CGTMSE MMS Final Summer Project

A PROJECT REPORT ON FINANCING UNDER CGTMSE- STRATEGIES ADOPTED BY PNB AND BOI SUGGEGTIONS FOR BOB PREPARE FOR

BANK OF BARODA, BORIVALI (EAST) MASTER OF MANAGEMENT STUDIES (MMS) UNIVERSITY OF MUMBAI SUBMITTED TO SINHGAD INSTITUTE OF BUSINESS MANAGEMENT CHANDIVALI UNDER THE GUIDANCE OF Mr. SUBHAS GARG – CHIEF MANAGER / Mr. VISHALDONKALWAR – CREDIT OFFICER SUBMITTED BY (PRAVIN S. MALUSARE) (BATCH 2012-14 & ROLL NO.98) (SPECIALISATION:-FINANCE)

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CERTIFICATE

This is to certify that PRAVIN SHANKAR MALUSARE has successfully completed the project work as a part of academic fulfillment of Masters of Management Studies (M.M.S.) Semester II examination.

Name : Prof. Sreelatha Guntupalli Signature:

Date : _________________

DIRECTOR SIBM

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DECLARATION I, Pravin S. Malusare of Master of Management Studies (Semester) of Sinhgad Institute of Business Management (SIBM), hereby declare that I have successfully completed this Project on Financing under CGTMSE – strategies adopted by PNB and BOI suggestions for BOB in the academic year 2012 - 2014. The information incorporated in this project is true and original to the best of my knowledge.

_____________________________ Signature

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ACKNOWLEDGEMENT

I am very glad to have the vocational training in Bank of Baroda. I am very thankful to Mr. S. S. Mundra (Chairman & Managing Director) and Mr. Jayant Rao (Asst. General Manager, Greater Mumbai Zone), Mr. Ashok K. Bajaj (Asst. General Manager, MMNR) & Mr. Subhas Garg (Chief Manager, Borivali East Branch) who have granted me the permission for doing summer training in The Bank of Baroda.

I am also very grateful to Mr. Subhas Garg who is a chief manager of SME’s management department of Boriwali (E) branch, who has guided me through out my training period. With all the necessities being fulfilled by the department and I am again thankful to all the employees of finance and HR, Credit department who had given me support for the work to be done during training.

Last but not least I am also grateful to my Institute Sinhgad Institute Of Business Management(SIBM) and Director Mrs. Meera Vijay and My Project Head Mrs. Sreelatha Guntupalli and also all the faculty members who had inspired me for doing the summer training.

Thanking You, Yours faithfully,

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(PRAVIN S. MALUSARE) TABLE OF CONTENTS Sr.No. 1 2

TOPIC EXECUTIVE SUMMARY OBJECTIVES OF PROJECT

06 07

3

RESEARCH METHODOLOGY

08-09

4

INTRODUCTION OF THE TOPIC (CGTMSE) 4.1 ROLE OF MSMEs 4.2 CREDIT FACILITIES ELIGIBLE UNDER

10 11-12 13

THE SCHEME 4.3 CREDIT FACILITIES NOT ELIGIBLE

14

UNDER THE SCHEME 4.4 GUARANTEE FEE & ANNUAL SERVICE

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FEE 4.5 EXTENT OF THE GUARANTEE REVIEW OF LITERATURE BANK OF BARODA PUNJAB NATIONAL BANK BANK OF INDIA CONCLUSION SUGGESTIONS BIBLOGRAPHY

16 17 18 - 24 25 – 29 30 – 33 34 35 36

5 6 7 8 9 10 11

1. EXECUTIVE SUMMARY (Key Strengths)

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Pg. No.

 Bank of Baroda is a 104 years old State-owned Bank with modern & contemporary personality, offering banking products and services to Large industrial, SME, retail & agricultural customers across the country.  Uninterrupted Record in Profit-making and Dividend Payment.  Overseas Business Operations extend across 24 countries through 100 Offices.  Strong Domestic Presence through 4, 276 Branches.  Provides Financial Services to around 50.86 million Customers Globally.  Robust Technology Platform with 100% CBS in Indian Branches.  First PSB to receive Corporate Governance Rating (CGR-2).  Pioneer in many Customer-Centric Initiatives.  A well-accepted & recognized Brand in Indian banking industry.  Relatively Strong Presence in Progressive States likes Maharashtra.

2. OBJECTIVES OF PROJECT:

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 To study and understand the concept of CGTMSE  To analyze the CGTMSE Scheme  To understand the effect of CGTMSE on banks profit  To understand the corrective measures taken by bank for CGTMSE  To analyze the CGTMSE of Bank of Baroda and get a insight on its performance

3. RESEARCH METHODOLOGY:

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Study is all about the research & analysis of credit services offered to small and medium enterprises Study is being made for the purpose of analysis of credit services and relief to the borrowers by the bank that the future growth of the bank by providing better services by bank can earns more profit. Study will be carried out at Mumbai. Secondary data is required for analysis of report. Period of the study is limited to 45 days. The method adopted to carry out this report was based on both the primary and secondary sources. •

Primary sources:



Interaction with the Credit Officer and Chief Manager.



Personal interaction with the customers visiting to the bank. •

Secondary sources:



Manuals of the bank.



Websites



Journals



Circulars



Annual Report

•

BENEFITS FROM THE STUDY: 8

It helps me to know more about CGTMSE Scheme and the situation of CGTMSE in bank. It helps me to know the strategies adopted by banks to increase the CGTMSE customer and to understand the CGTMSE provisions norms in bank. •

ANALYSIS AND REPORT WRITING:

Here I have done CGTMSE scheme analysis in PNB and BOI and used various data for analysis purpose. And also I have written report on it.

4. INTRODUCTION OF THE TOPIC 9

 CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGTMSE) The scheme was originally launched from August 1, 2000 known as Credit Guarantee Fund Scheme for Small Industries (CGFSI) covering eligible credit facilities from June 1, 2000. Subsequent to the enactment of MSMED Act-2006 the Trust was renamed as Credit Guarantee Fund Trust for Micro and Small Enterprises and scheme as Credit Guarantee Scheme for Micro and Small Enterprises. MSE as defined in MSMED Act 2006

4.1 Role of Micro, Small and Medium Enterprises (MSMEs) 10

The role of micro, small and medium enterprises (MSMEs) in the economic and social development of our country is well established. The MSME sector is a nursery of entrepreneurship, often driven by individual creativity and innovation. Thus, MSMEs are important for the national objectives of growth with equity and inclusion. The MSME sector contributes about 9 per cent of the country's GDP, 45 per cent of the manufactured output and 40 per cent of its exports. The overall growth in the MSME sector has been much higher than in the large industries over the last five years. Although Indian MSMEs are a bed rock for innovation and despite being a diverse and heterogeneous group they face some common challenges with regard to access to institutional credit, collateral requirements, equity capital, etc. It was against this background that the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was established with the objective of guaranteeing collateral and third party guarantee free credit facilities so as to enable enhanced flow of credit to the MSE sector in India. Over the past 12 years, CGTMSE has been ably serving India's MSEs through the Credit Guarantee Scheme by providing guarantee cover to collateral and third party guarantee free credit facilities sanctioned by Member Lending Institutions (MLIs) to eligible MSEs. CGTMSE has extended guarantees for loans aggregating to over Rs.38,000crore covering approximately. CGTMSE is well placed to meet the challenges of the future. It is heartening to note that the positive impact that CGTMSE has had on credit flow to the MSE Sector has been recognized by the Government and the credit guarantee framework in the country is poised for expansion with the announcement of setting up of Credit Guarantee Funds for housing, educational loans and skill development by the Hon'ble Finance Minister during the budget speech in Parliament. I take this opportunity to thank the Government of India, Reserve Bank of India, Small Industries Development Bank of India, all Member Lending Institutions, MSE 11

Entrepreneurs and other national and international partner agencies for their support and co-operation. I am sure that with the active support of all stakeholders, CGTMSE would continue to excel by achieving higher performance parameters. I would also like to compliment team CGTMSE for their hard work and dedication.

4.2 CREDIT FACILITIES ELIGIBLE UNDER THE SCHEME:

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The Trust shall cover credit facilities (Fund based and/or Non fund based) extended by Member Lending Institution(s) to a single eligible borrower in the Micro and Small Enterprises sector for credit facility not exceeding Rs.100 lakh by way of term loan and/or working capital facilities on or after entering into an agreement with the Trust, without any collateral security and\or third party guarantees provided that the lending institution applies for guarantee cover in respect of credit proposals sanctioned in the quarter April-June, July-September, October-December and January-March prior to expiry of the following quarter viz. July-September, October-December, January-March and April-June respectively. Provided further that, as on the material date:  The dues to the lending institution have not become bad or doubtful of recovery; and / or  The business or activity of the borrower for which the credit facility was granted has not ceased; and / or  The credit facility has not wholly or partly been utilized for adjustment of any debts deemed bad or doubtful of recovery, without obtaining a prior consent in this regard from the Trust. For Example, XYZ & Co. has been sanctioned the cash credit limit of Rs.5.00 lacs on 15.04.2012.The application for the guarantee cover should be submitted by next quarter i.e. July to Sept. quarter online latest by 30.09.2012. Credit facilities extended by more than one bank and/or financial institution jointly and/or separately to eligible borrower up to a maximum up to Rs.100 lakh per borrower subject to ceiling amount of individual MLI or such amount as may be specified by the Trust. 4.3 CREDIT FACILITIES NOT ELIGIBLE UNDER THE SCHEME:

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 Any credit facility in respect of which risks are additionally covered under a scheme operated / administered by Deposit Insurance and Credit Guarantee Corporation or the Reserve Bank of India, to the extent they are so covered.  Any credit facility in respect of which risks are additionally covered by Government or by any general insurer or any other person or association of persons carrying on the business of insurance, guarantee or indemnity, to the extent they are so covered.  Any credit facility, which does not conform to, or is in any way inconsistent with, the provisions of any law, or with any directives or instructions issued by the Central Government or the Reserve Bank of India, which may, for the time being, be in force.  Any credit facility granted to any borrower, who has availed himself of any other credit facility covered under this scheme or under the schemes mentioned in clause (i), (ii) and (iii) above, and where the lending institution has invoked the guarantee provided by the Trust or under the schemes mentioned in clause (i), (ii) and (iii) above, but has not repaid any portion of the amount due to the Trust or under the schemes mentioned in clause (i), (ii) and (iii) above, as the case may be, by reason of any default on the part of the borrower in respect of that credit facility.  Any credit facility which has been sanctioned by the lending institution against collateral security and / or third party guarantee. Any credit facility which has been sanctioned by the lending institution with interest rate more than 3% over the Prime Lending Rate (PLR) of the lending institution.(Branches to link this corresponding to Base Rate). 4.4 GUARANTEE FEE AND ANNUAL SERVICE FEE

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Annual Guarantee Fee

Credit Facility

(AGF) [% p.a] Women, Micro Enterprises and units in

Others

North East Region (incl. Sikkim) Upto Rs.5 Lakh

0.75

1.00

0.85

1.00

Above Rs. 5 Lakh and upto Rs.100 Lakh

 of sanctioned credit facility shall be paid upfront to the Trust by the institution availing of the guarantee cover within such period as may be specified by the Trust.  In the event of non-payment fee by the MLI within such period or any other specified date, the guarantee under the scheme shall not be available to the lending institution unless the Trust agrees for continuance of guarantee and the lending institution pays penal interest on the fee due and unpaid, with effect from the due date, at four per cent over Bank Rate, per annum, or at such rates specified by the Trust from time to time, for the period of delay.

4.5 EXTENT OF THE GUARANTEE 15

The Trust shall provide guarantee as under:

Category Micro Enterprises

Maximum extent of Guarantee where credit facility is Up to Rs.5 lakh

Above Rs.5

Above Rs.50 lakh up

lakh up to

to

Rs.50 lakh

Rs.100 lakh

85% of the

75% /

Rs.37.50 lakh plus

amount in

Rs.37.50 lakh

50% of amount in

default subject

default above Rs.50

to a maximum

lakh subject to overall

of Rs.4.25 lakh

ceiling of Rs.62.50

Women entrepreneurs/

lakh Rs.40 lakh plus 50%

Units located in North

of

East Region (incl.

80% of the amount in default

amount in default

Sikkim) other than

subject to a maximum of Rs.40

above Rs.50 lakh

credit facility up to

lakh

subject to overall

Rs.5 lakh to micro

ceiling of Rs.65 lakh

enterprises All other category of

Rs.37.50 lakh plus

borrowers

50% of amount in 75% / Rs.37.50 lakh

default above Rs.50 lakh subject to overall ceiling of Rs.62.50 lakh

All proposals for sanction of guarantee approvals for credit facilities are to be rated as per the extant guidelines wherever required and should be acceptable to Bank. 5. REVIEW OF LITERATURE

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BRAHMANANDAM, G, N., RAI, H.L., DAKSHINA MURTHY, “Financing Small Scale Sector”. The Role of Banks” INDIAN BANKING TODAY AND TOMORROW, The above article was prepared on the role of banks in financing the SMEs in the year. At those times the Indian banking was not all interested in financing the SMEs, because of their credit worthiness. Later due to changes in the industrial policy of India, the commercial banks come forward made immense help to the growth of SMEs. This article was written before the economic reforms taken place. Here is a gap for more analysis about the role of the banks in the post economic reforms. BRAHMANANDAM, G, N., RAI, H.L., DAKSHINA MURTHY, has focused on role of banks in financing SMEs. He also focused on how economic reforms have changed the bank role in extending credit to SMEs. They also focused on the credit facilities available to the SMEs in the wake of MSME act 2006.

6. BANK OF BARODA

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Bank Of Baroda, is a Body Corporate (Nationalized Bank) constituted under The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, with its Head Office at Mandvi, Baroda and Corporate Office at Mumbai. Present day Bank of Baroda is the successor of the erstwhile "The Bank of Baroda Limited", founded in 1908 in a small town - Baroda - by the great visionary the late Maharaja of Baroda - Sir Sayajirao Gaekwad-III. From its humble beginnings, the Bank has grown, over the years, to emerge as an Indian Financial Powerhouse, with a network of over 4,043 branches in India across the length and breadth of the country and 96 overseas branches/foreign offices in 25 countries across 5 continents serving a Global customer base of over 45 million. In tune with times and in response to the emerging market requirements, the Bank has set up specialized branches dedicated to specific Customer segments. Bank has also setup specialized Retail, Corporate and SME Loan factories across the country which work on assembly line principle to reduce turnaround time for sanction of retail and corporate loans

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Type Traded as Industry Founded Founder(s) Headquarters Area served Key people

Public company BSE: 532134 Banking, Financial services 1908 Maharaja Sayajirao Gaekwad Vadodara, India Worldwide S S Mundra (Chairman & MD) Credit cards, consumer banking, corporate banking, finance and

Products

insurance, investment banking, mortgage loans, private banking,

Revenue Net income Total assets

private equity, wealth management . 4032.74 (In Crores) .13452.08 (In Crores) . 127861.71 (In Crores)

• Board Of Directors Chairman & Managing Director Director(Shareholders) Company Secretary Director(PartTime NonOfficial)

S S Mundra Maulin Arvind Vaishnav Vinay A Shah Satya Dev Tripathi 19

Director (Officer Employee) Nominee (RBI) Director (Workmen Employee)

V B Chavan Sudarshan Sen Vinil Kumar Saxena Surendra Singh Bhandari

Director(Shareholders)

Rajib Sekhar Sahoo P Srinivas

Executive Director

Sudhir Kumar Jain

Nominee (Govt)

Ranjan Dhawan Alok Nigam

• The Position as on 31st March 2013 was as under:  Balance Sheet Size

Rs. 547135.44

 Total Deposits

Rs. 13452.08

 Net Advances

Rs. 328185.76

 Investments

Rs. 121393.72

 Net NPA

•

0.54%

NATURE

The nature of the business that decide the company belongs to which industry and it helps the many stakeholders and parties like government, NGO, etc, to decide the parameter and other concerned issue binding to the organization, for e.g. environmental protection, tax rate, incentives, and rules and regulations. The Bank of Baroda belongs 20

to the service sector, which provides various types of financial solution related to banking industry. As Indian economy is emerging as a major services provider in the world, which can be seen by it’s contribution in GDP of India which is closed to 55%. •

VISION

It has been a long and eventful journey of almost a century across 25 countries. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai, is a saga of vision, enterprise, financial prudence and corporate governance. It is a story scripted in corporate wisdom and social pride. It is a story crafted in private capital, princely patronage and state ownership. It is a story of ordinary bankers and their extraordinary contribution in the ascent of Bank of Baroda to the formidable heights of corporate glory. It is a story that needs to be shared with all those millions of people customers, stakeholders, employees & the public at large - who in ample measure, have contributed to the making of an institution. •

MISSION

“To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence”

•

BANK OF BARODA - Micro, Small & Medium Enterprises Sector

The Micro, Small and Medium Enterprises in Manufacturing and service sector are defined as under in MSMED ACT, 2006 Particulars

Investment in Plant & Machineries

Investment in Equipment in

in case of Manufacturing Enterprises

case of Service Sector

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Enterprises Micro

Up to Rs. 25/- lacs

Up to Rs.10/- lacs

Enterprises Small

Above Rs. 25/- lacs and up to Rs.500/- Above Rs.10/- lacs and upto

Enterprises

lacs

Rs.200/- lacs

Medium

Above Rs.500/- lacs and up to

Above Rs.200/- lacs and up to

Enterprises

Rs.1000/- lacs

Rs.500/- lacs

The micro and small (service) enterprises shall include small road & water transport operators, small business, professional & self-employed persons, retail trade i.e. advances granted to retail traders dealing in essential commodities (fair price shops), consumer co-operative stores and advances granted to private retail traders with credit limits not exceeding Rs. 200/- lakh and all other service enterprises, as per the definition under MSMED Act. Our bank has for internal purposes given focused attention to finance all Commercial enterprises i.e. enterprises which may be outside the purview of regulatory definition of SME but having turnover up to Rs 150.00 crores and new infrastructure and real estate projects where the project cost is up to Rs. 50/- crores by treating them as part of SME segment.

SME PRODUCTS

Name of the Product/Scheme

Sr. No. 1. 2. 3.

Baroda Laghu Udhyami Credit Card Baroda Artisan Credit Card Loans under KVIC Margin Money Scheme – since merged with

4.

PMRY Scheme and re-named as PMEGP Scheme Collateral free loans under Credit Guarantee Fund Trust Scheme 22

5. 6. 7.

Composite Loans to SSI units Loans under Technology Upgradation Fund Scheme for Textile Units Loans under Credit Linked Capital Subsidy Scheme for Technology

8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

Upgradation of Small Enterprises Loans under National Equity Fund Scheme Scheme for financing Energy Efficiency Projects SME Short Term Loans SME Medium Term Loans Baroda SME Gold Card Baroda Overdraft against Land and Building Baroda Vidyasthali Loan Baroda SME Loan Pack Baroda Arogyadham Loan Scheme for financing existing borrowers under SME Segment for purchase of new vehicles.

•

BOB have been established in almost all-major sectors in the Indian industry such as:

 Drugs & Pharmaceuticals  Auto components, Auto Ancillary units  Food and Agro based industries  Textile machineries  Dyes & intermediates  Engineering equipments  Chemicals  Defence equipments manufacturing Units 23

•

BANK OF BARODA CGTMSE PERFORMANCE AS ON 2013

 Number of Proposal Received

– 28679

 Sanction Proposal Total Amount

- Rs. 233042.00 (In Rs. Lakh)

•

Bank of Baroda , Borivali East Branch CGTMSE Performance F.Y.12-13,

 Number of Proposal Received – 9  Number of Proposal Sanction – 6  Amount of Proposal Received – Rs.9.40 (In Crore)  Amount of Proposal Sanction – Rs. 2.40 (In Crore)

7. PUNJAB NATIONAL BANK Punjab National Bank (PNB) is an Indian financial services company based in New Delhi, India. PNB is the third largest bank in India in terms of asset size. It was founded in 1894 as a private banking company by Lala Lajpat Rai and is currently the second largest state-owned commercial bank in India ahead of Bank of Baroda with about 5000 branches across 764 cities. It serves over 37 million customers. The bank has been ranked 248th biggest bank in the world by the Bankers' Almanac. The bank's total assets for financial year 2007 was about US$60 billion. PNB has a banking subsidiary in the

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UK, as well as branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai. Bank has been a frontrunner in the industry so far as the initiatives for Financial Inclusion is concerned. With its policy of inclusive growth and the mission “Banking for Unbanked”, it is a matter of pride for the Bank that it has been able to cover all its 4588 villages allotted under the Swabhiman Campaign of Government of India through Business Correspondents. Further, the Bank has also adopted 118 villages across country. Under FI plan, the Bank has engaged Technical Service Providers (TSPs) and the corporate Business Correspondents (BCs) for providing banking services in villages using ICT based BC model. The village level BC agents are using Hand Held Terminals/ POS machines & smartcards. Bank has extensively used technology to reach out to those which have remained away from formal banking set up.

Type Traded as

Public BSE: 532461

NSE: PNB Industry Banking, Financial services Founded 1895 Founder(s) Lala Lajpat Rai Headquarters New Delhi, India Key people K R Kamath (Chairman & MD) 25

Credit cards, consumer banking, corporate banking, finance and Products

insurance, investment banking, mortgage loans, private banking,

Revenue Net income Total assets Owner(s) Employees

•

private equity, wealth management . 47476715/. 42159227/. 4788770363/Government of India 62,127

PUNJAB NATIONAL BANK - Micro, Small & Medium Enterprises :

Bank has well defined policy for lending to Micro, Small & Medium Enterprises (MSMEs) with built-in concessions and incentives. The operative part of the MSME policy for the year 2013 is as under:  The Bank shall continue to lay emphasis on financing Micro, Small & Medium Enterprises and our existing MSME credit portfolio shall be enlarged with special focus on lending to Micro Enterprises.  Following recommendations of High Level Task Force constituted by Hon’ble Prime Minister on Micro, Small & Medium Enterprises (MSME) Sector will be implemented: -

Achievement of 20% year on year growth in credit to Micro and Small enterprises.

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-

The share of Micro Enterprises in Micro & Small Enterprises lending be increased to 60% by accelerating lending to Micro Enterprises.

-

10% annual growth in number of accounts of advances to Micro Enterprises.

The Bank envisages MSEs credit growth through financial inclusion by way of collateral free and without third party guarantee lending by leveraging CGTMSE. As per RBI mandatory guidelines, loans upto Rs.10 lakh to Micro and Small Enterprises, which are eligible for coverage under Credit Guarantee Scheme of CGTMSE, are to be considered on merits without accepting any collateral security / third party guarantee and all such cases must be got covered under guarantee scheme of CGTMSE. Further, as per Banks guidelines, MSE proposals up to Rs.100 lakh, which are eligible under Credit Guarantee Scheme of CGTMSE, are to be sanctioned by the competent authority without taking any collateral security/third party guarantee. PNB is committed to Financial Inclusion and the Credit Guarantee Scheme (CGS) offered excellent opportunity for youngsters and first generation entrepreneurs to set up their own units without collateral security. PNB providing better customer care and transparency in services, Bank has adopted the Code of Bank's Commitment to Micro and Small Enterprises prescribed by the Banking Codes and Standards Board of India, Mumbai. Bank has identified MSME focus branches in addition to already existing Specialized MSME branches. As on date there are 523 such branches (59 specialized SME branches & 464 MSME focus branches). Apart from extending 1.00% concessions on chargeable Interest Rate to Micro Enterprises for loans up to Rs.25 lakh, higher Loaning Powers have been vested to Branch Managers for directly disposing proposals at Branch Level for financing micro enterprises under CGTMSE.

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SME PRODUCTS

Name of the Product/Scheme

Sr. No. 1. 2.

Sarthak Udyami - Scheme for financing Micro and Small Enterprises PNB Pragati Udyami - Scheme for financing Industry related

3. 4. 5. 6.

Services / Business Enterprises PNB Kushal Udyami PNB Garrage Yogana Loans for setting up Industrial Estates PNB Vikas Udyami - Scheme for Loans acquisition of ISO - 9000

7. 8.

Series Certification SME Sahayog Scheme PNB Artisan Credit Card - Scheme to provide hassle free financial

9.

support to Artisan PNB Laghu Udyami Credit Card - A simplified Loan Delivery

10. 11.

Mechanism Scheme for Advances to Small Road Transport Operators Scheme for Advances to Owner-Drivers of Taxi Cars, Three Wheeler, Station Wagons, Tempos, Etc.

•

PNB have been established in almost all-major sectors in the Indian industry such as:

 Textile Industry - Technology Upgradation Fund Scheme (TUFS)  Food Processing Industry  Leather Industry – Integrated Development of Leather Sector (IDLS)  Coir industry  Cement Industries  Iron & Steel  Chemicals Industries  Paper Industries  Construction  Infrastructure  Village & Cottage Industries •

PUNJAB NATIONAL BANK CGTMSE PERFORMANCE AS ON 2013 28

 Number of Proposal Received

- 96406

 Sanction Proposal Total Amount

- Rs. 442014.93 (In Lakh)

8. BANK OF INDIA Bank of India (BoI) is an Indian state-owned commercial bank with headquarters in Mumbai, Maharashtra. Government-owned since nationalisation in 1969, It is India's 4th largest PSU bank, after State Bank of India, Punjab National Bank and Bank of Baroda. It has 4187 branches as on 21 April 2012, including 52 branches outside India, and about 1679 ATMs. BoI is a founder member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunications), which facilitates provision of cost-effective financial processing and communication services. The Bank completed its first one hundred years of operations on 7 September 2006.

Type Industry

Public company (BSE: BOI) Financial services 29

Founded Headquarters Key people

7 September 1906 Mumbai, Maharashtra, India Vijayalakshmi R Iyer (CMD) Commercial Banking Retail Banking

Products

Private Banking Asset Management Mortgages

Revenue Operating income Net income •

Credit Cards 243,935.0 million 53,842.3 million 24,887.1 million

BANK OF INDIA - Micro, Small & Medium Enterprises (MSME):

 All advances to segments viz. Micro, Small and Medium Enterprises in the Manufacturing sector irrespective of sanctioned limits, (including advances against TDRs/Govt. Securities etc for business purposes to these categories of Borrowers), and  Advances to Services Sectors such as Retail Traders, Professional & SelfEmployed, Small Business Enterprises, and Small Road/Water Transport Operators and other enterprises engaged in providing/rendering of services, conforming to the above investment criteria and enjoying borrowing/nonborrowing facilities with the Bank (including advances against TDRs/Govt. Securities etc for business purposes to these categories of Borrowers).  Those enterprises exceeding the investment ceilings would be categorized as Large Enterprises and be outside the purview of MSME.  The sanctioned limits would no longer be the criteria determining the status as micro or small or medium enterprises in these cases. 30

 As per RBI guidelines, advances made to micro & small enterprises would be categorized as Priority sector advances whereas lending by banks to medium enterprises will not be included for the purpose of reckoning of advances under the priority sector

 Bank inform about salient features including benefits available and charges payable and terms of Credit Guarantee Scheme of CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES which is extended by eligible banks and is popularly known as CGTMSE guarantee scheme for MSEs and which is available at present to new as well as existing Micro and Small Enterprises including Service Enterprises with a maximum credit cap of ` 100 lakh (Rupees One hundred lakh) per borrower, excluding retail trade, educational institutions, training institutes and Self Help Groups (SHGs) as per the said Scheme.  Where a loan is eligible to be covered under any subsidy scheme in force, we will explain to you the features of such scheme and any requirement you will need to fulfill.  We will endeavour to conduct programmes to enhance knowledge on financial management of prospective borrowers.  We shall endeavour to organize meetings of MSE borrowers at periodic intervals as a regular channel for exchange of ideas and suggestions.

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SME PRODUCTS

Name of the Product/Scheme

Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. •

Star Laghu Udyami Samekit Loan Star SME Liquid Plus Star SME Auto Express Star SME Contractor Credit Line Star SME Education Plus Star MSE Term/Demand Loan Kisan Credit Card BOI Shatabdi Krishi Vikas Card Kisan Samadhan Card Star Bhumiheen Kisan Card Star Bhumiheen Kisan Card

BOB have been established in almost all-major sectors in the Indian industry such as:

 Textile Industry  Technology Service Industry  IT and IT-enabled services  Bio-tech and footwear services  Auto & Engineering  Printing & Packaging 32

 Pharmaceuticals, Medical & Healthcare  Food Processing  Infrastructure •

BANK OF INDIA CGTMSE PERFORMANCE AS ON 2013

 Number of Proposal Received

- 103778

 Sanction Proposal Total Amount

- Rs. 641376.64 (In Lakh)

9. CONCLUSION My project report mainly involved the opportunity, credit facilities to Under CGTMSE Scheme by the bank. The main purpose of the analysis is to know that how bank is providing loan to CGTMSEs. We know that today SMEs are growing and profitable sectors for banks in terms of money investment. And BOB system of loan sanctioning is quite good. But it is very true, in terms of the paper work that most of the SMEs are enable to submit proper documents for approval of loan. It is also found that after sanctioning the credit facilities bank has maximum no. of paper works, which is creating problems for SMEs to maintain all of them. It also found that some CGTMSE Scheme borrowers are not educated, so they are not aware about the benefits of this scheme. Due to this they are not eligible for the financing, and lack of finance they cannot grow. Now a days credit guaranty scheme institutions have floated to support banks to assume risk unhesitatingly in financing SMEs. And also more appropriate CGTMSE have been developed to help SMEs to have easy credit with less cost and collaterals. CGTMSE scheme is a successful in the banking industries because CGTMSE scheme for Widening of credit portfolio, Better management of risk, Faster recovery of dues, Enhancement of profitability and also borrowers get the benefit. 33

10. SUGGESTIONS The borrowing should be made cheaper by lowering the rate of interest on lending of banks, which help the SMEs for coping with the high risk and costs to compete with their competitors. Bank should also provide consultancy services and professional guidance at the time of setting up for considering the long term and short term financial requirements of a small unit for lending purpose. Bank has to increase their credit limit and also decrease the installment amount. CGTMSE Scheme are big source of revenue for banks, so bank should encourage also the unregistered units by providing more facilities like less paper work. The best way to encourage lending to SMEs CGTMSEs scheme is to improve the ability of existing institution to construct profitable and efficient lending programs. Building awareness among small business people about the financial sources offering by bank. Especially in the case of CGTMSEs is must. So there is mutual benefits are possible. While granting the loans the bank does not adhere with the margin.

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The process followed by the bank in sanctioning the loan is cumbersome (unmanageable), hence it is suggested to make the process easier in sanctioning the credit facilities to the SMEs.

11. BIBLIOGRAPHY A. Web Site: •

www.bankofbaroda.co.in

•

http://www.cgtsi.org.in/schemes.aspx

•

http://www.cgtsi.org.in/about_us.aspx

•

http://www.iob.in/uploads/CEDocuments/loanpolicydocumentrevised.pdf

•

http://www.smallenterpriseindia.com/index.php? option=com_content&view=article&id=939:sme-marketing-cost-effectivestrategies&catid=82:featureone

•

http://www.bankofbaroda.co.in/fin/fin_directorreport.asp

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http://www.centralbankofindia.co.in/upload/obc/MainMenuEnglishLevel2_FAQ_CGTMSE.pdf

•

www.pnbindia.com

•

https://www.pnbindia.in/en/ui/ssi-schemes.aspx

•

www.bankofindia.co.in

•

http://www.slideshare.net/superalisha07/sme-credits

•

www.thehindubusinessline.com

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B. Articals •

Business Standard

•

The Times of India

•

Money Control

CGTMSE circular, Bank data, CGTMSE Proposal, Listen Customer and Credit officer conversation, Visit to Punjab National Bank Goregaon East Branch, etc.

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