Social and Economic Constraints to Entrepreneurship Development: A Study of Aizawl District, Mizoram

Abstract

Finance is one of the most critical factors in the development of enterprises. It continues to be the major problem for small entrepreneurs, more so for  new entrepreneurs. The problems of bank finance takes several forms begining from delay in appraisal of loan proposal, sanction and disbursement of loan to outright rejection. This paper emphasises the need of active cooperation between commercial banks and entrepreneurs for the promotion of entrepreneurship which depend mostly on private money lenders, relatives and friends to meet their credit needs. The present study is based on a sample study of 406 micro, small and medium enterprises covering rural and urban areas of  Aizawl district, Mizoram. It was observed that majority of the entrepreneurs started their business after thirty years of age and almost three-fourths of them have education only upto school level.  The biggest problems faced by the entrepreneurs with regard to finance was reluctance by financial institutions to extent credit. It was found that only 8.4% of the entrepreneurs  have access to commercial banks for their credit needs. The rural marginal people who needs credit for production and consumption depends on costly informal loan from money lenders. The paper suggests that for reaching out the majority of the entrepreneurs, too much official formalities should be done away and simplification on application procedure is needed. It was also suggested that the need for better coordination and mutual trust and faith between commercial banks and the entrepreneurs.