Kolkata: Reluctance of banks and financial institutions to provide loans to start-ups, bureaucratic red tapeism and sloth, lack of coordination and infrastructure at the level of state governments and absence of proper mentoring are among the major reasons that are killing the spirit of entrepreneurship in the country, say industry watchers and experts.
Kolkata-headquartered Federation of Small & Medium Industries (FOSMI) president Biswanath Bhattacharya said getting finances is the major problem for the start-ups.
“That’s because banks are reluctant. Though under the central government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, an entrepreneur can get loans up to two crore rupees without collateral, at branch level such schemes are not encouraged.
“The banks don’t help start-ups with regard to other schemes also. The banks and financial institutions lay too much stress on market feasibility. They don’t have confidence in start-ups,” Bhattacharya said.
Gautam Mazumdar, faculty of Ahmedabad-headquartered Entrepreneurship Development Institute of India – which has been selected as the National Resource Organization (NRO) for the central government’s 4-year Start-up Village Entrepreneurship Programme (SVEP), echoed Bhattacharya.
“Banks have their own issue, guarantee issues, for giving loans under schemes like Mudra. These are the hiccups in the system. Banks have become very cautious, particularly because of the ongoing downturn,” Mazumdar said.
From his experience of working in two West Bengal blocks — Dinhata in Cooch Behar district and Patharpratima in South 24 Parganas district — as part of the programme, Mazumdar said “there is hardly any support from the bank in getting loans. We have the entrepreneurs, we have the data base of how entrepreneurs are performing, but the banks are still hesitating in providing loans.”