This study theoretically investigated the reasons why banks are reluctant in granting credit facilities to the Small and Medium Enterprises (SMEs) in Nigeria. The study identified the indispensable roles of SMEs as the most viable engine for job creation, economic growth and development, and the need for the development of the Small and Medium Scale Enterprise (SMEs) in Nigeria. Adopting the theoretical approach, the study observed that banks are willing and capable to provide the necessary funds needed by SMEs but so many factors have hampered them. SME operators are compelled to provide their own electricity, water and, in some cases access roads to offset deficiencies in public infrastructural facilities. This is detrimental to viability and efficiency in production and is considered as high risk by the banks. Banks as a business entity have to make profit and maintain enough liquidity needed to meet up with other obligations of other stakeholders. The inability of the deposit money banks to extend the needed credits to the SMEs is due the unfriendly environment in which these SMEs operate. This study therefore recommends that government should totally adopt the Indian Model of SMEs development. Again, the environment for doing in Nigeria should be improved by the government most especially the electricity generation, sustainable water supply, quality roads.