SMALL SCALE INDUSTRIES’ PERCEPTION

TOWARDS
BANK LOAN AS A SOURCE OF FINANCE
Presented by
Rishab Prasad soni
Braja kumbhar
Saiprasad sahu
M.Com 2nd year G. M. University, Sambalpur
 INTRODUCTION
 Small scale industries cab be defined in terms of person employed, capital investment in plant and
machinery, volume of output and power consumed.
 In India, it can be defined in term of investment in plant and machinery or equipment.
 According MSME Act,2006 the small scale industries are classified into two classes-

(a) In case of manufacturing sector

the investment in plant & machinery is > Rs 25 lakh but < Rs 5 Crore.

(b) In case of service sector

the investment in equipment is >Rs10 lakh but < Rs 2 Crore.

 As per 2019, the small scale industries contribute 29% of the total GDP and 50% of the total exports
besides creating employment opportunities for young masses.
 OBJECTIVES OF THE STUDY

 To find out the perception of small scale industries towards bank loan.

 To find out the factors perceive more by the SSIs while taking loan from bank.

 To find out the performance of SSIs in sambalpur District.

 RESEARCH METHODOLOGY

 This study is based on primary data collected through questionnaire from 50 small scale
firms located in the sambalpur district.

 To explore the factors perceived as important by small scale industries while taking loan
from banks, Simple statistical tool like pie chart are applied on the data collected through
judgement sampling.
 LIMITATION OF THE STUDY

 The study is confined to Sambalpur district only.

 The sample size is confined to 50 because of limited fund and time constraints.

 The data collected may be biased as the respondents are small scale firms.

 It is a type of descriptive research focus on fact finding.

 DATA ANALYSIS
Have you ever taken loan from bank?
In the above chart we can see that 72% of the
SSIs unit taking loan from the bank while
28% of the SSIs are not taking loan from the
bank at all.
Which factors discourage you while taking loan?
From the above chart, we can see that 11.1 % of
SSIs considered high margin of security is the
factor which discourages the most,25%
considered high interest rates as the factor,30.6%
considered delay in processing and
documentation as the factor and 33.3% SSIs
considered terms and conditions as the factor.
If Yes, For what purpose?
In the above chart, it is well noticed that most
of the 52.4 of the SSIs unit take loan for the
expansion of the business, 14.3% for the
modernisation, 16.7% for the fulfilment of
working capital needs, 16.7% for fixed
capital requirement.
Which factors encourage you
the most in taking loan?
from the above chart it can be concluded
25.5% of the SSIs have replied that, it is the
lucrative government schemes which
influence in taking loan from the bank,38.3%
replied low interest rates as the factor,21.3%
replied easy processing as factor, and 14.9%
replied easy availability as the factor.
How often do you take loan
from bank?
It is clear from the chart that 39.5 of SSIs take
loan from yearly basis,37.2 % on more than a
year basis, 16.3% on more than a year basis,
7% on half-yearly basis.
which type of bank do you
prefer while taking loan?
Here we can see that 68.1 % of the SSIs
preferred public sector bank while taking
loan whereas only 31.9 % SSIs preferred
private sector bank while taking loan.

Time taken by the bank in
disbursement of loan?
The above chart indicates the time taken by the
bank in disbursement of loan.54.5 of the SSIs
opinion that, they get loan slower than
expected time, 27.3 opinion that they get loan
on time and 18.2 % opinion that they get loan
faster than expected time.
How do you come to know
about bank loan facility?
From the above chart it is observed that, 34.8%
of the SSIs say they come to know about the
bank loan from family & friends, 30.4%
through self inquiry, 21.7% from business
contacts,13% through mass communication.
How many times your loan
application had been
approved?
From the above chart we can understand that,
47.7% of the SSIs have replied, they get their
loan application approved most of the time,
29.5% have replied they get the application
approved least of the time, 18.2 % have
replied always and 4.6% have replied never.
What amount of applied loan
had been sanctioned to you?
It can be seen from the above chart, 54.5%
of the SSIs are of opinion that they get
sanctioned 75% of the applied loan amount,
25% of SSIs say 50%, 13.6% of the SSIs
say 25% and the rest of the SSIs say 100%.
Have you accomplished the purpose for
which you have taken the loan?
The above chart makes clear, 65.9% of SSIs
acknowledge that they have accomplished their
purpose with the loan for which they have taken
the loan and 34.1% of the SSIs have not
accomplished their purpose.
Have you ever faced any
problem in repaying loan?
From the above chart it is clear that, 65.9% of
the SSIs opinion that they have faced problem in
repaying loan while 34.1% of the SSIs have not
faced any problem at all.
 IF YES, WHICH PROBLEM YOU HAVE FACED?

• It is clear from the above chart that the problem faced by SSIs in
repaying loan, 38.7% of the SSIs unit unable to repay the loan as
they get lessor profit, 22.6% of the SSIs faced problem like
unsuccessful implementation of loan, 25.8% of the SSIs due to
market competition and 12.9% due to insolvency.
 FINDINGS AND CONCLUSIONS
 Most of the SSIs take loan from bank (Bank as a source of finance).
 Terms & conditions of the bank are most discouraging factors.
 Most of the SSIs take loan for expansion purpose.
 Low interest rate is the most encouraging factor for taking loan.
 Most of the loans are taken on yearly basis.
 Most of the SSIs preferred public sector banks while taking loan.
 Most of the SSIs are of opinion that bank disburse loan slower than expected.
 Majority of the SSIs come to know about the bank loan from friends and family.
 Most of the SSIs accomplished their purpose.
 Most of the SSIs faced problem in repaying the loan.
 Most of the SSIs unable to repay the loan due to less profit.
 SUGGESTIONS
It is suggested from the above findings that banks should provide consultancy services and professional
guidance at the time of providing long term and short term loan to small units which will definitely help small
scale firms to understand the procedures and kind of the documentation required for getting loan from banks.
Further, banks should try to create awareness among small scale firms regarding the kind of assets they can use
as collateral security so that firms do not hesitate to approach banks to apply for loan. Hence, regular interaction
of commercial banks with SSI clients can build up confidence between both the parties.
 BIBLIOGRAPHY
 OECD (2006). Financing SMEs and Entrepreneurs. Retrieved from www.oecd.org/dataoecd/ 53/27/37704/20.pdf.

 Osotimehin, K.O., Charles, J., Babatunde, A., & Olajide, O.T. (2012). An Evaluation of the Challenges and

Prospects of Micro and Small Scale Enterprises Development in Nigeria. American International Journal of

Contemporary Research, 2(4), 174-184.

 Padachi, K., Howorth, C., & Narsimhan, M.S. (2012). Working Capital Financing Preferences: The Case of

Mauritian Manufacturing Small and Medium Sized Enterprises. Asian Academy of Management Journal of

Accounting and Finance, 8(1), 125-157.

THANK YOU