A Study On The Role Of Bank Loans In Driving MSME Growth In Pune City

Micro, Small, and Medium Enterprises (MSMEs) play a vital role in driving economic growth, employment generation, and industrial development in India, particularly in rapidly growing urban centres like Pune. Access to timely and adequate bank finance is a critical factor influencing the growth and sustainability of MSMEs. This study examines the role of bank loans in driving MSME growth in Pune city, focusing on credit accessibility, utilization, and its impact on business expansion. The study is based on secondary data from reports of financial institutions and research studies, along with insights into lending trends in the MSME sector. Recent evidence suggests that MSMEs have emerged as a major driver of bank credit growth, with credit to the sector growing faster than retail and other segments due to supportive government schemes and improved lending frameworks Bank loans enable MSMEs to meet working capital requirements, invest in technology, expand operations, and enhance productivity. However, despite increased credit flow, MSMEs continue to face challenges such as stringent documentation, collateral requirements, and risk perception by banks, especially in urban areas like Pune. Studies also indicate that loan characteristics and borrower profiles significantly influence credit outcomes and default risks. The findings highlight that bank loans act as a catalyst for MSME growth by facilitating financial inclusion and business expansion, but there is a need for more flexible lending policies, simplified procedures, and improved credit delivery mechanisms. Strengthening the banking-MSME relationship can further accelerate economic development in Pune city. MSMEs, Bank Loans, Credit Growth, Financial Inclusion, Pune, Economic Development.