Indian economy has introduced with the reform measures in 1991, the government has launched many promotional and innovative programs to increase the competitiveness in the Micro, Small & Medium Enterprise (MSMEs) sector. MSMEs are considered to be the engine of economic growth. For the developing countries like India, MSMEs plays vital role in streamlining of the economy. In spite if their great importance, this sector is facing number of constraints like inadequate finance, inability in the procurement of raw material, absence of innovative technology, improper manufacturing and distribution channels etc. According to the estimate there are 26.1 million MSME’s in the country. Millions of these enterprises, considered the backbone of an economy. MSME’s contributes 47% of countries industrial output. MSME’s plays an important economic role by generating employment and income, and by contributing significantly to economic development. The MSME’s sector deserves all possible support. In India, these MSME’s are being provided with the financial instruments by the institutional credit and credit by non-banking financial companies (NBFC). The MSME enterprises are neglected by the banks. In India, the non-banking financial companies consist of large number of privately owned. There are 41,000 NBFC’s are working in India. The review of literature assures that there are various problems in availing the finance from financial institutions and which does varies region wise or sector wise. This paper tries to identify the Problems faced by the MSMEs while availing the finance from the banking institutions.