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Abstract
Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamicsector of the Indian economy over the last five decades. MSMEs in Tamilnadu play a crucial role in providing large employmentopportunities at comparatively lower capital cost than large industries but also help in industrialization of rural &backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income andwealth. Indian banking sectors play a vital role in the field of socio-economic development through its conventional as well as pioneering services in the modern periods with innovative banking models like payments and small finance banks. The study highlights the key characteristics of the MSME sector in Tamilnadu and assess the demand for, and the flow of credit into the sector. . RBI has formulated several policies regarding financing to priority sectors particularly in small industries in India. The result shows that MSME in Tamilnadu needs liberal financial assistance from commercial banks to establish and extend their business operation to meet the global competition.