P.D.C.

S MINOR PROJECT REPORT ON

STUDY ON BANKING PATTERN AND NEEDS OF SMES

LINGAYAS LALITA DEVI INSTITUTE OF MANAGEMENT SCIENCES

FOR THE PARTIAL FULFILLMENT OF BACHELOR IN BUSINESS MANAGEMENT

UNDER THE SUPERVISION OF M%. PRANAV MISHRA SUBMITTED TO

GURU GOBIND SINGH INDRAPASTHA UNIVERSITY DELHI! INDIA

CERTIFICATE
Certified that this project report &STUDY ON BANKING PATTERN AND NEEDS OF SMES.' is the bo afide !or" of # NIIKHIL VIRMANI' !ho carried o$t the project !or" $ der the s$per%isio of Mr& 'ra a% Mishra&

SIGNATURE 'RANAV MI(HRA HEAD OF THE DEPARTMENT ))A LL*IM( Ma di road+ ,a di ,a di Ne! de-hi . /9

SIGNATURE 'RANAV MI(HRA P%()*+, I-+./%0* ))A LL*IM( Ma di

road+

Ne! de-hi ./9

2 NIIKHILVIRMANI 16719201711

DECLARATION
0his !or" has ot pre%io$s-1 bee accepted i s$bsta ce for a 1 de2ree a d is ot bei 2 co c$rre t-1 s$b,itted i ca didat$re for a 1 de2ree 3 dip-o,a& (i2 ed4 55555555&& *ate4 555555555&& S,/,*1*-, 2 0his project is the res$-t of ,1 o! i depe de t !or"3i %esti2atio + e6cept !here other!ise stated& 7ther so$rces are ac" o!-ed2ed b1 2i%i 2 e6p-icit refere ces& A bib-io2raph1 is appe ded&

(i2 ed4 55555555&& *ate4 555555555

8 NIIKHILVIRMANI 16719201711

ACKNO"LEDGEMENT
I o!e a 2reat ,a 1 tha "s to a 2reat ,a 1 peop-e !ho he-ped a d s$pported ,e d$ri 2 the !riti 2 of this report& M1 deepest tha "s to Lect$rer+ 9MR&'RANAV MI(HRA: for correcti 2 %ario$s doc$,e ts of ,i e !ith atte tio a d care& He has ta"e pai to 2o thro$2h the project a d ,a"e ecessar1 correctio as a d !he eeded& I e6press ,1 tha "s to the hod of+ 9)&)&A:+ for e6te di 2 his s$pport& M1 deep se se of 2ratit$de to MR&'RANAV MI(HRA+ 9STUDY ON BANKING PATTERN AND NEEDS OF SMES: s$pport a d 2$ida ce& 0ha "s a d appreciatio to the he-pf$- peop-e at 9STUDY ON BANKING PATTERN AND NEEDS OF SMES:+ for their s$pport& I !o$-d a-so -i"e to tha " ,1 I stit$te a d ,1 fac$-t1 ,e,bers !itho$t !ho, this project !o$-d ha%e bee a dista t rea-it1&

/ NIIKHILVIRMANI 16719201711

1. 2. 3. 4. 5. 6.

Cover page Certificate Declaration Acknowledgement Table of content

1 2 3 4 5

Introduction !b"ective# $ %cope of &ro"ect )et*odolog+ Anal+#i# and Interpretation Conclu#ion -ibliograp*+ 05 35 3' 3( 3, 41 42 '4 '' (0 (1 (1

7. 8. 9. 10. 11.

; NIIKHILVIRMANI 16719201711

INTRODUCTION
(,a-- a d Medi$, < terprises =(M<s> ha%e p-a1ed a si2 ifica t ro-e !or-d o%er i the eco o,ic de%e-op,e t of %ario$s co$ tries& 7%er a period of ti,e+ it has bee pro%ed that (M<s are d1 a,ic+ i o%ati%e a d ,ost i,porta t-1+ the e,p-o1er of first resort to ,i--io s of peop-e i the co$ tr1& 0he sector is a breedi 2 2ro$ d for e trepre e$rship& 0he i,porta ce of (M< sector is !e--.reco2 i?ed !or-d o%er o!i 2 to its si2 ifica t co trib$tio i achie%i 2 %ario$s [Link] o,ic objecti%es+ s$ch as to atio a- o$tp$t a d e6ports+ e,p-o1,e t 2e eratio + co trib$tio the eco o,1& (,a-- a d ,edi$,.si?ed e terprises =(M<s> are the bac"bo e of a-eco o,ies a d are a "e1 so$rce of eco o,ic 2ro!th+ d1 a,is, a d f-e6ibi-it1 i ad%a ced i d$stria-i?ed co$ tries+ as !e-- as i e,er2i 2 a d de%e-opi 2 eco o,ies& (M<s co stit$te the do,i a t for, of b$si ess or2a i?atio + acco$ ti 2 for o%er 9;@ a d $p to 99@ of e terprises depe di 2 o creatio s i the co$ tr1& 0he1 are respo sib-e for bet!ee 60.70@ et job *e%e-opi 2 co$ tries& (,a-- b$si esses are partic$-ar-1 o%ati%e prod$cts or tech iA$es to the ,ar"et&

fosteri 2 e! e trepre e$rship a d to pro%ide depth to the i d$stria- base of

i,porta t for bri 2i 2 i

Microsoft ,a1 be a soft!are 2ia t toda1+ b$t it started off i t1pica- (M< fashio + as a drea, de%e-oped b1 a 1o$ 2 st$de t !ith the he-p of fa,i-1 a d frie ds& 7 -1 !he )i-- Bates a d his co--ea2$es had a sa-eab-e prod$ct
6 NIIKHILVIRMANI 16719201711

!ere the1 ab-e to ta"e it to the ,ar"etp-ace a d -oo" for i %est,e t fro, ,ore traditio a- so$rces& (M<s are %ita- for eco o,ic 2ro!th a d de%e-op,e t i both i d$stria-i?ed a d de%e-opi 2 co$ tries+ b1 p-a1i 2 a "e1 ro-e i creati 2 e! jobs& Ci a ci 2 is ecessar1 to he-p the, set $p e! staff a d e6pa d their operatio s+ de%e-op e! prod$cts+ a d i %est i

or prod$ctio faci-ities& Ma 1 s,a-- b$si esses start o$t as a idea fro, o e or t!o peop-e+ !ho i %est their o! ,o e1 a d probab-1 t$r to fa,i-1 a d frie ds for fi a cia- he-p i ret$r for a share i the b$si ess& )$t if the1 are s$ccessf$-+ there co,es a ti,e for a-- de%e-opi 2 (M<s !he the1 eed e! i %est,e t to e6pa d or i the1 ofte r$ o%ate f$rther& 0hat is !here i to prob-e,s+ beca$se the1 fi d it ,$ch harder tha

-ar2er b$si esses to obtai fi a ci 2 fro, ba "s+ capita- ,ar"ets or other s$pp-iers of credit& C(11(- C./%/+,*%23,2+3 (4 SME3 5/6 B(%- (7, (4 2-829287/: 2-2,2/,29*3 e trepre e$rsD i ,a 1 casesD 3;2::3

(M< start$ps te d to e%o-%e a-o 2 a si 2-e e trepre e$r or a s,a-- 2ro$p of -e%era2i 2 o a s"i-- set& 0here are other (M<s bei 2 set $p p$re-1 as a ,ea s of ear i 2 -i%e-ihood& 0hese i c-$des ,a 1 tradi 2 a d retai- estab-ish,e ts !hi-e ,ost co$ tries co ti $e (M<s to ,a $fact$ri 2 ser%ices+ others adopt a broader defi itio i c-$de retai-i 2 as !e--& 5<6 G%*/,*% (=*%/,2(-/: 4:*>2<2:2,? a d

7 NIIKHILVIRMANI 16719201711

0he direct i %o-%e,e t of o! er=s>+ co$p-ed !ith f-at hierarchica- str$ct$res a d -ess $,ber of peop-e e s$re that there is 2reater operatio a- f-e6ibi-it1& *ecisio ,a"i 2 s$ch as cha 2es i price ,i6 or prod$ct ,i6 i respo se to ,ar"et co ditio s is faster& 5+6 L(@ +(3, (4 =%(87+,2((M<s ha%e -o!er o%erheads& 0his tra s-ates to -o!er cost of prod$ctio + -east $pto -i,ited %o-$,es& 586 H20. =%(=*-32,? ,( /8(=, ,*+.-(:(0? 0raditio a--1 (M<s ha%e sho! a prope sit1 of bei 2 ab-e to adopt a d i ter a-i?e the tech o-o21 bei 2 $sed b1 the,& 5*6 H20. +/=/+2,? ,( 2--(9/,* *>=(%,A (M<s s"i-- i i o%atio + i,pro%isatio a d re%erse e 2i eeri 2 are -e2e dar1& )1 bei 2 ab-e to ,eet iche reA$ire,e ts+ the1 are a-so ab-e to capt$re e6port ,ar"ets !here %o-$,es are ot h$2e& 546 H20. *1=:(?1*-, (%2*-,/,2(-A (M<s are $s$a--1 the pri,e dri%es of jobs+ i so,e cases creati 2 $p to E0@& Fobs (M<s te d to be -abo$r i te si%e per se a d are ab-e to 2e erate ,ore jobs for e%er1 $ it of i %est,e t+ co,pared to their bi22er co$ terparts&

E NIIKHILVIRMANI 16719201711

506 R*87+,2(- (4 %*02(-/: 21</:/-+*3 G -i"e -ar2e i d$stries !here di%isibi-it1 of operatio s is ,ore diffic$-t+ (M<s e jo1 the f-e6ibi-it1 of -ocatio & 0h$s+ a 1 co$ tr1+ (M<s ca be fo$ d spread %irt$a--1 ri2ht across+ e%e thro$2h so,e specific -ocatio s e,er2e as Hc-$stersI& SME3 2- I-82/ I dia has a %ibra t (M< sector that p-a1s a i,porta t ro-e i s$stai i 2 eco o,ic 2ro!th+ i creasi 2 trade+ 2e erati 2 e,p-o1,e t a d creati 2 e! e trepre e$rship i I dia& I "eepi 2 i %ie! its i,porta ce+ the pro,otio a d de%e-op,e t of (M<s has bee a i,porta t p-a " i o$r po-ic1 for i d$stria- de%e-op,e t a d a ![Link]$ct$red pro2ra,,e of s$pport has bee p$rs$ed i s$ccessi%e fi%e.1ear p-a s for& (M<s i I dia ha%e recorded a s$stai ed 2ro!th d$ri 2 -ast fi%e decades& 0he $,ber of (M<s i I dia is esti,ated to be aro$ d 1B 12::2(- !hi-e the esti,ated e,p-o1,e t pro%ided b1 this sector is o%er B1 12::2(-& 0he (M< sector acco$ ts for abo$t $C =*% +*-, of the ,a $fact$ri 2 o$tp$t a d o%er $0 =*% +*-, of the atio a- e6ports of the co$ tr1&

I dia e,bar"ed o the path of ope i 2 $p its eco o,1 a d i te2rati 2 it !ith the 2-oba- eco o,1 i 1991& 0he -ibera-i?atio of eco o,1+ !hi-e offeri 2 tre,e do$s opport$ ities for the 2ro!th a d de%e-op,e t of I dia i d$str1 i c-$di 2 (M<s+ has a-so thro! $p e! cha--e 2es i ter,s of fierce co,petitio & 0he %er1 r$-es !hich pro%ide i creased access for o$r prod$cts i the 2-oba- ,ar"ets a-so p$t do,estic i d$str1 $ der i creased co,petitio fro, other co$ tries& I toda1Is !or-d+ access o a 2-oba- basis
9 NIIKHILVIRMANI 16719201711

to ,oder tech o-o21+ capita- reso$rces a d ,ar"ets ha%e beco,e the ,ost critica- deter,i a ts of i ter atio a- co,petiti%e ess& D*42-2-0 SME3 I I dia+ the e terprises ha%e bee c-assified broad-1 i to t!o cate2ories4 =i> Ma $fact$ri 2D a d =ii> 0hose e 2a2ed i pro%idi 23re deri 2 of ser%ices& )oth cate2ories of e terprises ha%e bee f$rther c-assified i to ,icro+ s,a-a d ,edi$, e terprises based o their i %est,e t i p-a t a d ,achi er1 =for ,a $fact$ri 2 e terprises> or o eA$ip,e ts =i case of e terprises pro%idi 2 or re deri 2 ser%ices>& 0he c-assificatio o basis of i %est,e t is as $ derA T/<:* 1.1 C:/33242+/,2(- O4 M2+%(! S1/:: A-8 M*8271 E-,*%=%23*3 C:/33242+/,2(I-9*3,1*-, C*2:2-0 4(% P:/-,! M/+.2-*%? (% ED72=1*-,3 M/-74/+,7%2-0 S*%92+* E-,*%=%23*3 Micro (,a-Medi$, E-,*%=%23*3 Gpto Rs&2; -a"h Abo%e Rs&2; -a"h J $pto Rs&; crore Abo%e Rs&; crore J $pto Rs&10 crore T/<:* 1.2
10 NIIKHILVIRMANI 16719201711

Gpto Rs&10 -a"h Abo%e Rs&10 -a"h J $pto Rs&2 crore Abo%e Rs&2 crore J $pto Rs&; crore

C:/33242+/,2(- O4 M2+%(! S1/:: A-8 M*8271 E-,*%=%23*3 B*4(%* 2-8 O+,(<*%! 2006 C:/33242+/,2(I-9*3,1*-, C*2:2-0 F(% P:/-,! M/+.2-*%? O% ED72=1*-,3EF M/-74/+,7%2-0 S*%92+* E-,*%=%23*3 Micro (,a-Medi$, E-,*%=%23*3 Gpto Rs&2; -a"h Abo%e Rs&2; -a"h J $pto Rs&1 crore Not defi ed Gpto Rs&10 -a"h Not defi ed Not defi ed

Khi-e ca-c$-ati 2 the i %est,e t i p-a t a d ,achi er13eA$ip,e t referred to abo%e+ the ori2i a- price thereof sha-- be ta"e i to acco$ t+ irrespecti%e of !hether the p-a t a d ,achi er13eA$ip,e t are e! or seco d ha d& I case of i,ported ,achi er13eA$ip,e t+ the fo--o!i 2 d$t13char2es3costs sha-- be i c-$ded i ca-c$-ati 2 their %a-$e4

I,port *$t1 = ot to i c-$de ,isce--a eo$s e6pe ses s$ch as tra sportatio fro, the port to the site of the factor1+ de,$rra2e paid at the port>D (hippi 2 Char2esD C$sto,s C-eara ce char2esD a d (a-es 0a6 or Va-$[Link] 0a6& Cost of the fo--o!i 2 p-a t J ,achi er13eA$ip,e ts etc !o$-d be e6c-$ded4D

11 NIIKHILVIRMANI 16719201711

<A$ip,e ts s$ch as too-s+ ji2s+ dies+ ,o$-ds+ a d spare parts for ,ai te a ce a d the cost of co s$,ab-e storesD I sta--atio of p-a t J,achi er1D Research a d de%e-op,e t a d po--$tio co tro- eA$ip,e tsD 'o!er 2e eratio set a d e6tra tra sfor,er i sta--ed b1 the e terprises as per the Re2$-atio s of the (tate <-ectricit1 )oardD )a " char2es a d (er%ice Char2es paid to the Natio a- (,a-I d$stries Corporatio or the (tate (,a-- I d$stries Corporatio D 'roc$re,e t or I sta--atio of cab-es+ !iri 2 b$s bars+ e-ectrica-

co tro- pa e-s = ot ,o$ ted o i di%id$a- ,achi es>

7i- circ$it brea"ers or ,i iat$re circ$it brea"ers !hich are ecessari-1 to be $sed for pro%idi 2 e-ectrica- po!er to the p-a t a d ,achi er1 or for safet1 ,eas$resD Bas prod$cer p-a tsD 0ra sportatio char2es =other tha sa-es ta6 or %a-$[Link] ta6 a d e6cise d$t1> for i di2e o$s ,achi er1 fro, the p-ace of their ,a $fact$re to the site of the e terprise>D Char2es paid for tech ica- " o!.ho! for erectio of p-a t ,achi er1D ($ch stora2e ta "s !hich store ra! ,ateria-s a d fi ished prod$cts o -1 a d are ot -i "ed !ith the ,a $fact$ri 2 processD Cire.fi2hti 2 eA$ip,e tD a d ($ch other ite,s as ,a1 be specified+ b1 otificatio fro, ti,e to ti,e&

I case of (er%ice < terprises+ the ori2i a- cost to e6c-$de f$r it$re+ fitti 2s a d other ite,s ot direct-1 re-ated to the ser%ices re dered& La d a d
12 NIIKHILVIRMANI 16719201711

)$i-di 2

!o$-d

a-so

ot

be

i c-$ded

!hi-e

co,p$ti 2

the

,achi er13eA$ip,e ts cost& (M< !o$-d be ,ea t to i c-$de Micro (,a-- a d Medi$, < terprises =M(M<s>& 0he abo%e defi itio s of Micro+ (,a-- a d Medi$, < terprises !o$-d be i p-ace of the e6isti 2 defi itio s of (,a-- J Medi$, I d$stries a d ((()<s30i 1 < terprises&

Micro < terprises !o$-d i c-$de 0i 1 I d$stries a-so& (,a-- < terprises =Ma $fact$ri 2> !o$-d ,ea I d$stries =((Is>& (,a-- (ca-e

Medi$, < terprises =Ma $fact$ri 2> !o$-d ,ea Medi$, I d$stries =MIs>& (,a-- < terprises =(er%ices> a d Medi$, < terprises =(er%ices> !o$-d ,ea other (,a-- J Medi$, < terprises& 0h$s+ (M< Ad%a ces !o$-d be cate2orised as $ der4

A-- ad%a ces to se2,e ts %i?& Micro+ (,a-- a d Medi$, < terprises i the Ma $fact$ri 2 sector irrespecti%e of sa ctio ed -i,its+ =i c-$di 2 ad%a ces a2ai st 0*Rs3Bo%t& (ec$rities etc for b$si ess p$rposes to these cate2ories of )orro!ers>+ a d Ad%a ces to (er%ices (ectors s$ch as 'rofessio a- J (e-f.<,p-o1ed+ (,a-- )$si ess < terprises+ a d (,a-- Road3Kater 0ra sport 7perators a d other e terprises+ e 2a2ed i pro%idi 23re deri 2 of ser%ices+ co for,i 2 to the abo%e i %est,e t criteria a d e jo1i 2 borro!i 23 o .borro!i 2 faci-ities !ith the )a " =i c-$di 2 ad%a ces a2ai st 0*Rs3Bo%t& (ec$rities etc for b$si ess p$rposes to these cate2ories of )orro!ers>&

18 NIIKHILVIRMANI 16719201711

0hose e terprises e6ceedi 2 the i %est,e t cei-i 2s !o$-d be cate2ori?ed as Lar2e < terprises a d be o$tside the p$r%ie! of (M<& 0he sa ctio ed -i,its !o$-d o -o 2er be the criteria deter,i i 2 the stat$s as ,icro or s,a-- or ,edi$, e terprises i these cases& Reser%e )a " of I dia has si ce re%ie!ed the defi itio o 'riorit1 (ector a d ha%e iss$ed re%ised 2$ide-i es o -e di 2 to 'riorit1 (ector %ide their Master Circ$-ar dated 2 d F$-1+ 2007& As per this circ$-ar Retai- 0rade is e6c-$ded fro, the acti%ities c-assified as (M<&

=http433!!!&ba "ofi dia&co,3s,epo-&asp6 -ast accessed o 2009>

26 No%+

D*9*:(=1*-, (4 SME3 I- I-82/ Ma"i 2 the best $se of the ,ateria- reso$rces b1 e,p-o1i 2 hi2her order of s"i-- a d artistic ta-e ts thro$2h occ$pied a per,a e t p-ace traditio aof pride i ha dicrafts+ I dia has the !or-d before i d$stria-ar2e sca-e ,echa i?ed to the dec-i e of the

reso-$tio & Ho!e%er+ the ad%e t of ,oder

i d$str1+ the i,positio of restrictio s o I dia trade b1 the )ritish r$-ers a d deteriorati 2 [Link] o,ic co ditio s -ead (,a-- (ca-e I d$str1& )$t !ith the pro%isio s of per,a e t p-ace i I depe de ce+ it has sta2ed a 2ra d reco%er1 a d is o the path of pro2ress to!ards 2reat e6pa sio &

atio Ls po-ic1 of eco o,ic de%e-op,e t after the attai ,e t of the o! !e-- e tre ched

(M< has e,er2ed i to pro,i e t sector i I dia eco o,1 i 2e era- a d i d$str1 i partic$-ar& ((I sector i I dia has posted i,pressi%e 2ro!th i
1/ NIIKHILVIRMANI 16719201711

1990Ls

fro, 1;@

1991.92

to ;;@

2001.02&0he 2ro!th

e,p-o1,e t 2e eratio has bee eA$a--1 i,pressi%e fro, 8@ to /;@ d$ri 2 the sa,e period& <,p-o1,e t i (M< to$ched 19 ,i--io + j$st behi d a2ric$-t$re& (hare of ((I e6ports crosses /0@ of tota- e6ports& Bro!th b1 itse-f i (M< sector is i,pressi%e e o$2h i dicati 2 a positi%e respo se to the <co o,ic Refor, process i itiated i the co$ tr1 si ce 1991& ... *e%e-op,e t of i frastr$ct$re ... Ass$red s$pp-1 of Ra! Materia-s ... A%ai-abi-it1 of Cheap Credit ... Co cessio ar1 0a6es a d 0ariffs& ... Ci a cia- s$bsidies ... <A$it1 co trib$tio s are a-- the protecti%e ,eas$res for the sector

T/<:* 1.B P%(0%*33 O4 SME3 I- I-82/ Y*/% 199;.96 1996.97 1997.9E 199E.99 1999.00 2000.01 2001.02
NIIKHILVIRMANI 16719201711

T(,/: SME U-2,3 5L/;.36 67&E7 70&68 78&;1 76&/9 79&60 E2&E/ E6&21

F2>*8 I-9*3,1*-, 5R3 C%(%*36 98;;; 1008;1 109628 11;79; 128790 12;7;0 180;60
1;

2002.08 E9&71 1882/2 2008.0/ 98&86 18;/E2 200/.0; 97&1; 1899E2 200;.06 101&1 1/6E/; 2006.07 10;&21 1;/8/9 2007.0E 109&/9 162817 200E.09 118&9; 170219 2009.10 11E&;9 17E699 2010.11 128&/2 1EE118 =http433!!!&s,echa,berofi dia&co,3ro-MofMs,eMsector&asp6 -ast accessed o 27 No%+ 2009> S1/:: /-8 M*8271 E-,*%=%23*3 # I-873,%2/: =(:2+?A 0he s,a-- a d Medi$, i d$stries ha%e a specific ro-e to p-a1 b1 the I d$stria- po-ic1 a d t1pe 19/E !hich stated that cotta2e a d s,a-- sca-e respect of certai i d$stries are partic$-ar-1 s$ited for better $ti-i?atio of -oca- reso$rces for the achie%e,e t of -oca- se-f.s$fficie c1 i of esse tia- 2oods& A (,a-- a d Medi$, I d$stries )oard !as

co stit$ted i 19;/ a d a $,ber of he-pi 2 sche,es s$ch as s$pp-1 of ,achi er1 o hire p$rchase+ -ibera- a d !ider 2ra ts& 0he Bo%er ,e t a o$ ced its seco d I d$stria- po-ic1 i 19;6 !hich

rep-aced the I d$stria- po-ic1 reso-$tio

of 19/E&Khi-e s$ch ,eas$res %ita-it1 to be -ar2e

co ti $e to be ta"e !here%er ecessar1+ the ai, of the state po-ic1 is to e s$re that the dece tra-i?ed sector acA$ires s$fficie t se-f s$pporti 2 a d its de%e-op,e t is i te2rated !ith that of

sca-e i d$str1& )esides+ the Bo%er ,e t i te ded to stre 2the the e6isti 2 arra 2e,e ts to fi a ce s,a-- sca-e $ its a d ,a"e cha 2es if ecessar1 to ease the credit prob-e,s of the sector& 0he s1ste, of reser%atio of ite,s for e6c-$si%e prod$ctio b1 s,a-- sca-e $ its !o$-d co ti $e i f$t$re&
16 NIIKHILVIRMANI 16719201711

0he I d$stria- po-ic1 state,e t of 19E; !as a-so s,a-- sca-e $ it !as re%ised to i c-$de i %est,e t

accorded i,porta ce to

s,a-- sca-e sector a d ,ade so,e s$itab-e po-ic1 cha 2es& 0he defi itio of a-- ,a $fact$ri 2 $ its ha%i 2 Rs&8; La"hs& I case of i '-a t a d Machi er1 $ to

a ci--ar1 $ its+ the i %est,e t cei-i 2 !as Rs&/; La"hs& I the po-ic1 state,e ts of 1991+ the state fo--o!ed a po-ic1 of

s$pporti 2 s,a-- e terprises i the co$ tr1& (,a-- a d Medi$, e terprises acco$ t for ;;@ of i d$stria- prod$ctio + /0@ of e6ports a d abo%e EE@ of ,a $fact$ri 2 e,p-o1,e t& He ce+ this sector is co sidered as d1 a,ic a d %ibra t sector of the co$ tr1& 0he to re-ati%e i,porta ce te ds %ar1 i %erse-1 !ith the -e%e- of de%e-op,e t a d their co trib$tio &

(,a-- a d Medi$, e terprises ha%e e,er2ed as the -eaders i the i d$striasector& I reco2 itio of their si2 ifica ce a d stat$re+ the the 2o%er ,e t a o$ ced po-ic1 ,eas$res o A$2$st 6+ 1991 for the first ti,e i the post 0his is a-,ost a G.t$r i po-ic1 sti,$-a ts a d i depe de ce period& 0his !as to pro,ote a d stre 2the s,a--+ ti 1 a d %i--a2e e terprises& str$ct$re of ,icro a d s,a-- e terprises i the co$ tr1&

P%(<:*13 (4 SME3 *espite its co,,e dab-e co trib$tio to the Natio Ls eco o,1+ (M< (ector does ot 2et the reA$ired s$pport fro, the co cer ed Bo%er ,e t
17 NIIKHILVIRMANI 16719201711

*epart,e ts+ )a "i 2 (ector+ Ci a cia- I stit$tio s a d Corporate (ector+ !hich is a ha dicap i beco,i 2 ,ore co,petiti%e i the Natio a- a d I ter atio a- Mar"ets a d !hich eeds to be ta"e $p for i,,ediate a d proper redressa-& (M< sector faces a $,ber of prob-e,s . abse ce of o . adeA$ate a d ti,e-1 ba "i 2 fi a ce+ -i,ited " o!-ed2e a d

a%ai-abi-it1 of s$itab-e tech o-o21+ -o! prod$ctio capacit1+ fo--o! $p !ith %ario$s a2e cies i so-%i 2 re2$-ar acti%ities a d -ac" of i teractio !ith 2o%er ,e t a2e cies o %ario$s ,atters& (o,e of the ,ajor prob-e,s are brief-1 as fo--o!s4

/6F2-/-+2/: =%(<:*13 (4 SME3A 0he fi a cia- prob-e, of (M<s is the Root Ca$se for a-the other prob-e,s faced b1 the (M< sector& 0he s,a-- a d ,edi$, i d$stria-ists are 2e era--1 poor a d there are o faci-ities for cheap credit& 0he1 fa-- i to the c-$tches of ,o e1 -e der !ho char2es %er1 hi2h rates of i terest+ or e-se the1 borro! fro, the dea-ers of their 2oods+ !ho e6p-oit the, b1 co,p-eti 2 the, to se-- their prod$cts at %er1 -o! price& ba "s !ere pro%idi 2 o -1 a s,a-- proportio !ith its co trib$tio to the tota- i d$stria- o$tp$t& to the i d$stria- sector is o -1 abo$t 80@& After the atio a-i?atio of 1/ ,ajor I dia )a "s i F$-1+ 1969+ the Co,,erciaof (M<s fi a ciaAs a2ai st the share of reA$ire,e ts& Credit to the (M< sector co ti $es to be o .co,,e s$rate the %i--a2e a d (M< at /0@ i the i d$stria- o$tp$t+ its share i tota- credit

1E NIIKHILVIRMANI 16719201711

<6 R/@ M/,*%2/: =%(<:*1 (4 SME3A 0his diffic$-t1 is e6perie ced i a %er1 pro o$ ced for,& 0he A$a tit1+ A$a-it1 a d i re2$-arit1 of the s$pp-1 of ra! ,ateria-s si ce are the1 ot are satisfactor1& 0here p$rchased are o A$a tit1 disco$ ts+

s,a-- A$a tities a d he ce char2ed+ hi2her prices b1 proc$ri 2 se,i.,a $fact$red

s$pp-iers& *iffic$-t1 is a-so e6perie ced i b$-" i a co,petiti%e ,ar"et& +6 P%(87+,2(- =%(<:*1 (4 SME3A

,ateria-s& Ci a cia- !ea" ess sta ds i the !a1 of sec$ri 2 ra! ,ateria-s i

(M< $ its s$ffer fro, i adeA$ate !or" space+ po!er+ -i2hti 2 a d %e ti-atio + a d safet1 ,eas$res etc& 0hese short co,i 2s ha%e te ded to e da 2er the hea-th of !or",e a d ha%e ad%erse-1 affected the rate of prod$ctio & Ma 1 prod$ctio & Adoptio s,a-- i d$stries are $ its are fo--o!i 2 pri,iti%e ,ethods of of ,oder tech iA$es is either dis-i"ed b1 the

e trepre e$rs is ot feasib-e&

Ka2e rates a d ser%ice co ditio s of

ot attracti%e to s"i--ed -abor&

86 T*+.-(:(02+/: =%(<:*1 (4 SME3A 0oda1 tech o-o21 is cha 2i 2 at a %er1 fast phaseD it beco,es diffic$-t for (M<s to cope $p !ith cha 2i 2 tech o-o21& 0ech o-o21 $p 2radatio a d the freA$e t eed to re e! the eA$ip,e t has e,er2ed as a bi2 prob-e,&
19 NIIKHILVIRMANI 16719201711

86 M/%;*,2-0 =%(<:*1 (4 SME3A or2a i?ed+ the he-p-ess artisa s

As

,ar"eti 2

is ot

proper-1

are co,p-ete-1 at the ,erc1 of ,idd-e

,a & 0he pote tia- de,a d for their 2oods re,ai s $ der de%e-oped& 0he (M<s ha%e to face the co,petitio s fro, -ar2e sca-e $ its i ,ar"eti 2 their prod$cts& ca It ca$ses da,a2e to the 2ro!th a d stabi-it1 of (M<s& (M<s ot afford to spe d -a%ish-1 for ad%ertise,e t to pro,ote their sa-es&

*6 M/-/0*%2/: =%(<:*1 (4 SME3A (,a-- sca-e i d$stries i the $ e6p-ored i d$striao$r co$ tr1 ha%e s$ffered fro, the -ac" of fie-ds& 0he i efficie c1 i ,a a2e,e t e trepre e$ria- abi-it1 to de%e-op i itiati%e a d $ derta"e ris"s i co,es first a,o 2 ,a a2eria- prob-e,s& 0he e trepre e$ria- abi-it1 of pro,oters of cotta2e i d$stries a d (M<s are ha dicapped b1 tech ica" o! ho! i the areas of prod$ctio + fi a ce+ acco$ ti 2 a d ,ar"eti 2 ,a a2e,e t& 46 S2+;-*33 (4 SME3A A serio$s prob-e, !hich is ha,peri 2 s,a-- a d ,edi$, sector has bee sic" ess& Ma 1 s,a-- $ its ha%e fa--e sic" d$e to o e prob-e, or the ca$ses of hi2h rate of sic" ess capitaother& (ic" ess is ca$sed b1 t!o sets of factors+ I ter a- a d e6ter a- factors& Cro, a,o 2 the %ario$s i ter a- a d e6ter athe i,porta t o es are b$d ,a a2e,e t+

2eari 2+ i adeA$ac1 of fi a ce+ short of ra! ,ateria-s+ o$tdated p-a t a d ,achi er1+ -o! -abor prod$cti%it1 etc&

20 NIIKHILVIRMANI 16719201711

0he abo%e fi2$re sho!s that fi a ce has bee the ,ajor reaso for the sic" ess of (M< $ its& 0he other ,ajor reaso s are i effecti%e ,a a2e,e t a d tech o-o21 $p2radatio accordi 2 to the -atest tech o-o2ica- cha 2es&

SME F2-/-+2-0 SME F2-/-+* is the f$ di 2 of s,a-- a d ,edi$, si?ed e terprises a d represe ts a ,ajor f$ ctio of the 2e era- b$si ess fi a ce ,ar"et N i !hich capita- for fir,s of t1pes is s$pp-ied+ acA$ired+ a d costed3priced& Capita- is s$pp-ied thro$2h the b$si ess fi a ce ,ar"et i the for, of ba " -oa s a d o%erdraftsD -easi 2 a d hire.p$rchase arra 2e,e tsD eA$it13corporate bo d iss$esD %e t$re capita- or pri%ate eA$it1D a d asset. based fi a ce s$ch as factori 2 a d i %oice disco$ ti 2 I1=(%,/-+* 0he eco o,ic a d socia- i,porta ce of the s,a-- a d ,edi$, e terprise =(M<> sector is !e-- reco2 i?ed i acade,ic a d po-ic1 -iterat$re& It is a-so reco2 i?ed that these actors i the eco o,1 ,a1 be $ derser%ed+ especia--1 i ter,s of fi a ce& 0his has -ed to si2 ifica t debate o the best ,ethods to ser%e this sector& 0here ha%e bee $,ero$s sche,es a d pro2ra,,es i ,ar"ed-1 differe t eco o,ic e %iro ,e ts& Ho!e%er+ there are a $,ber of disti cti%e rec$rri 2 approaches to (M< fi a ce&

Co--atera- based -e di 2 offered b1 traditio a- ba "s a d fi a ce co,pa ies is $s$a--1 ,ade $p of a co,bi atio of [Link] fi a ce+ co trib$tio based fi a ce+ a d factori 2 based fi a ce+ $si 2 re-iab-e debtors or co tracts&
21

NIIKHILVIRMANI 16719201711

I for,atio

based -e di 2 $s$a--1 i corporates fi a cia- state,e t

-e di 2+ credit scori 2+ a d re-atio ship -e di 2&

Viabi-it1 based fi a ci 2 is especia--1 associated !ith %e t$re capita-&

0here is a-so a ,ore fa%orab-e e %iro ,e t o! !ith the Bo%t& co,,itted to 2i%e fi--ip to this sector thro$2h i frastr$ct$re de%e-op,e tD s"i-- set de%e-op,e t3e trepre e$rship de%e-op,e t+ tech o-o21 $p 2radatio to ser%ice the credit reA$ire,e ts of the (M< sector depe ds o $ der-1i 2 tra sactio etc& the Kith the dere2$-atio of the fi a cia- sector+ the 2e era- abi-it1 of the ba "s costs+ efficie t reco%er1 processes a d a%ai-ab-e

sec$rit1& 0here is a i,,ediate eed for the ba "s 2e era--1 to foc$s o credit a d fi a ce reA$ire,e ts of (M<s& A-tho$2h the ba "s are a--o!ed to fi6 their o! tar2ets for f$ di 2 (M<s i order to achie%e a ,i i,$, 20@ 1ear.o .1ear 2ro!th+ the Bo%er ,e tIs objecti%e is to do$b-e the f-o! of credit to the (M< sector fro, Rs&67+600 crore i 200/.0; to Rs&1+8;+200 crore b1 2009.10 i&e& !ithi a period of ; 1ears& A-so+ Credit ris" i the (M< sector is !ide-1 dispersed a d )a "s 2et better 1ie-d fro, (M< ad%a ces as a2ai st the traditio a- ad%a ces !here the spread is 2etti 2 2rad$a--1 red$ced& 0he (M< c-ie te-e base co$-d a-so be $ti-i?ed b1 the )ra ches to step.$p #cross se--i 2O of %ario$s other prod$cts i c-$di 2 tech o-o21. e ab-ed prod$cts&

SME F2-/-+2-0 G/= A s$bsta tia- portio of the (M< sector ,a1 ot ha%e the sec$rit1 reA$ired for co %e tio a- co--atera- based ba " -e di 2+ or hi2h e o$2h ret$r s to attract for,a- %e t$re capita-ists a d other ris" i %estors& I additio +
22 NIIKHILVIRMANI 16719201711

,ar"ets ,a1 be characteri?ed b1 deficie t i for,atio

=-i,iti 2 the

effecti%e ess of fi a cia- state,e [Link] -e di 2 a d credit scori 2>& 0his has -ed to c-ai,s of a P(M< fi a ce 2apO& 0he (M<s that fa-- i to this cate2or1 ha%e bee defi ed as (,a-- Bro!i 2 )$si esses =(B)s> at a !or"shop i Be e%a i F$-1 200E+ hosted b1 0he Net!or" for Bo%er a ceD < trepre e$rship J *e%e-op,e t =B<J*> 0here ha%e bee at -east t!o disti cti%e approaches to tr1 to o%erco,e the [Link]--ed (M< fi a ce 2ap& 0he first has bee to broade the co--atera- based approach b1 e co$ra2i 2 ba " -e ders to fi a ce (M<s !ith i s$fficie t co--atera-& 0his ,i2ht be do e thro$2h a e6ter a- part1 pro%idi 2 the co--atera- or 2$ara tees reA$ired& G fort$ ate-1+ to the e6te t that the sche,es co cer ed r$ co$ ter to basic free ,ar"et pri cip-es the1 te d to be $ s$stai ab-e& 0h$s+ the seco d approach has bee to broade the %iabi-it1 based approach& (i ce the %iabi-it1 based approach is co cer ed !ith the b$si ess itse-f+ the ai, has bee to pro%ide better 2e era- b$si ess de%e-op,e t assista ce to red$ce ris" a d i crease ret$r s& =http433e &!i"ipedia&or23!i"i3(M<Mfi a ce -ast accessed o 27 o%+ 2009> S(7%+*3 (4 SME F2-/-+*A 0he ,ost co,,o so$rces of (M< fi a ce are as fo--o!s P%(<:*13 (4 SME3 F2-/-+2-0 0he ,ai prob-e, faced b1 (M<Is !he tr1i 2 to obtai f$ di 2 is that of $ certai t14 Q (M<Is rare-1 ha%e a -o 2 histor1 or s$ccessf$- trac" record that pote tiai %estors ca re-1 o i ,a"i 2 a i %est,e tD
28 NIIKHILVIRMANI 16719201711

Q Lar2er co,pa ies =partic$-ar-1 those A$oted o a stoc" e6cha 2e> are reA$ired to prepare a d p$b-ish ,$ch ,ore detai-ed fi a cia- i for,atio N !hich ca act$a--1 assist the fi a [Link] 2 processD Q )a "s are partic$-ar-1 er%o$s of s,a--er b$si esses d$e to a perceptio that the1 represe t a 2reater credit ris"& )eca$se the i for,atio is ot a%ai-ab-e i other !a1s+ (M<Is !i-- ha%e to pro%ide it !he the1 see" fi a ce& 0he1 !i-- eed to 2i%e a b$si ess p-a + -ist of the co,pa 1 assets+ detai-s of the e6perie ce of directors a d ,a a2ers a d de,o strate ho! the1 ca 2i%e pro%iders of fi a ce so,e sec$rit1 for a,o$ ts pro%ided& 'rospecti%e -e ders N $s$a--1 ba "s N !i-the ,a"e a decisio based o the i for,atio pro%ided& 0he ter,s of the -oa =i terest rate+ ter,+ sec$rit1+ a d repa1,e t detai-s> !i-- depe d o the ris" i %o-%ed a d the -e der !i-- a-so !a t to ,o itor their i %est,e t& A co,,o prob-e, is ofte that the ba "s !i-- be $ !i--i 2 to i crease -oa f$ di 2 !itho$t a i crease i the sec$rit1 2i%e =!hich the (M< o! ers ,a1 be $ ab-e or $ !i--i 2 to pro%ide>&A partic$-ar prob-e, of $ certai t1 re-ates to b$si esses !ith a -o! asset base& 0hese are co,pa ies !itho$t s$bsta tia- ta 2ib-e assets !hich ca be $se to pro%ide sec$rit1 for -e ders& Khe a (M< is ot 2ro!i 2 si2 ifica t-1+ fi a ci 2 ,a1 ot be a ,ajor prob-e,& Ho!e%er+ the fi a ci 2 prob-e, beco,es %er1 i,porta t !he a co,pa 1 is 2ro!i 2 rapid-1+ for e6a,p-e !he co te,p-ati 2 i %est,e t i capita- eA$ip,e t or a acA$isitio & Ce! 2ro!i 2 co,pa ies are ab-e to fi a ce their e6pa sio p-a s fro, cash f-o! a-o e& 0he1 !i-- therefore eed to co sider raisi 2 fi a ce fro, other e6ter a- so$rces& I additio + ,a a2ers !ho are -oo"i 2 to b$1.i to a b$si ess =P,a a2e,e t b$1.i P or
2/ NIIKHILVIRMANI 16719201711

PM)IP> or b$1.o$t =,a a2e,e t b$1.o$tP or PM)7P> a b$si ess fro, its o! ers ,a1 ot ha%e the reso$rces to acA$ire the co,pa 1& 0he1 !i-- eed to raise fi a ce to achie%e their objecti%es

1.2 ROLE OF PUBLIC SECTOR BANKS IN SME FINANCING )a "s are p-a1i 2 a ,ajor ro-e i fi a ci 2 (M<s i I dia& Near-1 E2@ of the tota- (M< fi a ci 2 i 1ear 2006.07 is thro$2h ba "s& A d a,o 2 the, the ,ajor share is of p$b-ic sector ba "s i&e& ;7@& 0h$s it is c-ear that the ,ost co,,o so$rce of fi a ce for (M<s is )a " Ci a ci 2& 0here is o& of ba "s that he-p i assisti 2 the (M<s for fi a ci 2& 0he ,ai cha e- $sed b1 the (M<s %ia )a "s is (pecia-i?ed -oa s b1 %ario$s )a "s& 0he Mai reaso for choosi 2 ba " -oa s b1 (M<s co,pared to other so$rces of fi a ci 2 -i"e %e t$re capita-+ '< f$ di 2 etc is that is o -1 i terest to be paid o sta"e is to be di-$ted th$s the !ho-e co,,a d of the (M< is !ith the o! er o -1& 0here are a $,ber of 'ri%ate as !e-- as '$b-ic sector ba "s !ho assist (M< i Ci a ci 2 F207%* 1.$ S(7%+*3 O4 SME F2-/-+* 52006#076

Others 18%

Private sector abnks 25%

Public sector banks 57%

2; NIIKHILVIRMANI 16719201711

=http433!!!&b$si ess!or-d&i 3b!32009M11M19MRefor,sM0oMI,pro%eMCredi tMAccessM0oM(M<s&ht,- -ast accessed o ; Fa + 2010> 0he ro-e of )a "s+ i 2e era-+ has beco,e %er1 i,porta t i the abo%e co te6t 0he (M< sectorIs de,a ds !ere co,prehe si%e-1 ta"e care of b1 the '$b-ic sector )a "s thro$2h se%era- i itiati%es s$ch as4

(i 2-e Ki do! dispe satio + R$ic" decisio !ith -east 0$r aro$ d 0i,e thro$2h specia--1 co stit$ted (M< Ce--s+ a d abo%e a--+ )etter ser%ice& C-$[Link] (che,es are a-so o the -ist of the )a "Is i itiati%es& 0he )a " prioriti?ed the fo--o!i 2 ,ore partic$-ar-14. 'ro%isio of ti,e-1 a d adeA$ate credit to the (M<s+ < co$ra2i 2 0ech o-o21 Gp 2radatio + for better A$a-it1 a d co,petiti%e ess of their prod$ct=s>+ a d 'roacti%e-1 detecti 2 sic" a d %iab-e $ its i ti,e so as to $rse the, bac" to hea-th thro$2h appropriate [Link]$ct$ri 2& Ci a ci 2 of C-$sters !ith adeA$ate a d co cessio a- )a " fi a ce o -ibera- ter,s i se%era- poc"ets for specified acti%ities co ce trated i these poc"ets+ !hich !o$-d res$-t i red$ci 2 tra sactio cost a d 2reater eco o,ies of sca-e&

C%*82, ,( SME 3*+,(% 4%(1 P7<:2+ S*+,(% B/-;3 0he tab-e be-o! 2i%es the stat$s of credit f-o! to the ,icro a d s,a-e terprises =(M<> sector fro, the p$b-ic sector ba "s si ce 20004
26 NIIKHILVIRMANI 16719201711

T/<:* 1.C C%*82, ,( SME 3*+,(% 4%(1 P7<:2+ S*+,(% B/-;3 Y*/% N*, B/-; C%*82, ,( SME3 G (4 NBC

C%*82, 200/ 816/27 /60/; 1/&6@ 200; 8/1291 /E/00 1/&2 2006 8969;/ /97/8 12&; 2007 /77E99 ;29EE 11&1 200E ;;EE/9 ;E27E 10&/ 2009 71E772 6768/ 9&/ 2010 101761/ E2/92 E&1 2011 181770; 10/708 E&0 =http433!!!&rbi&or2&i 3scripts3'$b-icatio sVie!&asp6SidT11998 accessed o 11 Fa + 2012> F207%* 1.C S,*=3 F(% SME L(/-3 B? P7<:2+ S*+,(% B/-;3

-ast

27 NIIKHILVIRMANI 16719201711

App-icatio for -oa b1 (M< to -oca- bra ch of a partic$-ar ba " i that area

& I spectio 3($r%e1 of (M< b1 the <6ec$ti%es of that Loca- bra ch&

(e di 2 the *oc$,e ts of s$r%e1 b1 Loca- bra ch to (M<CC bra ch

'repari 2 crede tia-s of 'ro,oters a d fir, b1 (M<CC bra ch a d i %esti2ati 2 the sa,e <sti,ati 2 the a,o$ t of -oa to be sa ctio ed a d for!ardi 2 the doc$,e ts for sa ctio i 2& If the -oa is bee sa ctio ed b1 the ce tra- a$thorit1 the disb$rse,e t of the -oa a,o$ t i to acco$ t of the (M<&

0he abo%e fi2$re sho!s the steps for a%ai-i 2 fi a ce thro$2h '$b-ic sector )a "s $si 2 -oa s& Here is the brief descriptio of the abo%e sho! proced$re4 Cirst of a-- the (M< !ho !a ts to a%ai- -oa has to %isit the -ocabra ch office of the ba " of their area+ !here b1 the -oa app-icatio is bee fi--ed b1 the (M<& After that the e6ec$ti%es of that bra ch chec" !hether a-- the

ecessar1 doc$,e ts are pro%ided b1 the (M< or ot+ the if a-ecessar1 doc$,e ts are s$b,itted the e6t step co,es !hereb1 the officia-s of that -oca- bra ch 2o to the pre,ises of that (M< a d j$st ha%e a brief s$r%e1 of pro,oter as !e-- as the pre,ises&

2E NIIKHILVIRMANI 16719201711

 After the1 are satisfied the1 se d the fi-e of (M< -oa s& Khere b1 the credit appraisata"es

ecessar1

doc$,e ts to the (M<CC bra ch+ !hich is a specia- bra ch for p-ace+ !hich co sist of credit appraisa- of pro,oter+ fi a cia- appraisa-+ deter,i i 2 cost of project+ $ dersta di 2 %ario$s ,ea s of fi a ce $sed+ profitabi-it1 esti,ate+ cash f-o! projectio s + ,ar"eti 2 appraisa- etc&+ !hich is e6p-ai ed i otS If the (M<CC bra ch is satisfied !ith the detai-s the it for!ard the reA$est of 2ra ti 2 -oa to the sa ctio i 2 a$thorit1& A d fi a--1 after the %erificatio b1 sa ctio i 2 a$thorit1+ the e6t sectio & 0his step bri 2s

o$t the c-ear pict$re !hether the -oa sho$-d be 2i%e to the (M< or

disb$rse,e t of -oa a,o$ t ta"es p-ace i the acco$ t of that (M< 0his !ho-e proced$re ri2ht fro, app-icatio -oa to disb$rse,e t of a,o$ t ta"es appro6i,ate-1 20.2; da1s as the proced$re

i %o-%es a a-1sis of doc$,e ts b1 %ario$s bra ches a d th$s the ,o%e,e t of doc$,e ts a,o 2st the,+ if a-- this proced$re !o$-d ha%e ta"e p-ace at si 2-e p-ace the it !o$-d ta"e o -1 10.12 da1s for disb$rse,e t& (o,e '$b-ic sector )a "s offeri 2 (M< fi a ci 2 sche,es are as fo--o!s4 1> (tate ba " of I dia a d its s$bsidiaries I dia 2> A--ahabad )a " )a "
29 NIIKHILVIRMANI 16719201711

7> Ce tra- )a " of

E> '$ jab Natio a-

8> 7rie ta- )a " of Co,,erce /> )a " of )aroda ;> )a " of I dia 6> '$ jab J (i d )a " )a " S,/,* B/-; (4 I-82/

9> I*)I )a " 10> I dia )a " 11> Ca ada )a " 12> Corporatio

(tate )a " of I dia has bee p-a1i 2 a %ita- ro-e i the de%e-op,e t of s,a-sca-e i d$stries si ce 19;6&0he )a " has fi a ced o%er E -a"hs ((I $ its i the co$ tr1& It has ;; specia-i?ed ((I bra ches+ 99 bra ches i i d$striaestates a d ,ore tha /00 bra ches !ith (I) di%isio s& 0he )a " fi a ces for (,a-- )$si ess acti%ities !hich are of specia- si2 ifica ce to a -ar2e $,ber of peop-e as ,a 1 of these acti%ities ca be started !ith re-ati%e-1 -o!er i %est,e t a d !ith o specia- s"i--s o the part of the e trepre e$rs& 0he fo--o!i 2 are the (M< prod$cts offered b1 (tate )a " 7f I dia4 Co,,odit1 'ac"ed Kareho$se Receipt Ci a ci 2 ($rabhi *eposit (che,e 0raders <as1 Loa (che,e ((I Loa s )$si ess C$rre t Acco$ ts 7pe 0er, Loa Retai- 0rade *octor '-$s
80 NIIKHILVIRMANI 16719201711

 ()I (hoppe C1ber '-$s (M< Credit '-$s (,a-- )$si ess Credit Card (M< 'etro Credit *a- Mi-- '-$s 'ar1ata '-$s A$to Loa s 0ra sport 7perators Rice Mi--s '-$s (choo- '-$s =http433!!!&sbi&co&i 3$ser&ht, -ast accessed o 27 No%+ 2009> IDBI B/-; I*)I )a " has bee a d shorte the 0$r acti%e-1 e 2a2ed i pro%idi 2 a ,ajor thr$st to fi a ci 2 of (M<s& Kith a %ie! to i,pro%i 2 the credit de-i%er1 ,echa is, aro$ d 0i,e =0A0>+ I*)I )a " has de%e-oped a ai+ specia- b$si ess ,ode- to ser%e the (M<s i I dia& 0he )a " has set $p 2/ Cit1 (M< Ce tres =C(Cs> across I dia i M$,bai+ *e-hi+ Ko-"ata+ Che )a 2a-ore+ H1derabad+ '$ e to a,e a fe!& 0hese C(Cs are the )a "Ls h$bs !hi-e dedicated (M< des"s ha%e bee set $p i se%era- bra ches across these cities& 0hese bra ches ser%e as fro t offices for sa-es de-i%er1 a d c$sto,er ser%ice& I*)I )a " has a !ide %ariet1 of prod$cts a d ser%ices cateri 2 to the eeds of differe t se2,e ts !ithi s,a-- b$si ess& Lo 2 1ears of e6perie ce i
81 NIIKHILVIRMANI 16719201711

bei 2 the tr$sted part er of -ar2e a d ,id corporates has tra s-ated i to deeper $ dersta di 2 of eeds of b$si ess a d i d$stries& 0he )a " has para,eterised prod$cts for tra sporters+ dea-ers+ traders+ a d %e dors& I additio + it has a separate 0ra sactio )a "i 2 Bro$p that has e6pertise i prod$cts -i"e cash ,a a2e,e t ser%ices+ -etter of credit+ ba " 2$ara tees a d treas$r1 prod$ctsO I*)I )a " pro%ides fo--o!i 2 (M< prod$cts4 ($-abh V1apar Loa *ea-er Ci a ce C$ di 2 G der CBCM(< *irect Credit (che,e.(I*)I 'referred C$sto,er (che,e Ve dor Ci a ci 2 'ro2ra,,e Le di 2 a2ai st the sec$rit1 of f$t$re Credit Card Recei%ab-es Kor"i 2 Capita- Ci a ci 2 Ci a ce to Medica- 'ractitio ers Loa s to (RK70s (M< Hosier1 (pecia- C$rre t Acco$ t =http433!!!&idbi&co,3s,e3 -ast accessed o 27 No%+ 2009>

B/-; (4 B/%(8/ )a " of )aroda started its operatio i the 1ear 190E i )aroda tho$2h its Corporate Ce tre is i M$,bai o!& Its ,issio is Pto be a top ra "i 2 Natio a- )a " of I ter atio a- (ta dards co,,itted to a$2,e t sta"e
82 NIIKHILVIRMANI 16719201711

ho-dersL %a-$e thro$2h co cer + care a d co,pete ceO& )a " of )aroda offers fo--o!i 2 (M< prod$cts a d ser%ices4

)aroda Vid1astha-i Loa )aroda Aro21adha, Loa )aroda La2h$ Gdh1a,i Credit Card )aroda Artisa s Credit Card 0ech o-o21 Gp2radatio sche,e (M< short ter, -oa s (M< ,edi$, ter, -oa s Co,posite Loa s

=http433!!!&ba "ofbaroda&co,3bbs3s,e&asp -ast accessed o 26 No%+ 2009> U-2(- B/-; (4 I-82/ G io )a " is co,,itted to e6te d its best ser%ices to Micro+ (,a-- a d Medi$, e terprises a d at a %er1 co,petiti%e price& G io )a " of I dia has adopted a po-ic1 pac"a2e for steppi 2 $p credit to (,a-- J Medi$, < terprises& G io )a " of I dia has adopted a po-ic1 pac"a2e for steppi 2 $p credit to (,a-- J Medi$, < terprises 9(M<: !ith the appro%a- of the )oard i its ,eeti 2 he-d o 80th (epte,ber 200; a d s$bseA$e t-1 fo--o!i 2 steps ha%e bee i itiated i this directio & G io Hi2h 'ride G io 'roc$re G io ($pp-1 G io C1ber G io (M< '-$s
88 NIIKHILVIRMANI 16719201711

 G io 0ra sport Ci a ci 2 (MALL H7(I<RU GNI0( i Ko-"ata =http433!!!&$ io ba "ofi dia&co&i 3cbMs,e&asp6 -ast accessed o 27 No%+ 2009> C/-/%/ B/-; Ca ara )a " !as fo$ ded b1 (hri A,,e,ba- ($bba Rao 'ai+ a 2reat %isio ar1 a d phi-a thropist+ i F$-1 1906+ at Ma 2a-ore+ the a s,a-- port i Kar ata"a 0he )a " has adopted a 'o-ic1 for -e di 2 to (M< sector+ i t$ e !ith Bo%t& of I dia 2$ide-i es as per M(M<* Act+ 2006+ !hich has co,e i to force !&e&f& 2 d 7ctober+ 2006& L7AN 'R7*GC0( S+.*1*3 4(% C/=2,/: I-9*3,1*-, 0er, -oa for acA$isitio of fi6ed assets (ta db1 credit for capita- e6pe dit$re (ta db1 ter, -oa sche,e for Appare- <6porters Loa sche,e for rei,b$rse,e t of i %est,e t ,ade i fi6ed assets b1 (M<s (oft -oa sche,e for (o-ar Kater Heaters (che,e for < er21 (a%i 2s for (M<s 0ech o-o21 Gp2radatio C$ d sche,e =0GC(> for te6ti-e J j$te i d$stries i (M< sector Credit -i "ed capita- s$bsid1 sche,e =CLC((>
8/ NIIKHILVIRMANI 16719201711

 Loa s $ der I terest ($bsid1 <-i2ibi-it1 Certificate =I(<C> (che,e of Khadi J Vi--a2e I d$stries Co,,issio =KVIC> to e-i2ib-e i stit$tio s S+.*1*3 4(% "(%;2-0 C/=2,/: (i,p-ified 7pe Cash Credit =(7CC> 7pe Cash Credit =7CC> Micro fi a ci 2 joi t -iabi-it1 2ro$ps =Ha d-oo, !ea%er J A2arbathi ,a $fact$rer 2ro$ps> La2h$ Gdh1a,i Credit Card =LGCC> )i-- of <6cha 2e disco$ ti 2 faci-it1 to (,a-- < terpre e$rs at co cessio a- rate of i terest =)<.(<>

SCOPE AND OBJECTIVES OF THE STUDY

B.1 N**8 (4 ,.* 3,78? 0he researches that !ere co d$cted i past b1 the %ario$s professio a-s are i forei2 co te6t a d ot i I dia co te6t& (t$d1 re-ati 2 to (M<s+ their prob-e,s a d so$rce of fi a ci 2 has bee do e b$t re2ardi 2 the (M< fi a ci 2 sche,es of p$b-ic sector ba "s has ot bee do e& 0his 2ap has bee ide tified a d it has -ed to the prese t research to be $ derta"e & (o+ the eed !as fe-t to co%er the areas e2-ected& 0h$s+ here a st$d1 o (M< fi a ci 2 sche,es of p$b-ic sector ba "s !as ta"e care of& B.2 S+(=* (4 ,.* 3,78? 0he scope of this st$d1 !as -i,ited to L$dhia a cit1 o -1&

[Link]<)*+,29*3 (4 ,.* 3,78? 7bjecti%es are the 2$idi 2 -i2hts of a st$d1& 0he prese t st$d1 !as $ derta"e to achie%e the fo--o!i 2 objecti%es4 .

0o " o! abo$t the %ario$s (M< fi a ci 2 sche,es of p$b-ic sector ba "s a d their $sa2e&

0o " o! the effecti%e ess of %ario$s (M< fi a ci 2 sche,es of p$b-ic sector ba "s&

0o " o! the prob-e,s faced b1 (M<s i 2etti 2 credit fro, p$b-ic sector ba "s&

0o " o! the be efits of (M< fi a ci 2 sche,es of the p$b-ic sector ba "s&

86 NIIKHILVIRMANI 16719201711

0o chec" the satisfactio -e%e- of (,a-- a d Medi$, e terprises re2ardi 2 (M< fi a ci 2 sche,es of the p$b-ic sector ba "s&

87 NIIKHILVIRMANI 16719201711

METHODOLOGY
Research Methodology is a way to systematically solve the research problem. The Research Methodology includes the various methods and techniques for conducting a Research. Marketing Research is the systematic design, collection, analysis and reporting of data and finding relevant solution to a specific marketing situation or problem. . !lesinger and M.!tephenson in the encyclopedia of !ocial !ciences define Research as the manipulation of things, concepts or symbols for the purpose of generali"ing to e#tend, correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art. Research is+ th$s+ a ori2i a- co trib$tio to the e6isti 2 stoc" of of scie tific " o!-ed2e ,a"i 2 for its ad%a ce,e t& 0he p$rpose of Research is to disco%er a s!ers to the R$estio s thro$2h the app-icatio effecti%e ,a proced$res& 7$r project has a specified fra,e!or" for co--ecti 2 data i a er& ($ch fra,e!or" is ca--ed #R*3*/%+. D*320-'& 0he research process fo--o!ed b1 $s co sists of fo--o!i 2 steps4 $.1 RESEARCH DESIGN 0his research !as descripti%e a d co c-$sio orie ted research& C(-+:732(- O%2*-,*8 R*3*/%+.A .Research desi2 ed to assist the decisio ,a"er i the sit$atio & I other !ords it is a research !he !e 2i%e o$r o! %ie!s abo$t the research&
8E NIIKHILVIRMANI 16719201711

 D*3+%2=,29* R*3*/%+.A #A t1pe of co c-$si%e research+ !hich has as its ,ajor objecti%e the descriptio research !here i researcher has of so,ethi 2.$s$a--1 ,ar"et o co tro- o%er %ariab-e& It j$st characteristics or f$ ctio s& I other !ords descripti%e research is a prese ts the pict$re+ !hich has a-read1 st$died&

$.2 SAMPLING DESIGN (a,p-i 2 ca be defi ed as the sectio of so,e part of a a22re2ate or tota-it1 o the basis of !hich j$d2,e t or a i fere ce abo$t a22re2ate or tota-it1 is ,ade& 0he sa,p-i 2 desi2 fo--o!i 2 areas4 . $.2.1 U-29*%3* (4 ,.* 3,78?.0he $ i%erse co,prises of t!o parts as theoretica- $ i%erse a d accessib-e $ i%erse T.*(%*,2+/: 7-29*%3*# It i c-$des a-- the (M<s thro$2ho$t the $ i%erse& A++*332<:* 7-29*%3*# It i c-$des the (M<s i L$dhia a cit1& $.2.2 S/1=:* F%/1*#(a,p-e fra,e !as (,a-- a d Medi$, e terprises a-o%er I dia& $.2.B S/1=:* U-2,# (a,p-i 2 $ it is the basic $ it co tai i 2 the e-e,e ts of the $ i%erse to be sa,p-ed& 0he sa,p-i 2 $ it of the prese t st$d1 !as (M<s -ocated i L$dhia a cit1 i '$ jab&
89 NIIKHILVIRMANI 16719201711

he-ps i

decisio

,a"i 2 i

the

$.2.$ S/1=:* S2H*# (a,p-e si?e is the $,ber of e-e,e ts to be i c-$ded i a st$d1& Keepi 2 i ,i d a-- the co strai ts 100 respo de ts !ere se-ected& $.2.C S/1=:2-0 T*+.-2D7*3# 0he sa,p-i 2 tech iA$es $sed !ere co %e ie ce tech iA$e a d si,p-e ra do, sa,p-i 2 tech iA$e& $.B DATA COLLECTION AND ANALYSIS $.B.1 D/,/ C(::*+,2(-A I for,atio has bee co--ected fro, both 'ri,ar1 a d (eco dar1 so$rces of data co--ectio & S*+(-8/%? 3(7%+*3# (eco dar1 data are those+ !hich ha%e a-read1 bee co--ected b1 so,eo e e-se+ !hich a-read1 had bee passed thro$2h the statistica- process& (eco dar1 data had bee co--ected thro$2h !ebsites+ e!spapers a d jo$r a-s& P%21/%? 3(7%+*3# 'ri,ar1 data are those+ !hich are co--ected are fresh a d for the first ti,e a d th$s happe to be ori2i a- i character& 'ri,ar1 data had bee A$estio te-epho ic i ter%ie!& <6 T((:3 (4 A-/:?323 /-8 P%*3*-,/,2(-A 0o a a-1?e the data obtai ed !ith the he-p of A$estio !ere $sed4 T((:3 (4 A-/:?323A # S711/,*8 S+(%*A 0his too- !as $sed for the a a-1sis of A$estio s based o Li"ert sca-e&
/0 NIIKHILVIRMANI 16719201711

co--ected b1 co d$cti 2 s$r%e1s thro$2h

aire+ !hich i c-$de se%era- A$estio s a d perso a- a d

aire+ fo--o!i 2 too-s

 "*20.,*8 A9*%/0* S+(%*A 0his too- !as $sed to ca-c$-ate hi2hest a d -o!est ra "& T((:3 (4 P%*3*-,/,2(-A . T/<:*3A 0his too- !as $sed to prese t the data i tab$-ar for,& B/% G%/=.3 /-8 P2* C./%,34 0hese too-s !ere $sed for a a-1sis of data&

/1 NIIKHILVIRMANI 16719201711

ANALYSIS AND INTERPETATION

1. D*1(0%/=.2+ P%(42:* (4 R*3=(-8*-,3. T/<:* C.1 D*1(0%/=.2+ F*/,7%*3 D*1(0%/=.2+3 D*320-/,2(7! er 'art er 7ther T(,/: L(+/,2(L$dhia a 7ther T(,/: G*-8*% Ma-e Ce,a-e T(,/: B732-*33 Hosier1 7ther T(,/: A-/:?323 /-8 I-,*%=%*,/,2(-A It had bee a a-1?ed fro, the tab-e that 78@ of the respo de ts !ere the o! er+ 19@ !ere [Link] ers a d 6@ !ere at so,e other desi2 atio &100@ of the respo de ts !ere fro, the L$dhia a cit1& 9;@ of the respo de ts !ere ,a-e a d o -1 ;@ !ere fe,a-e& A-- the respo de ts i&e& 100@ !ere fro, the hosier1 b$si ess&
/2 NIIKHILVIRMANI 16719201711

N(. O4 R*3=(-8*-,3 78 19 6 100 100 0 100 9; ; 100 100 0 100

GA0* O4 R*3=(-8*-,3 78 19 6 100 100 0 100 9; ; 100 100 0 100

(o it had bee i terpreted that ,a6i,$, of the respo de ts !ere ,a-e+ o! er of the b$si ess a d fro, L$dhia a cit1& A-- the respo de ts !ere fro, hosier1 b$si ess&

2. "./, /%* ,.* 3(7%+*3 (4 42-/-+* 73*8 <? ?(7% *-,*%=%23*I T/<:* C.2 T( K-(@ T.* S(7%+*3 O4 F2-/-+* U3*8 B? SME3 S(7%+*3 (4 F2-/-+* 7! ers Ci a ci 2 'ri%ate fi a ciai stit$tio s <A$it1 fi a ce )a " fi a ci 2 Ve t$re capitaHire p$rchase a d -easi 2 )$si ess a 2efi a ci 2 0otaN(. O4 R*3=(-8*-,3 E0 /6 12 7; 1/ 2/ 29 2E0 F207%* C.1 T( K-(@ T.* S(7%+*3 O4 F2-/-+* U3*8 B? SME3 GA0* O4 R*3=(-8*-,3 29 16 / 27 ; 9 10 100

/8 NIIKHILVIRMANI 16719201711

$o. %f Respondents
%wners /inancing 0rivate financial institutions

).( '( -( &'(

1quity finance 2ank financing 3enture capital 4ire purchase and leasing 2usiness angel financing

&,( +(

)*(

A-/:?323 /-8 I-,*%=%*,/,2(-A# 0he $,ber of respo de ts had i creased fro, 100 to 2E0+ as this is a ,$-[Link] A$estio & Cro, the s$r%e1 it !as fo$ d that respo de ts $se ,$-tip-e so$rces for fi a ci 2 their e terprises& 0he fi2$re sho!s that 29@ respo de ts re-1 o their o! f$ ds for fi a ci 2 (M<s&2E@ respo de ts $se ba " fi a ci 2 a d 16@ ta"e credit fro, pri%ate fi a cia- i stit$tio s& <A$it1 fi a ce a d %e t$re capita- are the -east $sed&

// NIIKHILVIRMANI 16719201711

B. R/-; ,.* (<3,/+:*3 ,./, /%* 4/+*8 <? ?(7% *-,*%=%23* 2- 2,3 0%(@,. 4%(1 1 ,( CJ 1 <*2-0 ,.* <200*3, (<3,/+:*. T/<:* C.B O<3,/+:*3 I- T.* G%(@,. O4 E-,*%=%23*

/; NIIKHILVIRMANI 16719201711

O<3,/+:*3

0he freA$e t eed to re e! the eA$ip,e t I stabi-it1 of de,a d for prod$ct or ser%ice 7btai i 2 adeA$ate fi a ci 2 Lo! profitabi-it1 of the sector 0a6atio -e%e-s

R/-; R/-; R/-; R/-; R/-; "*20.,* 1 2 B $ C 8 A9*%/0* S+(%* 12 19 2E 2/ 17 81; 7 /0 11 80 16 27 12 26 16 17 21 1E 2E E 29 11 88 E 27 1; 86/ 217 8/9 2;;

A-/:?323 /-8 I-,*%=%*,/,2(-A # I this abo%e tab-e !ei2hted a%era2e score ,ethod is $sed !here 1 ra " is 2i%e to the bi22est obstac-e i the 2ro!th a d ; is the -east i,porta t ra "& As i the abo%e tab-e %ario$s obstac-es faced b1 the e terprises i their 2ro!th are bei 2 ra "ed& 0he obstac-e of obtai i 2 adeA$ate fi a ce is ra "ed first !ith s$,,ated score of 217& (eco d ra " is 2i%e eed to re e! the eA$ip,e t& 0he Co$rth ra " is 2i%e ser%ice& Cro, the abo%e tab-e it ca be co c-$ded that obtai i 2 adeA$ate fi a ce is the bi22est obstac-e faced b1 (M<s i their 2ro!th fo--o!ed b1 b$rde of hea%1 ta6es o the,& <as1 fi a ci 2 sche,es sho$-d be pro%ided& Rates of ta6es sho$-d a-so be decreasedD it !i-- he-p i the 2ro!th of (M<s i I dia&
/6 NIIKHILVIRMANI 16719201711

to the

ta6atio -e%e-s char2ed b1 the 2o%er ,e t a d third ra " to the freA$e t to the -o! profitabi-it1 of the sector a d fifth to the i stabi-it1 of de,a d of prod$ct or

$. H/9* ?(7 *9*% %/23*8 42-/-+* 4%(1 =7<:2+ 3*+,(% </-;3I T/<:* C.$ T( K-(@ ".*,.*% SME3 R/23* F2-/-+* F%(1 P7<:2+ 3*+,(% B/-;3 R/23*8 F2-/-+* Ues No 0otaN(. O4 R*3=(-8*-,3 100 0 100 F207%* C.2 T( K-(@ ".*,.*% SME3 R/23* F2-/-+* F%(1 P7<:2+ 3*+,(% B/-;3 GA0* O4 R*3=(-8*-,3 100 0 100

$o. %f Respondents

.(

5es $o

)..(

A-/:?323 /-8 I-,*%=%*,/,2(-A#

0he abo%e fi2$re sho!s that 100@ of the respo de ts ha%e raised fi a ce fro, the p$b-ic sector ba "s &0his sho!s that p$b-ic sector ba "s are the ,ost pop$-ar so$rce of (M< fi a ci 2& 0he reaso is -o! rates of i terest !hich 2i%es the, capita- at -o! cost& 0he ser%ice fees a d ba " char2es are a-so -ess !hich res$-ts i -o! cost of fi a ci 2 tha the other so$rces&

C. "./, ,?=* (4 :(/- 23 ,/;*- <? ?(7I T/<:* C.C T?=* O4 L(/T?=* (4 L(/($-abh V1apar -oa 0ra sport -oa 'ar1ata p-$s -oa 7pe ter, -oa Kor"i 2 capita- -oa 0otaN(. O4 R*3=(-8*-,3 67 2; ;6 8E ;/ 2/0 F207%* C.B T?=* O4 L(/GA0* O4 R*3=(-8*-,3 2E 10 28 16 28 100

/E NIIKHILVIRMANI 16719201711

$o. %f Respondents

&7(

&6( !ulabh 3yapar loan Transport loan 0aryatan plus loan %pen term loan ).( &7( 8orking capital loan

)*(

A-/:?323 /-8 I-,*%=%*,/,2(-A 0he $,ber of respo de ts has i creased fro, 100 to 2E0+ as this is a ,$-[Link] A$estio 0he abo%e 2raph sho!s that 2E@ of the respo de ts ha%e ta"e ($-abh V1apar -oa &28@ of the respo de ts ha%e ta"e 'ar1ata p-$s a d !or"i 2 capita- -oa & (o ($-abh V1apar -oa is the ,ost pop$-ar sche,e of p$b-ic sector ba "s for fi a ci 2 (M<s&

6. F(% @./, =7%=(3*! ?(7% *-,*%=%23* ./3 ,/;*- :(/-I T/<:* C.6 P7%=(3* O4 T/;2-0 L(/P7%=(3* O4 T/;2-0 L(/Rea- estate acA$isitio to ho$se the b$si ess 0o i crease the
NIIKHILVIRMANI 16719201711

N(. O4 R*3=(-8*-,3 /0 68

GA0* O4 R*3=(-8*-,3 1; 2/
/9

prod$ctio Co str$ctio + re o%atio or -easeho-d i,pro%e,e ts Cor the f-oori 2 of i %e tor1 a d for !or"i 2 capitaCor ,oder i?atio a d $p2radatio of tech o-o21 0ota-

88 71 ;E 26; F207%* C.$

12 27 22 100

P7%=(3* O4 T/;2-0 L(/$o. %f Respondents Real estate acquisition to house the business To increase the production 9onstruction, renovation or leasehold improvements /or the flooring of inventory and for working capital )&( /or moderni"ation and upgradation of technology

&&(

)-(

&+(

&,(

A-/:?323 /-8 I-,*%=%*,/,2(-A# 0he $,ber of respo de ts has i creased fro, 100 to 26;+ as this is a ,$-[Link] A$estio &27@ of respo de ts ha%e ta"e -oa for the f-oori 2 of i %e tor1 a d !or"i 2 capita- a d 2/@ to i crease the si?e of prod$ctio & Most of the fir,s are ta"i 2 -oa s for f$-fi--i 2 their freA$e t eeds for the capita-& Cor tech o-o2ica- $p2radatio a d ,oder i?atio + 22@
;0 NIIKHILVIRMANI 16719201711

of the respo de ts ha%e ta"e -oa sho!i 2 that (M<s reA$ire capita- to $p2rade their tech o-o2ies !hich is cha 2i 2 at a %er1 fast phase& 7. R/-; ,.* <*-*42,3 (4 ,.*3* 3+.*1*3 (- ,.* 3+/:* (4 1#CJ 1 <*2-0 ,.* 1(3, 21=(%,/-, /-8 C <*2-0 ,.* :*/3, 21=(%,/-,. T/<:* C.7 B*-*42,3 O4 SME F2-/-+2-0 S+.*1*3 B*-*42,3 )etter (er%ice (i 2-e Ki do! *ispe satio Attracti%e fi a ci 2 co ditio s <as1 access Lo! rates of I terest R/-; R/-; R/-; R/-; R/-; 1 2 B $ C E E /0 / /0 12 12 2E 12 86 12 22 20 82 1/ 80 80 / 80 6 8E 2E E 22 / "*20.,*8 A9*%/0* S+(%* 87E 8;E 212 8;/ 19E

A-/:?323 /-8 I-,*%=%*,/,2(-A # I this abo%e tab-e !ei2hted a%era2e score ,ethod !as $sed !here 1 ra " is the ,ost i,porta t ra " a d ; is the -east i,porta t ra "& As i the abo%e tab-e %ario$s be efits of (M< fi a ci 2 sche,es !ere bei 2 ra "ed& 0he be efit ra "ed first !ith s$,,ated score of 19E !as -o! rates of i terest& 0his sho!s that p$b-ic sector ba "s fi a ci 2 sche,es pro%ide fi a ce at cheap rates& (eco d ra " is !ith s$,,ated score of 212 !as 2i%e to the attracti%e fi a ci 2 co ditio s of these sche,es& 0he sche,es are desi2 ed i s$ch a !a1 that ,a"es fi a ci 2 easier for (M<s&

;1 NIIKHILVIRMANI 16719201711

0he third ra " !as 2i%e to eas1 access& 0he fo$rth ra " !as 2i%e to (i 2-e !i do! dispe satio a d fifth to )etter ser%ice+ bei 2 -east preferred b1 the respo de ts& 0his sho!s that respo de ts !ere ot satisfied b1 the ser%ice pro%ided b1 these ba "s& Cro, the abo%e tab-e it ca be co c-$ded that Lo! rates of i terest !as ,ost preferred of a-- other be efits& Attracti%e fi a ci 2 co ditio s a d eas1 access !ere e6t i the prefere ce order& (i 2-e !i do! dispe satio !as the e6t preferred be efit& )etter ser%ice !as the -east preferred be efit b1 the respo de ts& K. "./, @*%* ,.* =%(<:*13 4/+*8 <? ?(7% *-,*%=%23* 2- %/232-0 42-/-+* 4%(1 =7<:2+ 3*+,(% </-;3I T/<:* C.K P%(<:*13 F/+*8 B? SME3 I- R/232-0 F2-/-+* P%(<:*13 F/+*8 I s$fficie t co--atera'oor doc$,e tatio *e-a1 i the sa ctio of -oa Cost i %o-%ed is hi2h )ias ess Hi2h rate of i terest 0otaN(. O4 R*3=(-8*-,3 6E 89 E0 2; 76 20 80E F207%* C.C P%(<:*13 F/+*8 B? SME3 I- R/232-0 F2-/-+* GA0* O4 R*3=(-8*-,3 22 18 26 E 2; 6 100

;2 NIIKHILVIRMANI 16719201711

$o. %f Respondents :nsufficient collateral *( 0oor documentation elay in the sanction of loan )7( 6( &*( 9ost involved is high 2iasness 4igh rate of interest

&&(

&-(

A-/:?323 /-8 I-,*%=%*,/,2(-A# 0he $,ber of respo de ts has i creased fro, 100 to 80E+ as this is a ,$-[Link] A$estio & 0he ,ost co,,o prob-e, faced b1 (M<s i raisi 2 fi a ce is the de-a1 ,ade i sa ctio i 2 the -oa !ith 26@&0he p$b-ic sector ba " e,p-o1ees !or" %er1 s-o!-1 a d $s$a--1 a app-icatio ta"es a -ot of ti,e for appro%a-&2;@ respo de ts sa1 bias ess !as o e a other prob-e, faced b1 the,&22@ respo de ts fi d the i abi-it1 to pro%ide s$fficie t co--atera- as a prob-e,& 9. "./, /%* ,.* 1(3, +(11(- %*/3(-3 029*- ,( ?(7% *-,*%=%23* <? ,.* =7<:2+ 3*+,(% </-; 4(% %*)*+,2-0 /- /==:2+/,2(- 4(% L(/-I T/<:* C.9 R*/3(-3 F(% R*)*+,2-0 A- A==:2+/,2(- F(% L(/R*/3(-3 0he ,a a2e,e t tea, is too
NIIKHILVIRMANI 16719201711

N(.O4 R*3=(-8*-,3 2E

GA0* O4 R*3=(-8*-,3 11
;8

i e6perie ced 0he app-icatio did ot ,eet the criteria 0he app-icatio !as ot correct-1 co,p-eted 'oor credit histor1 0he e terprise co$-d ot pro%ide e o$2h 2$ara tees Not a profitab-e %e t$re 0otaF207%* C.6

/8 2/ /E 60 ;/ 2;7

17 9 19 28 21 100

R*/3(-3 F(% R*)*+,2-0 A- A==:2+/,2(- F(% L(/$o.%f Respondents The management team is too ine#perienced The application did not meet the criteria The application was not correctly completed 0oor credit history

&)(

))(

),(

&7(

'(

The enterprise could not provide enough guarantees $ot a profitable venture

)'(

A-/:?323 /-8 I-,*%=%*,/,2(-A# 0he $,ber of respo de ts has i creased fro, 100 to 80E+ as this is a ,$-[Link] A$estio & 0he abo%e fi2$re sho!s that 28@ respo de ts sa1s that the ,ost co,,o reaso 2i%e b1 the ba "s for rejecti 2 a app-icatio is that the1 co$-d ot pro%ide e o$2h 2$ara tees&21 @ sa1s that ba "s reject a app-icatio beca$se the1 be-ie%e that it is ot a profitab-e %e t$re&19@

;/ NIIKHILVIRMANI 16719201711

sa1s a app-icatio 2ot rejected beca$se of poor credit histor1 as ba "s -ie o the past perfor,a ce of e terprises before 2ra ti 2 a 1 -oa & 10. "./, 4/+,(%3 8*1(,29/,* ?(7 2- /==:?2-0 4(% 42-/-+* 4%(1 ,.*3* 3+.*1*3 (4 =7<:2+ 3*+,(% </-;3I T/<:* C.10 F/+,(%3 ,./, D*1(,29/,* I- A==:?2-0 4(% F2-/-+* F/+,(%3 ,./, D*1(,29/,* Ke !ere t$r ed do! before 'roced$re to obtai this t1pe of fi a ci 2 is too co,p-icated 0he process is -e 2th1 0oo ,$ch of doc$,e tatio is reA$ired 0otaF207%* C.7 F/+,(%3 ,./, D*1(,29/,* I- A==:?2-0 4(% F2-/-+*
$o. %f Respondents

N(. O4 R*3=(-8*-,3 /0 2; 62 8E 16;

GA0* O4 R*3=(-8*-,3 2/ 1; 8E 28 100

&7(

&+(

8e were turned down before 0rocedure to obtain this type of financing is too complicated The process is lengthy

)-( 76( Too much of documentation is required

A-/:?323 /-8 I-,*%=%*,/,2(-A#

0he $,ber of respo de ts has i creased fro, 100 to 16;+ as this is a ,$-[Link] A$estio & 0he abo%e fi2$re sho!s that 8E@ respo de ts sa1s that the factor that de,oti%ates the, for app-1i 2 for fi a ce fro, these sche,es is the -e 2th1 process i %o-%ed&2/@ respo de ts sa1s that the1 !ere t$r ed do! before&28@ respo de ts sa1s that the1 do ot app-1 for -oa fro, these sche,es as too ,$ch of doc$,e tatio is reA$ired& 11. A%* ,.* P%29/,* 3*+,(% </-;3 SME 42-/-+2-0 3+.*1*3 /%* <*,,*% ,./SME 42-/-+2-0 3+.*1*3 (4 =7<:2+ 3*+,(% </-;3I T/<:* C.11 ".*,.*% P%29/,* S*+,(% B/-;3 S+.*1*3 A%* B*,,*% T./- P7<:2+ S*+,(% B/-;3 S+.*1*3 P%29/,* S*+,(% B/-; S+.*1*3 A%* B*,,*% Ues No 0otaN(. O4 R*3=(-8*-,3 6/ 86 100 F207%*C.K ".*,.*% P%29/,* S*+,(% B/-;3 S+.*1*3 A%* B*,,*% T./- P7<:2+ S*+,(% B/-;3 S+.*1*3 GA0* O4 R*3=(-8*-,3 6/ 86 100

;6 NIIKHILVIRMANI 16719201711

$o.%f Respondents

7*(

5es $o *+(

A-/:?323 /-8 I-,*%=%*,/,2(-A# 0he abo%e fi2$re sho!s that 6/@ of respo de ts thi " that pri%ate sector ba "s sche,es of fi a ci 2 are better tha that of p$b-ic sector ba "s fi a ci 2 sche,es a d o -1 8/@ thi " that p$b-ic sector ba "s sche,es of fi a ci 2 are better tha that of pri%ate sector ba "s& 0he pri%ate sector ba "s $se -atest tech o-o21 a d pro%ide better ser%ice& Moreo%er+ the ti,e i %o-%ed for obtai i 2 -oa is a-so co,parati%e-1 -ess& )$t pri%ate ba "s char2e hea%1 rates of i terest a d char2e hea%1 ser%ice fees&

12. P:*/3* 2-82+/,* ?(7% :*9*: (4 3/,234/+,2(- @2,. 9/%2(73 /3=*+,3 (4 (<,/2-2-0 42-/-+* 4%(1 ,.*3* =7<:2+ 3*+,(% </-;3. K2-8:? %/,* ,.*1 (C#=(2-, 3+/:* </323J C <*2-0 3,%(-0:? 3/,2342*8 /-8 1 <*2-0 3,%(-0:? 8233/,2342*8 T/<:* C.12 S/,234/+,2(- R*0/%82-0 V/%2(73 A3=*+,3 O4 O<,/2-2-0 F2-/-+* F%(1 P7<:2+ 3*+,(% B/-; S+.*1*3
;7 NIIKHILVIRMANI 16719201711

V/%2(73 A3=*+,3 11&1> 0he a,o$ t 2ra ted b1 the ba " re-ati%e to the a,o$ t reA$ested 11&2> 0he si,p-icit1 of the app-icatio for, 11&8> I terest rate 11&/> (er%ice fees 11&;> 0i,e to obtai appro%a11&6> B$ara tees reA$ired b1 the i stit$tio 11&7> )eha%ior of the ba " staff

S,%(-0:? S/,2342*8 N*7,%/: S/,2342*8 1; /E 2/

D233/,2342* 8 12

S,%(-0:? D233/,2342* 8 1

S711/,*8 S+(%* 212

12

;2

81

281

2/ 1; 6 0

71 /E E 16

2 2/ 10 21

8 12 8/ 86

0 1 /2 27

1E/ 286 89E 87/

10

22

12

80

26

8/0

N71<*% (4 %*3=(-8*-,3 #100 M/>2171 S+(%* # C00 M2-2171 S+(%* # 100

A-/:?323 /-8 I-,*%=%*,/,2(-A # As fro, the abo%e tab-e o& ;&11 co,pariso !as do e bet!ee ,a6i,$, score a d ($,,ated score& Ma6i,$, score is the score+ !hich represe ts the dissatisfactio -e%e- a,o 2 the respo de ts& (o+ i for,atio re-ated to the -e%e- of satisfactio or -east satisfactio to %ario$s factors i f-$e ci 2 the satisfactio -e%e- of respo de ts !as i terpreted i fo--o!i 2 ,a er.4

It !as c-ear that respo de ts !ere satisfied !ith the HRate of I terestI as this aspect -ies bet!ee stro 2-1 a2reed a d a2reed !ith s$,,ated score of 1E/& (o the respo de ts !ere satisfied !ith this aspect& 0he factor #a,o$ t 2ra ted b1 the ba " re-ati%e to the a,o$ t reA$ested -ies bet!ee a2ree a d e$tra- !ith s$,,ated score of 212 b$t !as ,ore c-ose to satisfied& (o+ respo de ts are satisfied !ith the i terest rate a d the a,o$ t sa ctio ed& Abo$t other 2 factors H(i,p-icit1 of the app-icatio for,I a d H(er%ice feesI !ere !ith s$,,ated score of 281 a d 286 !ere bet!ee a2reed a d e$trab$t are ,ore c-ose to a2reed -e%e-& (o the respo de ts !ere satisfied !ith these aspects& 0he other three factors Hbeha%ior of the ba " staffI+ 2$ara tees reA$ired b1 the i stit$tio a d the ti,e to obtai the appro%a- are bet!ee the e$traa d dissatisfied& Respo de ts !ere ot %er1 satisfied !ith these aspects&

;9 NIIKHILVIRMANI 16719201711

1B. A=/%, 4%(1 37+. 3+.*1*3! @./, 2-2,2/,29*3 0(9*%-1*-, +/- ,/;* 4(% 21=%(92-0 SME <732-*33 2- I-82/I T/<:* C.1B I-2,2/,29*3 F(% I1=%(9*1*-, V/%2(73 I-2,2/,29*3 *ecrease the a,o$ t of ta6es ($pport i o%ati%e tech o-o2icaco,pa ies B$ida ce for $p2radi 2 s"i--s J " o!-ed2e of e trepre e$rs Assista ce a d s$pport for re%i%a- of sic" $ its I trod$ce a (i 2-e Ki do! co cept for he-pi 2 (M<s 0otaN(. O4 R*3=(-8*-,3 8; 26 1; 29 20 12; GA0* O4 R*3=(-8*-,3 2E 21 12 28 16 100

F207%* C.9 I-2,2/,29*3 F(% I1=%(9*1*-,

$o. %f Respondents ecrease the amount of ta#es )*( &6( !upport innovative technological companies ;uidance for upgrading skills < knowledge of entrepreneurs &7( =ssistance and support for revival of sick units &)( )&( :ntroduce a !ingle 8indow concept for helping !M1s

A-/:?323 /-8 I-,*%=%*,/,2(-A# 0he $,ber of respo de ts has i creased fro, 100 to 12;+ as this is a ,$-[Link] A$estio & 0he abo%e 2raph sho!s that the 2E@ of respo de ts be-ie%e that there is eed for 2$ida ce for $p2radi 2 s"i--s a d " o!-ed2e of e trepre e$rs+28@ respo de ts be-ie%e that assista ce a d s$pport sho$-d be pro%ided for the re%i%a- of sic" $ its as $,ber of sic" (M< $ its are i creasi 2 at a rapid rate!&&21@ of the respo de ts be-ie%e 2o%er ,e t sho$-d s$pport i o%ati%e tech o-o2ica- co,pa ies& Moreo%er 2o%er ,e t ca i trod$ce a si 2-e !i do! co cept for he-pi 2 (M<s a d ca pro%ide 2$ida ce for $p2radi 2 s"i--s a d " o!-ed2e of e trepre e$rs&

After $ derta"i 2 the st$d1+ the fo--o!i 2 fi di 2s !ere ,ade abo$t the $sa2e of (M< fi a ci 2 sche,es of the p$b-ic sector ba "s4
61 NIIKHILVIRMANI 16719201711

 0he respo de ts had $sed ,$-tip-e so$rces for fi a ci 2 their e terprises& Most of the respo de ts had re-ied o their o! f$ ds for fi a ci 2 (M<s a d ba " fi a ci 2& 'ri%ate fi a cia- i stit$tio s ca,e third i the prefere ce& 7btai i 2 adeA$ate fi a ce !as the bi22est obstac-e faced b1 (M<s i their 2ro!th fo--o!ed b1 b$rde of hea%1 ta6es o the,& <as1 fi a ci 2 sche,es sho$-d be pro%ided& Rates of ta6es sho$-d a-so be decreasedD it !i-- he-p i the 2ro!th of (M<s i I dia& '$b-ic sector ba "s !ere the ,ost pop$-ar so$rce of (M< fi a ci 2& 0he reaso !as -o! rates of i terest !hich 2i%es the, capita- at -o! cost& 0he ser%ice fees a d ba " char2es !ere a-so -ess !hich res$-ts i -o! cost of fi a ci 2 tha the other so$rces& ($-abh V1apar -oa !as the ,ost pop$-ar sche,e of p$b-ic sector ba "s for fi a ci 2 (M<s fo--o!ed b1 !or"i 2 capita- -oa & Most of the fir,s !ere ta"i 2 -oa s for f$-fi--i 2 their freA$e t eeds for the capita-& 0he1 too" credit for the f-oori 2 of i %e tor1 a d !or"i 2 capita- a d to i crease the si?e of prod$ctio & 0he1 had ta"e -oa s for tech o-o2ica- $p2radatio a-so as (M<s reA$ire capita- to $p2rade their tech o-o2ies !hich is cha 2i 2 at a %er1 fast phase&

62 NIIKHILVIRMANI 16719201711

 0he ,ost preferred be efit of these sche,es !as -o! rates of i terest as 2o%er ,e t is char2i 2 %er1 -ess rates i access a-so& 0he ,ost co,,o prob-e, faced b1 (M<s i raisi 2 fi a ce !as the de-a1 ,ade i sa ctio i 2 the -oa & 0he p$b-ic sector ba " e,p-o1eeIs !or" %er1 s-o!-1 a d $s$a--1 a app-icatio ta"es a -ot of ti,e for appro%a-& )ias ess a d i s$fficie t co--atera- !ere a other prob-e,s faced b1 the,& 0he ,ost co,,o app-icatio reaso 2i%e b1 the ba "s for rejecti 2 a ot pro%ide e o$2h co,pariso to other so$rces& 0hese sche,es offer attracti%e fi a ci 2 co ditio s a d eas1

!as that the e terprises co$-d

2$ara tees& )a "s reject a app-icatio beca$se the1 be-ie%ed that it !as ot a profitab-e %e t$re& A app-icatio a-so 2ot rejected beca$se of poor credit histor1 as ba "s -ie o e terprises before 2ra ti 2 a 1 -oa & Most of the respo de ts 2et de,oti%ated for app-1i 2 for fi a ce fro, these sche,es beca$se of the -e 2th1 process i %o-%ed a d beca$se the1 !ere t$r ed do! before& (o,e of the respo de ts did ot app-1 for -oa fro, these sche,es as too ,$ch of doc$,e tatio !as reA$ired& 0he ti,e to obtai the appro%a- for -oa a d doc$,e tatio i %o-%ed de,oti%ates the (M<s& the past perfor,a ce of

68 NIIKHILVIRMANI 16719201711

 Most of the respo de ts thi " that pri%ate sector ba "s sche,es of fi a ci 2 !ere better tha that of p$b-ic sector ba "s fi a ci 2 sche,es &0he pri%ate sector ba "s $se -atest tech o-o21 a d pro%ide better ser%ice& Moreo%er+ the ti,e i %o-%ed for obtai i 2 -oa !as a-so co,parati%e-1 -ess& )$t pri%ate ba "s char2e hea%1 rates of i terest a d char2e hea%1 ser%ice fees& Most of the respo de ts !ere satisfied !ith the i terest rate char2ed+ a,o$ t of -oa sa ctio ed a d ser%ice fees &Respo de ts sho!ed their dissatisfactio re2ardi 2 ti,e to obtai the appro%a-+ beha%io$r of the ba " staff& Most of respo de ts !ere of the opi io that there is eed for

2$ida ce for $p2radi 2 s"i--s a d " o!-ed2e of e trepre e$rs+ that assista ce a d s$pport sho$-d be pro%ided for the re%i%a- of sic" $ its as the $,ber of sic" (M< $ its is i creasi 2 at a rapid rate& (o,e of the respo de ts !ere of the %ie! that 2o%er ,e t sho$-d s$pport i o%ati%e tech o-o2ica- co,pa ies& Moreo%er 2o%er ,e t ca i trod$ce a si 2-e !i do! co cept for he-pi 2 (M<s a d ca pro%ide 2$ida ce for $p2radi 2 s"i--s a d " o!-ed2e of e trepre e$rs&

6/ NIIKHILVIRMANI 16719201711

LIMITATIONS OF THE STUDY *$e to co strai ts of ti,e a d reso$rces+ the st$d1 is -i"e-1 to s$ffer fro, certai -i,itatio s& (o,e of these are ,e tio ed here $ der so that the fi di 2s of the st$d1 ,a1 be $ derstood i a proper perspecti%e& 0he -i,itatio s of the st$d1 are4 0he research !as carried o$t i a short period& 0herefore the sa,p-e si?e a d the para,eters !ere se-ected accordi 2-1 so as to fi ish the !or" !ithi the 2i%e ti,e fra,e& 0he i for,atio 2i%e b1 the respo de ts ,i2ht be biased as so,e of the, ,i2ht ot be i terested to 2i%e correct i for,atio & (o,e of the respo de ts co$-d ot a s!er the A$estio s d$e to -ac" of " o!-ed2e& (o,e of the respo de ts of the s$r%e1 !ere $ !i--i 2 to share i for,atio &

6; NIIKHILVIRMANI 16719201711

CONCLUSION AND RECOMMENDATIONS

7%er a period of ti,e+ it has bee pro%ed that (M<s are d1 a,ic+ i

o%ati%e

a d ,ost i,porta t-1+ the e,p-o1er of first resort to ,i--io s of peop-e i the co$ tr1 I dia has a %ibra t (M< sector that p-a1s a i,porta t ro-e i s$stai i 2 eco o,ic 2ro!th+ i creasi 2 trade+ 2e erati 2 e,p-o1,e t a d creati 2 e! e trepre e$rship i I dia& )$t the (M< sector faces a -ot of obstac-es i obtai i 2 adeA$ate fi a ce& Bo%er ,e t of I dia has started a $,ber of (M< fi a ci 2 sche,es i its p$b-ic sector ba "s &0hese p$b-ic sector ba "s are p-a1i 2 a ,ajor ro-e i the de%e-op,e t of (M< sector i I dia& )$t d$e to fe! obstac-es+ these sche,es are ot as effecti%e as the1 sho$-d be& 0he re%ie! of researches has sho!ed that (M< sector p-a1s a i,porta t ro-e i the eco o,ic de%e-op,e t of a co$ tr1 b$t obtai i 2 adeA$ate fi a ce has e,er2ed as a ,ajor prob-e, faced b1 (M<s& 0he eed+ scope a d objecti%es of the st$d1 pro%ided the fra,e!or" for f$rther research& 0he basic p$rpose of co d$cti 2 the st$d1 !as to st$d1 the $sa2e of (M< fi a ci 2 sche,es of the p$b-ic sector ba "s& 0he data !as co--ected fro, (M< $ its& Vario$s too-s of data a a-1sis a d i terpretatio !ere $sed for carr1i 2 o$t the research& 0he ,ajor fi di 2s of the st$d1 !ere that ba " fi a ci 2 is the ,ost pop$-ar so$rce for fi a ci 2 (M<s i I dia& 0he (M< fi a ci 2 sche,es pro%ide credit to this sector at -o! rates of i terest a d at attracti%e co ditio s b$t the proced$re i %o-%ed is -e 2th1& Moreo%er+ too ,$ch of doc$,e tatio is reA$ired &I s$fficie t co--atera- a d
66 NIIKHILVIRMANI 16719201711

bias ess are a-so the ,ajor prob-e,s& 0he [Link] tatio

pro2ra,+

!or"shops a d se,i ars sho$-d be or2a i?ed at district -e%e- to pro%ide -atest i for,atio to the (M<s abo$t the %ario$s (M< fi a ci 2 sche,es of the p$b-ic sector ba "s& Ne! credit prod$cts ,a1 be de%e-oped to ta"e care of the di%erse+ $ e6pected a d [Link], reA$ire,e ts of the (M< c$sto,ers i a hass-e free ,a i sa ctio i 2 the er a d i a short ti,e the process fo--o!ed -oa a d doc$,e tatio reA$ired is c$,berso,eD

he ce it is s$22ested to ,a"e the process easier&

After carr1i 2 o the st$d1+ the fo--o!i 2 reco,,e datio s ha%e bee ,ade4 . 0he [Link] tatio pro2ra,+ !or"shops a d se,i ars sho$-d be

or2a i?ed at district -e%e- to pro%ide -atest i for,atio to the (M<s abo$t the %ario$s (M< fi a ci 2 sche,es of the p$b-ic sector ba "s& 'rod$ct i o%atio s i ba "s ha%e set the r$-e of the 2a,e #I o%ate

or perishO& 0he sa,e r$-e app-ies to (M< se2,e t& At prese t+ there is a %ast 2ap bet!ee reA$ire,e ts of the (M< c$sto,er a d a%ai-abi-it1 of s$itab-e3,atchi 2 prod$cts a d ser%ices i the p$b-ic sector ba "s& Ne! credit prod$cts ,a1 be de%e-oped to ta"e care of the di%erse+ $ e6pected a d [Link], reA$ire,e ts of the (M< c$sto,ers i a hass-e free ,a er a d i a short ti,e&

67 NIIKHILVIRMANI 16719201711

 0he co %e tio a- credit appraisa- s1ste,s are hea%i-1 depe de t o fi a cia- state,e ts a d ,iss the softer stre 2ths i here t i the b$si ess& )a "s ,a1 adopt a ba-a ced score card ,ode- for credit assess,e t $ der !hich ris" !ei2hts ,a1 be assi2 ed to =i> ,a a2eria-+ tech ica- a d co,,ercia- co,pete ce of the e trepre e$r =ii> A$a-it1 of trade refere ces fro, s$pp-iers3b$1ers = eed ot be i !riti 2> =iii> pote tia- of the i d$str1+ $ it a d perso & 0he appraisa- s1ste, is to be ,ade ,ore rea-istic a d tra spare t& 0he app-ica t a d if reA$ired+ his co s$-ta t+ sho$-d be briefed o the objecti%e proced$res !hich ba " app-ies to arri%e at decisio s so as to ed$cate the, to $ dersta d the reA$ire,e ts of ba " a d to prepare credit proposa-s i a scie tific ,a er &

As 9;&E@ of (M< c$sto,ers are proprietorship t1pe of c$sto,ers+ it is esse tia- for the ba "s to c-ose-1 foc$s o sho!>& 0he process fo--o!ed i sa ctio i 2 the -oa a d the o .fi a ciapara,eters a-so d$ri 2 appraisa- =i&e& abi-it1 of perso behi d the

doc$,e tatio reA$ired is c$,berso,eD he ce it is s$22ested to ,a"e the process easier& (,a-- e trepre e$rs sho$-d ,a"e feasibi-it1 st$dies before the1 fi a-i?e their projects& 0he1 sho$-d $ derta"e o -1 s$ch

6E NIIKHILVIRMANI 16719201711

projects !hich are tech ica--1+ operatio a--1 a d eco o,ica--1 a d fi a cia--1 %iab-e&

0he prob-e, that the (M<s face !hi-e acA$iri 2 f$ ds fro, '$b-ic sector )a "s is that their fi a cia- s1ste,s -ac" tra spare c1& Credit Rati 2s ca be efit both the parties& 0he credit rati 2s !i-- 2i%e '$b-ic sector )a "s rati 2s a eas1 access to the fi a cia- i for,atio of (M<s that hi2h-i2ht the $ itLs stre 2th a d !ea" esses+ ,a"i 2 it eas1 for the, to ta"e a decisio !hi-e -e di 2&

0he iss$e of hi2h cost of acA$iri 2+ ser%i 2 a d ,o itori 2 (M< c$sto,ers ca be reso-%ed b1 offeri 2 prod$cts !hich red$ce freA$e t %isit of (M< c$sto,ers to the bra ch+ pro%ide f-e6ibi-it1 to the borro!ers as !e-- as to the ba "ers a d f$-fi-- other fi a cia- eeds of the c$sto,er& Most (M< c$sto,ers ha%e to ,a"e se%era- s,a-- pa1,e ts thro$2h cash+ ba "ersI cheA$es or drafts& )a "s ,a1 capita-i?e o e,er2i 2 e-ectro ic pa1,e t a d sett-e,e t s1ste,s s$ch as <C(+ <C0+ R0B(+ etc&+ to offer c$sto,i?ed a d cost effecti%e retai- pa1,e t3re,itta ce so-$tio s or cash ,a a2e,e t ser%ices to the (M< c$sto,ers& '$b-ic (ector )a "s sho$-d de%e-op f-e6ib-e s1ste,s a d proced$res for dea-i 2 !ith (M< c$sto,ers a d ,odif1 their ro-e to be a faci-itator& It ,a1 either pro%ide soft!are to these c$sto,ers to

69 NIIKHILVIRMANI 16719201711

prepare stoc" a d fi a cia- state,e ts or he-p a d 2$ide the, i preparatio of re e!a- proposa- 3 state,e ts& )a "s ,a1 p$b-ish periodica-s3,a2a?i es to disse,i ate i for,atio pertai i 2 to %ario$s sche,es of ba "+ %ario$s ,i istries+ R)I+ (I*)I+ C)*0+ C)<C a d other ta6 re-ated po-ic1 ,atters& It ,a1 a-so pro%ide the sa,e i for,atio thro$2h its !ebsite a d e.,ai-s&

70 NIIKHILVIRMANI 16719201711

BIBLIOGRAPHY

Na,biar+ '&C&*& =2007>& Ci a ci 2 Cor 'riorit1 (ectors& S.B.I Monthly Review+ 6=E>& 'op-i+ B&(&a d Rao+ *&N& =2009>& (er%ice R$a-it1 'ro%ided )1 '$b-ic (ector )a "s 0o (M< C$sto,ers4 A <,pirica- (t$d1 I 0he I dia Co te6t& Journal of Financial Services Research, /& Raj$+ )&U& =2002>& (,a-- (ca-e I d$stries I 0he Libera-i?ed <ra )e2 Cor Atte tio & Global Business Review+ 8=2>+ 8;1.867& Ra i a d Rao+ *&N& =200E>& Ci a ci 2 (,a-- e terprises4 Rece t 0re ds& ICFAI Journal of Entre reneurshi !evelo "ent+ ;=1>+ 6.22&

71 NIIKHILVIRMANI 16719201711