Mission

Who we are?

SEFC was established in 2006 with the mission to advance the research and practice of SME financing and growth in India and ultimately to help develop best practices for a vibrant SME sector. The SEFC team seeks to study how financial markets and private market forces can foster the growth of SMEs and the role that SMEs play in the alleviation of poverty.

What we do?

The nature of work conducted at SEFC places the organization at the intersection of action and research. We conduct projects that develop insights and products to improve SMEs’ access to financial services, and to resolve existing blockages in the financial system such as labor turnover, market inefficiency, and poor infrastructures.

After formulating the problems commonly faced by SMEs, we ideate innovations, practices and products for SMEs driven by knowledge sharing of academics, banks, NBFCs, and public partners. We test the ideas through on-the-ground implementations such as randomized impact evaluation, audit studies, and large scale econometric analysis. Finally, we seek to disseminate our findings through refining products to be applicable in multiple development contexts, publicizing ideas to policy makers and practitioners, and scaling up successful ideas to impact a greater number.

Why focus on SMEs?

Small businesses serve as engines of innovation, growth, and employment, due to their flexibility to respond to new opportunities in the economy and their potential for rapid growth. In India, SMEs constitute 95% of all industrial units, produce 40% of the gross industrial value added, and employ 45% of the nation’s total labor force. However, data suggests that despite their growth potential, SMEs in India do not typically grow to become large companies as is the case in developed economies.

The lack of growth of SMEs in India is seen as a serious hindrance to job creation, social mobility and poverty elimination. Lack of access to efficient and adequately structured financial services has been identified as one of the primary impediments to the growth of SMEs. Other constraints to firm growth include regulatory and legal constraints, limited access to (well trained) employees as well as lack of infrastructure. SEFC aims to serve the SME sector by studying best practices and designing robust mechanisms that ameliorate or circumvent obstacles to firm-growth within this critical sector of the economy.