New Delhi, April 27 -- India's leading Micro, Small and Medium Enterprises (MSME) body has proposed the establishment of a specialised commercial bank and new legislation to improve access to credit and address payment delays plaguing these businesses.

In its submission to the government, the Federation of Indian Micro and Small & Medium Enterprises (FISME), representing nearly 2 million MSMEs nationwide, called for setting up a dedicated bank to streamline lending to the sector.

To facilitate broader capital raising options, FISME proposed an equity guarantee fund to cover risks for investors in the equity financing of these small businesses.

It noted that cash-strapped MSMEs with unhealthy balance sheets find it difficult to raise fu...