One of the primary reasons is bad debt management. Too many self-employed people neglect their cash flow until it is too late to recover. Bad debt can cause an uncomfortable hiatus for any business. It has a domino effect because money has to flow freely in business and the economy for enterprise to flourish. Under the present overall socio economic dynamics the banks should prioritize to extend purpose-oriented credit facilities with required security/collateral support as their policy priority since diversion of fund is one of the identified causes of loan default. So it becomes of imperative need to keep a close watch on the borrower's business operations and the movement of its financial indicators in an empirical manner. Banks have to play the role of business partner rather than a conventional lender.