y Founded by Sir Sorabji Pochkhanawala in 1911. y Nationalization in 1969. y Large network -- present in 27 states & 3 UTs.

3656 branches and 178

extension counters .

y The Total Business increased to Rs. 3,10,763 crores as on March 31, 2011

registering a growth of 15.43% .

y Net Profit for the year 2010-11 amounts to Rs. 1252 crore, a growth of

19% over the previous year. Net NPA ratio declined to 0.65% as on March 31, 2011 from 0.69% as on 31.03.2010.

y Total Advances to Small Enterprises amounted to Rs 9165 crore in 2010.

y Access To Finance.
Lack of availability of adequate and timely credit, High cost of credit, Collateral requirements, Limited access to equity capital. The share of the credit to the MSME sector in Net Bank Credit (NBC) has declined from 22.3 % to 15.9 % during 2000-09.

y Access to Markets. y Access to Infrastructure. y Access to People. y Access to Technology & Environmental Constraints. y Issues regarding Regulatory Facilitation.

y To study the financial requirements of Micro, Small & Medium

Enterprises.
y To understand the various steps involved in the credit appraisal process

for financing various needs of the MSMEs by the Banks.

y Through a survey among the MSMEs, search for the gap between the

existing facilities of credit and the ideal requirements as well as the expectations of the sector.
y Recommend certain measures for better credit facilities to MSMEs on

the basis of finding of this study.

FUND BASED REQUIREMENTS y For the acquisition of capital assets e.g. land/ building / machinery / equipments etc. OR y Purchase of stocks of raw materials / finished goods, extending credit to trade debtors and for other day-to-day business operations. OR
y Both the above.

NON- FUND BASED REQUIREMENTS

y Letters of Credit y Bank Guarantees

y SUBMISSION OF LOAN APPLICATION. y INITIAL PROCESSING OF THE LOAN APPLICATION y APPRAISAL OF THE PROPOSED PROJECT
y CREDENTIALS / TRACK RECORD. y SITE VISIT. y ANALYSIS OF PAST & PROJECTED FINANCIAL STATEMENTS. y ACCOUNTING RATIOS. y VARIOUS STEPS IN THE APPRAISAL PROCESS. y CREDIT RATING

y ISSUE OF THE LETTER OF SANCTION y ACCEPTANCE OF TERMS & CONDITIONS BY THE BORROWING

UNIT y EXECUTION OF LOAN AGREEMENT y DISBURSEMENT OF LOAN y MONITORING

y TARGET POPULATION : Micro, Small & Medium Enterprises which take

loans from Banks & Financial institutions.

y SAMPLING UNIT : The MSMEs in the sample area, i.e. Shahdara Industrial

area, one of the prominent industrial areas of Delhi.

y SAMPLE SIZE : 50 MSMEs y SAMPLING METHODOLOGY : Convenient Sampling .

Sampling was done through database provided by the Bank, websites which have the addresses and the contact numbers of the business enterprises (like www.indiamart.com) and by cold calling.
y DATA COLLECTION : The primary instrument for data collection in this

research was questionnaires, which contained a mixture of closed and open ended questions.

y LIMITATIONS.

OPINION ON SERVICES OF BANK

y Most of the enterprises depend on banks or other financial institutions to

start or operate their business.

y Public sector banks remain the first choice for the MSMEs especially due to

their low rates of interest. However, they bring their own set of problems like delay in the documentation process.
y Credit options, interest rates, collateral security and documentation

process are the chief concerns among the MSMEs. Micro enterprises feel that banks stress a lot on collateral security and lend each pie on the basis of it.
y A considerable no of MSMEs especially in the micro sector are unaware of

credit schemes designed for them.

y Personal savings are still the major other source of finance for them.

y MSMEs make a major contribution to the growth and employment and

their ability to grow depends on their potential to invest in technology, restructuring, innovation and human resource development.
y There is a need for banks to focus their attention on the MSME sector

without affecting their profitability and without compromising on the quality of lending.
y Heavy dependence on debt rather than equity. This calls for an

innovative approach to lending.

y Due to higher risk awareness of the finance sector and the needs of

Basel II, many MSMEs are confronted for the first time with internal rating procedures or credit scoring system by their banks.

y Focus on more customized products. y Loans should be more of secured by a charge of overall assets of a

business. y Effects of high risk profile. The appraisal process should consider the sector s limited access to equity finance and high dependence on debt markets, blocking or delayed payments by vendees etc.
y Banks should gear up to offer entrepreneurs information about

industry, products, markets etc in addition to financial assistance. y The banks should communicate the relevant criteria affecting the rating of MSMEs and inform them about its assessment in order to allow MSMEs to improve. y Faster documentation process. y Prompt response to the queries on loans with the simplified details.