Synopsis Small Scale Industry plays a vital role in the overall Economic Development of the country. Today it accounts for 80% of Country's industrial employment, 40% of total manufactured goods, 35% of country's exports and produces nearly 6000 items. But the Small and Medium Enterprises (SMEs) would continue to remain as the powerful instrument of economic growth in the era of unprecedented technological revolution and globalisation. In India during the post reform era, while the large and medium scale grew at 6% p.a., the growth rate in the SSI sector was 18% p.a. the Institutional Credit support plays a catalytic role in accelerating the pace of economic development of a country. Financial Corporation are an integral part of the overall mechanism of economic development. Considering these facts; SFCs provide finance mainly to small and medium enterprises. So it is imperative to study the impact of financial institution in relation to financing Small and Medium Enterprises. It is a well-known fact that Small and Medium Sized Enterprises (SMEs) are playing a significant role in the economy, particularly with regard to innovation and new job creation.