Banking services and the status of small and medium scale enterprises in Ruiru town;

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Kampala international international: College of Economics and Management
Formal commercial banks have been recommended as the major source of external financing for the Small and Medium scale Enterprises (SME5) sector. This is because the informal financial institutions are known to be dogged with both inadequate regulatory framework and problems of financial proficiency therefore making them unreliable in propagating sustainable development &this sector. The study examined the level of interaction between banks and SME5 and the specific gains realized by 5MB sector as a result of this interaction. The study also assessed the bottlenecks experienced by both banks and SMEs in the process of relating with one another. Finally, the study established the different strategies adopted by banks in deepening their service delivery to the SME5 sector. This was accomplished by gathering the relevant information through questionnaires from thc proprietors of SME5 operating in Ruiru town and staff of the banks with outlets in the area. The study found that though banks offered to SMEs a wide variety of services, SME5 have not been able to fully utilize these facilities because of the procedural and cost burdens Involved. Banks also perceived lending to SMEs as a risky venture and therefore &Iopt a more cautious approach or charged a risk premium which further kept the SME5 at bay. Nonetheless, it was evident from the study that despite the existing limitations, banks have played a pivotal role in promoting the welfare of SME5. Iii the light of the findings of the study, the researcher made various recommendations meant to address the critical financing problem in the SMEs sector which included broad-based government policy interventions, enhanced capacity building through training of proprietors and managers as well as rationalized application of bank’s lending policies.
A Thesis Presented to the School of Postgraduate Studies and Research Kampala International University Kampala, Uganda In Partial Fulfillment of the Requirements for the Degree of Masters of Business Administration
Business administration, Banking services, Small and medium scale enterprises, Riuru town