A Project report On

ROLE OF PUBLIC SECTOR BANKS IN SME FINANCING

CHAPTER - 1
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INTRODUCTION

1.1 INTRODUCTION TO SMEs

Small and Medium Enterprises (SMEs) have played a significant role world over in the economic development of various countries. Over a period of time, it has been proved that SMEs are dynamic, innovative and most importantly, the employer of first resort to millions of people in the country. The sector is a breeding ground for entrepreneurship. The importance of SME sector is well-recognized world over owing to its significant contribution in achieving various socio-economic objectives, such as employment generation, contribution to national output and exports, fostering new entrepreneurship and to provide depth to the industrial base of the economy. Small and medium-sized enterprises (SMEs) are the backbone of all economies and are a key source of economic growth, dynamism and flexibility in advanced industrialized countries, as well as in emerging and developing economies. SMEs constitute the dominant form of business organization, accounting for over 95% and up to 99% of 2

enterprises depending on the country. They are responsible for between 60-70% net job creations in Developing countries. Small businesses are particularly important for bringing innovative products or techniques to the market. Microsoft may be a software giant today, but it started off in typical SME fashion, as a dream developed by a young student with the help of family and friends. Only when Bill Gates and his colleagues had a saleable product were they able to take it to the marketplace and look for investment from more traditional sources. SMEs are vital for economic growth and development in both industrialized and developing countries, by playing a key role in creating new jobs. Financing is necessary to help them set up and expand their operations, develop new products, and invest in new staff or production facilities. Many small businesses start out as an idea from one or two people, who invest their own money and probably turn to family and friends for financial help in return for a share in the business. But if they are successful, there comes a time for all developing SMEs when they need new investment to expand or innovate further. That is where they often run into problems, because they find it much harder than larger businesses to obtain financing from banks, capital markets or other suppliers of credit. Common Characteristics of SMEs (a) Born out of individual initiatives & skills SME startups tend to evolve along a single entrepreneur or a small group of entrepreneurs; in many cases; leveraging on a skill set. There are other SMEs being set up purely as a means of earning livelihood. These includes many trading and retail establishments while most countries continue SMEs to manufacturing services, others adopt a broader definition and include retailing as well. (b) Greater operational flexibility The direct involvement of owner(s), coupled with flat hierarchical structures and less number of people ensure that there is greater operational flexibility. Decision making such as changes in price mix or product mix in response to market conditions is faster. (c) Low cost of production

SMEs have lower overheads. This translates to lower cost of production, least upto limited volumes. (d) High propensity to adopt technology Traditionally SMEs have shown a propensity of being able to adopt and internalize the technology being used by them. (e) High capacity to innovate export: SMEs skill in innovation, improvisation and reverse engineering are legendary. By being able to meet niche requirements, they are also able to capture export markets where volumes are not huge. (f) High employment orientation: SMEs are usually the prime drives of jobs, in some cases creating up to 80%. Jobs SMEs tend to be labour intensive per se and are able to generate more jobs for every unit of investment, compared to their bigger counterparts.

(g) Reduction of regional imbalances Unlike large industries where divisibility of operations is more difficult, SMEs enjoy the flexibility of location. Thus, any country, SMEs can be found spread virtually right across, even through some specific location s emerge as clusters.

SMEs in India
India has a vibrant SME sector that plays an important role in sustaining economic growth, increasing trade, generating employment and creating new entrepreneurship in India. In keeping in view its importance, the promotion and development of SMEs has been an important plank in our policy for industrial development and a well-structured programme of support has been pursued in successive five-year plans for. SMEs in India have recorded a sustained growth during last five decades. The number of SMEs in India is estimated to be around 13 million while the estimated employment provided by this

sector is over 31 million. The SME sector accounts for about 45 per cent of the manufacturing output and over 40 per cent of the national exports of the country. Figure 1.1 SMEs In India

India embarked on the path of opening up its economy and integrating it with the global economy in 1991. The liberalization of economy, while offering tremendous opportunities for the growth and development of Indian industry including SMEs, has also thrown up new challenges in terms of fierce competition. The very rules which provide increased access for our products in the global markets also put domestic industry under increased competition from other countries. In todays world, access on a global basis to modern technology, capital resources and markets have become the most critical determinants of international competitiveness.

Defining SMEs
In India, the enterprises have been classified broadly into two categories: (i) Manufacturing; and (ii) Those engaged in providing/rendering of services.

Both categories of enterprises have been further classified into micro, small and medium enterprises based on their investment in plant and machinery (for manufacturing enterprises) or on equipments (in case of enterprises providing or rendering services). The classification on basis of investment is as under: Table 1.1 Classification Of Micro, Small And Medium Enterprises Classification Micro Small Medium Investment Ceiling for Plant, Machinery or Equipments Manufacturing Enterprises Upto Rs.25 lakh Above Rs.25 lakh & upto Rs.5 crore Above Rs.5 crore & upto Rs.10 crore Service Enterprises Upto Rs.10 lakh Above Rs.10 lakh & upto Rs.2 crore Above Rs.2 crore & upto Rs.5 crore

Table 1.2 Classification Of Micro, Small And Medium Enterprises Before 2nd October, 2006 Classification Micro Small Medium Investment Ceiling For Plant, Machinery Or Equipments*@ Manufacturing Enterprises Upto Rs.25 lakh Above Rs.25 lakh & upto Rs.1 crore Not defined Not defined Service Enterprises Upto Rs.10 lakh Not defined

(http://www.dcmsme.gov.in/ssiindia/MSME_OVERVIEW09.pdf last accessed on 26 Nov, 2009) While calculating the investment in plant and machinery/equipment referred to above, the original price thereof shall be taken into account, irrespective of whether the plant and

machinery/equipment are new or second hand. In case of imported machinery/equipment, the following duty/charges/costs shall be included in calculating their value:

Import Duty (not to include miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port); Shipping Charges; Customs Clearance charges; and Sales Tax or Value-added Tax. Cost of the following plant & machinery/equipments etc would be excluded:; Equipments such as tools, jigs, dies, moulds, and spare parts for maintenance and the cost of consumable stores; Installation of plant &machinery; Research and development and pollution control equipments; Power generation set and extra transformer installed by the enterprises as per the Regulations of the State Electricity Board; Bank charges and Service Charges paid to the National Small Industries Corporation or the State Small Industries Corporation; Procurement or Installation of cables, wiring bus bars, electrical control panels (not mounted on individual machines) Oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures; Gas producer plants; Transportation charges (other than sales tax or value-added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise);

Charges paid for technical know-how for erection of plant machinery; Such storage tanks which store raw materials and finished products only and are not linked with the manufacturing process; Fire-fighting equipment; and Such other items as may be specified, by notification from time to time.

In case of Service Enterprises, the original cost to exclude furniture, fittings and other items not directly related to the services rendered. Land and Building would also not be included while computing the machinery/equipments cost. SME would be meant to include Micro Small and Medium Enterprises (MSMEs). The above definitions of Micro, Small and Medium Enterprises would be in place of the existing definitions of Small & Medium Industries and SSSBEs/Tiny Enterprises.

Micro Enterprises would include Tiny Industries also. Small Enterprises (Manufacturing) would mean Small Scale Industries (SSIs). Medium Enterprises (Manufacturing) would mean Medium Industries (MIs). Small Enterprises (Services) and Medium Enterprises (Services) would mean other Small & Medium Enterprises. Thus, SME Advances would be categorised as under:

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 Professional & Self-Employed, 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/non-borrowing 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 SME. The sanctioned limits would no longer be the criteria determining the status as micro or small or medium enterprises in these cases. Reserve Bank of India has since reviewed the definition on Priority Sector and have issued revised guidelines on lending to Priority Sector vide their Master Circular dated 2nd July, 2007. As per this circular Retail Trade is excluded from the activities classified as SME.

(http://www.bankofindia.com/smepol.aspx last accessed on 26 Nov, 2009)

Development of SMEs In India

Making the best use of the material resources by employing higher order of skill and artistic talents through traditional handicrafts, India has occupied a permanent place of pride in the world before industrial resolution. However, the advent of modern large scale mechanized industry, the imposition of restrictions on Indian trade by the British rulers and deteriorating socio-economic conditions lead to the decline of Small Scale Industry. But with the provisions of permanent place in the nation's policy of economic development after the attainment of the Independence, it has staged a grand recovery and is now well entrenched on the path of progress towards great expansion. SME has emerged into prominent sector in Indian economy in general and industry in particular. SSI sector in India has posted impressive growth in 1990's from 15% in 1991-92 to 55% in 2001-02.The growth in employment generation has been equally impressive from 3% to 45% during the same period. Employment in SME touched 19 million, just behind agriculture. Share of SSI exports crosses 40% of total exports. Growth by itself in SME sector is impressive enough indicating a positive response to the Economic Reform process initiated in the country since 1991. --- Development of infrastructure --- Assured supply of Raw Materials --- Availability of Cheap Credit --- Concessionary Taxes and Tariffs. --- Financial subsidies --- Equity contributions are all the protective measures for the sector Table 1.3 Progress Of SMEs In India Year 1990-91 1991-92 1992-93 1993-94 Total SME Units (Lakhs) 67.87 70.63 73.51 76.49 9 Fixed Investment (Rs Crores) 93555 100351 109623 115795

1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

79.60 82.84 86.21 89.71 93.36 97.15 101.1 105.21 109.49 113.95 118.59 123.42

123790 125750 130560 133242 135482 139982 146845 154349 162317 170219 178699 188113

Small and Medium Enterprises - Industrial policy: The small and Medium industries have a specific role to play by the Industrial policy 1948 which stated that cottage and small scale industries are particularly suited for better utilization of local resources and for the achievement of local selfsufficiency in respect of certain type of essential goods. A Small and Medium

Industries Board was constituted in 1954 and a number of helping schemes such as supply of machinery on hire purchase, liberal and wider grants. The Government announced its second Industrial policy in 1956 which replaced the Industrial policy resolution of 1948.While such measures continue to be taken wherever necessary, the aim of the state policy is to ensure that the decentralized sector acquires sufficient that of vitality to be self supporting large and its development is integrated with scale industry. Besides, the Government intended to strengthen the

existing arrangements to finance small scale units and make changes if necessary to ease the credit problems of the sector. The system of reservation of items for exclusive production by small scale units would continue in future. The Industrial policy statement of 1985 was also accorded importance to small scale

sector and made some suitable policy changes. The definition of small scale unit was revised to include all manufacturing units having investment in Plant and Machinery unto Rs.35 Lakhs. In case of ancillary units, the investment ceiling was Rs.45 Lakhs.

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In the policy statements of 1991, the state followed a policy of supporting small enterprises in the country. Small and Medium enterprises account for 55% of industrial production, 40% of exports and above 88% of manufacturing employment. Hence, this sector is considered as dynamic and vibrant sector of the country. The relative importance tends to vary inversely with the level of development and then government their contribution. Small and Medium enterprises have emerged as the leaders in the industrial sector. In recognition of their significance and stature, the announced policy measures on August 6, 1991 for the first time in the post independence period. This was to promote and strengthen small, tiny and village enterprises. This is almost a U-turn in policy stimulants and structure of micro and small enterprises in the country.

Role of SME sector in Nation Development

The Small and Medium sector plays an important role in the Indian economy in terms of employment and growth has recorded a high rate of growth after independence. SMEs play a vital role for the growth of Indian economy by contributing 45% of the industrial output, 40% of exports, 42 million in employment, create one million jobs every year and produces more than 8000 quality products for the Indian and international markets. As a result, SMEs are today exposed to greater opportunities for expansion and diversification across the sectors. Table 1.4 Data Of SMEs In India

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Year

Total SME Units (Lakhs) 67.87 70.63 73.51 76.49 79.60 82.84 86.21 89.71 93.36 97.15 101.1 105.21 109.49 113.95 cause for

Fixed Investment (Rs Crore) 93555 100351 109623 115795 123790 125750 130560 133242 135482 139982 146845 154349 162317 170219 unemployment

Production (Rs Crore) 63518 73072 85581 98804 122210 148290 168413 189178 212901 234255 261289 282270 311993 351427 in India is the

Employment (lakh persons) 158.34 165.99 174.84 182.64 191.40 197.93 205.16 213.16 220.55 229.10 239.09 249.09 260.13 271.36 over

Export (Rs. Crore) 9664 13883 17784 25307 29068 36470 39248 44442 48979 54200 69797 71244 86013 95510

1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 The root

growing population

which has outpaced the development of industry and agriculture. For a country like ours, with limited financial resources and huge reservoir of human resources, Small and Medium industry is the only means for solving the unemployment problem. Small and Medium industry is providing employment at an increased rate which is evident from the table above. The Indian market is growing rapidly and Indian industry is making remarkable progress in various Industries like Manufacturing, Precision Engineering, Food Processing, Pharmaceuticals, Textile & Garments, Retail, IT, Agro and Service sectors. SMEs are finding increasing opportunities to enhance their business activities in core sectors. The good performance of the small scale units is evident from their number, production, employment and foreign exchange earnings.

Problems of SMEs
Despite its commendable contribution to the Nation's economy, SME Sector does not get the required support from the concerned Government Departments, Banking Sector, Financial Institutions and Corporate Sector, which is a handicap in becoming more

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competitive in the National and International Markets and which needs to be taken up for immediate and proper redressal. SME sector faces a number of problems - absence of adequate and timely banking finance, limited knowledge and non-availability of suitable technology, low production capacity, follow up with various agencies in solving regular activities and lack of interaction with government agencies on various matters. Some of the major problems are briefly as follows: a) Financial problems of SMEs: The financial problem of SMEs is the Root Cause for all the other problems faced by the SME sector. The small and medium industrialists are generally poor and there are no facilities for cheap credit. They fall into the clutches of money lender who charges very high rates of interest, or else they borrow from the dealers of their goods, who exploit them by completing them to sell their products at very low price. After the nationalization of 14 major Indian Banks in July, 1969, the Commercial banks were providing only a small proportion of SMEs financial requirements. Credit to the SME sector continues to be non-commensurate with its contribution to the total industrial output. As against the share of the village and SME at 40% in the industrial output, its share in total credit to the industrial sector is only about 30%. b) Raw Material problem of SMEs: This difficulty is experienced in a very pronounced form. The quantity, quality regularity quantity of the supply of since raw materials they are not in satisfactory. There discounts, are purchased and are no

small quantities and hence

charged, higher prices by suppliers. Difficulty is also experienced in procuring semimanufactured materials. Financial weakness stands in the way of securing raw materials in bulk in a competitive market. c) Production problem of SMEs: SME units suffer from inadequate work space, power, lighting and ventilation, and safety measures etc. These short comings have tended to endanger the health of units are workmen and have adversely affected the rate of production. Many

following primitive methods of production. Adoption of modern techniques is either

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disliked by the entrepreneurs is not feasible.

Wage rates and service conditions of

small industries are not attractive to skilled labor. d) Technological problem of SMEs: Today technology is changing at a very fast phase; it becomes difficult for SMEs to cope up with changing technology. Technology up gradation and the frequent need to renew the equipment has emerged as a big problem. d) Marketing problem of SMEs: As marketing is not properly organized, the helpless artisans are completely at the mercy of middle man. The potential demand for their goods remains under developed. The SMEs have to face the competitions from large scale units in marketing their products. It causes damage to the growth and stability of SMEs. SMEs cannot afford to spend lavishly for advertisement to promote their sales.

e) Managerial problem of SMEs: Small scale industries in our country have suffered from the lack of entrepreneurial ability to develop initiative and undertake risks in the unexplored industrial fields. The in efficiency in management comes first among managerial problems. The entrepreneurial ability of promoters of cottage industries and SMEs are handicapped by technical know how in the areas of production, finance, accounting and marketing management. f) Sickness of SMEs: A serious problem which is hampering small and medium sector has been sickness. Many small units have fallen sick due to one problem or the other. Sickness is caused by two sets of factors, Internal and external factors. From among and external causes of the various internal sickness the important ones are bud management,

high rate of capital gearing, inadequacy of finance, short of raw materials, outdated plant and machinery, low labor productivity etc. (http://www.smechamberofindia.com/challenges_to_sme_sector.aspx last accessed on 27 Nov, 2009)

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Figure 1.2 Reasons For The Sickness Of SMEs

(http://milagrow.in/k-solutions/msme-planet/sickness-rehabilitation last accessed on 25 Jan, 2010) The above figure shows that finance has been the major reason for the sickness of SME units. The other major reasons are ineffective management and technology upgradation according to the latest technological changes. Need of the hour The need of the hour for Indian SMEs is to upgrade their technology, quality and adopt modern management techniques to keep pace with the changes that are taking place in the global market. Investment would be a prerequisite in these areas to bring about transformation. The availability of adequate credit at affordable cost, thus, becomes critical for Indian SMEs. SIDBI is the national level principal financial institution for promotion, financing and development of SMEs. To empower the SME Sector to take its rightful place as the growth engine of Indian economy, it is necessary to support the SMEs, educate and empower them to make optimum utilization of the resources, both human and economic, to achieve success. The SMEs need to be educated and informed of the latest developments taking place globally and helped to acquire skills necessary to keep pace with the global developments.

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SME Chamber of India has decided to start various activities to empower and educate the SME Sector by organising various trade promotional activities in India and abroad. Also provide assistance and support for the promotion of domestic business as well as export promotion of the SME sector. (http://www.smechamberofindia.com/need_of_hour.aspx last accessed on 27 Nov, 2009) To encourage the growth of small scale industries in India, Government has reserved certain products for manufacture in the small scale sector in areas where there is technoeconomic justification for such an approach. Large/Medium units can, however, manufacture such reserved items provided they undertake to export 50% or more of their production. As on 10 October 2008, following items are reserved for exclusive manufacture by micro and small enterprise sector:

Food and Allied Industries: Pickles & Chutneys, Bread, Mustard Oil (except Wood and Wood Products: Wooden furniture and fixtures Paper Products: Exercise books and registers Injection Moulding Thermo Plastic Product: PVC Pipes, including conduits Other Chemicals & Chemical Products: Wax candles, Laundry soap, Safety Glass & Ceramics: Glass Bangles Mechanical Engg. Excluding Transport Equipment: Steel almirah, Rolling

solvent extracted), Ground nut oil (except solvent extracted).

upto 110 mm dia, Fittings for PVC pipes

matches, Fire works, Agarbatties

shutters, Steel chairs all types, Steel tables all other types, Steel furniture all other types, Padlocks, Stainless steel utensils, Domestic utensils Aluminium (http://www.iloveindia.com/finance/doing-business-in-india/small-scaleindustries.html last accessed on 8 feb, 2010)

SME Policy Initiatives in 2009

A continuous attention to ongoing schemes to assist MSME has demonstrated success in several areas. However, the Ministry of MSME and other government departments

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are still working hard to pull the sector out of the recession and overcome some inherent problems. Several of the schemes started by the Ministry of Micro, Small and Medium Enterprises (MSME) to promote the development of micro, small and medium enterprises in the country saw success this year. Following are some progress areas in 2009 that have made a positive impact on SMEs, especially during the painful process of recovering from an economic recession. Better Credit Flow: The Policy Package for Stepping up Credit to Small and Medium Enterprises (SME) was set up by the government in August 2005 for doubling the credit flow to the MSME sector within a period of five years. Credit flow from Public Sector Banks (PSBs) to this sector has increased from Rs.67, 634 crore at the end of March 2005 to Rs.1, 91,307 crore at the end of March 2009. Skill Development on priority: Various measures like enhancing the training capabilities of the Tool Rooms, MSME Development Institutes and other organizations under the Ministry of MSME have helped to train nearly 2.61 lakh trainees during 200809. The target set for 2009-10 is to train 3.2 lakh persons, with several programs organised free of cost for the weaker sections of society. Improving Competitiveness: Six out of the ten components under the National Manufacturing Competitiveness Programme (NMCP) for MSMEs are now operational. These are (i) Quality Management Systems and Quality Technology Tools, (ii) Building awareness on Intellectual Property Rights, (iii)Support for Entrepreneurial and Managerial Development of MSMEs, and (iv)Marketing support/assistance to MSMEs (v)Lean Manufacturing Competitiveness Scheme and (vi) Mini Tool Room Scheme. Success of Credit Guarantee Scheme: MSMEs are often unable to provide collateral as security to procure loans. The governments credit guarantee scheme has been rather successful because of timely interventions to make the scheme more attractive to lenders and borrowers. For instance, the loan limit was enhanced from Rs.25 lakh to Rs.100 lakh, the one-time guarantee fee was reduced from 2.5% to 1.5%, etc. Success can be gauged from the data on increased coverage. From about 40,000 proposals received (for loans of

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Rs.1000 crore) at the end of March 2004, more than 2.27 lakh proposals (for loans of over Rs.8200 crore) at the end of November 2009. Capital subsidy spreads coverage: Under the Credit Linked Capital Subsidy Scheme for Micro and Small Enterprises (CLCSS), 15 per cent capital subsidy is provided on loan amounts upto Rs. 100 lakh for technology upgradation. From the 47 products/sub-sectors with nearly 1400 well-approved technologies/machines for subsidy under the scheme, now 179 new technologies machines for pharma sectors have been added to this list. Until October 2009, 7810 proposals of subsidy were approved and Rs. 338.68 crore was released to the MSEs under the scheme. Quality improvement on priority : The ISO-9000/ISO-14001/HACCP Certification Reimbursement Scheme is an incentive scheme to upgrade technology and improve quality that provides for one time reimbursement of charges for acquiring ISO9000/14001/HACCP (or its equivalent) certification to the extent of 75% of the cost subject to a maximum of Rs. 75,000/- in total. Decentralised in 2007, the scheme saw growing popularity in 2009, with about 690 units amounting to Rs. 2.88 crore being reimbursed uptil November 2009 during 2009-10. Employment Generation: The Prime Ministers Employment Generation Programme (PMEGP) was launched in August 2008 with a total plan outlay of Rs. 4735 crore including Rs. 250 crore for backward and forward linkages. Around 38 lakh additional employment opportunities in the terminal four years (2008-09 to 2011-12) of XI Plan are expected.The program provides financial assistance to set up microenterprises costing upto Rs.10 lakh in service sector and Rs. 25 lakh in manufacturing sector in the form of subsidy upto 25 per cent of the project cost in rural areas and 15 per cent for urban areas. Until March 2009, 2,17,762 applications were received under PMEGP, of which 83,454 candidates were selected. About 36,444 projects were sanctioned financial assistance by banks for generating an estimated 3.64 lakh additional employment. Loans were disbursed in 25,507 cases by banks giving employment opportunities to about 2.55 lakh persons until 31st August 2009. About 4.5 lakh additional employment will be generated in2009-10.

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(http://www.businessworld.in/bw/2010_01_04_SME_policy_initiatives_in_2009.html last accessed on 9 feb, 2010)

SME Financing
SME Finance is the funding of small and medium sized enterprises and represents a major function of the general business finance market in which capital for firms of types is supplied, acquired, and costed/priced. Capital is supplied through the business finance market in the form of bank loans and overdrafts; leasing and hire-purchase arrangements; equity/corporate bond issues; venture capital or private equity; and assetbased finance such as factoring and invoice discounting Importance The economic and social importance of the small and medium enterprise (SME) sector is well recognized in academic and policy literature. It is also recognized that these actors in the economy may be underserved, especially in terms of finance. This has led to significant debate on the best methods to serve this sector. There have been numerous schemes and programmes in markedly different economic environments. However, there are a number of distinctive recurring approaches to SME finance.

Collateral based lending offered by traditional banks and finance companies is

usually made up of a combination of asset-based finance, contribution based finance, and factoring based finance, using reliable debtors or contracts.

Information based lending usually incorporates financial statement lending, credit Viability based financing is especially associated with venture capital.

scoring, and relationship lending.

There is also a more favorable environment now with the Govt. committed to give fillip to this sector through infrastructure development; skill set development/entrepreneurship development, technology up gradation etc. With the deregulation of the financial sector, the general ability of the banks to service the credit requirements of the SME sector depends on the underlying transaction costs, efficient recovery processes and available security. There is an immediate need for the banks generally to focus on credit and

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finance requirements of SMEs. Although the banks are allowed to fix their own targets for funding SMEs in order to achieve a minimum 20% year-on-year growth, the Governments objective is to double the flow of credit to the SME sector from Rs.67,600 crore in 2004-05 to Rs.1,35,200 crore by 2009-10 i.e. within a period of 5 years. Also, Credit risk in the SME sector is widely dispersed and Banks get better yield from SME advances as against the traditional advances where the spread is getting gradually reduced. The SME clientele base could also be utilized by the Branches to step-up cross selling of various other products including technology-enabled products.

SME Financing Gap A substantial portion of the SME sector may not have the security required for conventional collateral based bank lending, nor high enough returns to attract formal venture capitalists and other risk investors. In addition, markets may be characterized by deficient information (limiting the effectiveness of financial statement-based lending and credit scoring). This has led to claims of an "SME finance gap. The SMEs that fall into this category have been defined as Small Growing Businesses (SGBs) at a workshop in Geneva in July 2008, hosted by The Network for Governance; Entrepreneurship & Development (GE&D) There have been at least two distinctive approaches to try to overcome the so-called SME finance gap. The first has been to broaden the collateral based approach by encouraging bank lenders to finance SMEs with insufficient collateral. This might be done through an external party providing the collateral or guarantees required. Unfortunately, to the extent that the schemes concerned run counter to basic free market principles they tend to be unsustainable. Thus, the second approach has been to broaden the viability based approach. Since the viability based approach is concerned with the business itself, the aim has been to provide better general business development assistance to reduce risk and increase returns. (http://en.wikipedia.org/wiki/SME_finance last accessed on 27 nov, 2009) Sources of SME Finance: The most common sources of SME finance are as follows Figure 1.3 Various ways of Financing SMEs

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Problems of SMEs Financing The main problem faced by SMEs when trying to obtain funding is that of uncertainty: SMEs rarely have a long history or successful track record that potential investors can rely on in making an investment; Larger companies (particularly those quoted on a stock exchange) are required to prepare and publish much more detailed financial information which can actually assist the finance-raising process; Banks are particularly nervous of smaller businesses due to a perception that they represent a greater credit risk. Because the information is not available in other ways, SMEs will have to provide it when they seek finance. They will need to give a business plan, list of the company assets, details of the experience of directors and managers and demonstrate how they can give providers of finance some security for amounts provided. Prospective lenders usually banks will then make a decision based on the information provided. The terms

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of the loan (interest rate, term, security, and repayment details) will depend on the risk involved and the lender will also want to monitor their investment. A common problem is often that the banks will be unwilling to increase loan funding without an increase in the security given (which the SME owners may be unable or unwilling to provide).A particular problem of uncertainty relates to businesses with a low asset base. These are companies without substantial tangible assets which can be use to provide security for lenders. When an SME is not growing significantly, financing may not be a major problem. However, the financing problem becomes very important when a company is growing rapidly, for example when contemplating investment in capital equipment or an acquisition. Few growing companies are able to finance their expansion plans from cash flow alone. They will therefore need to consider raising finance from other external sources. In addition, managers who are looking to buy-in to a business ("management buy-in" or "MBI") or buy-out (management buy-out" or "MBO") a business from its owners may not have the resources to acquire the company. They will need to raise finance to achieve their objectives

1.2 ROLE OF PUBLIC SECTOR BANKS IN SME FINANCING

Banks are playing a major role in financing SMEs in India. Nearly 82% of the total SME financing in year 2006-07 is through banks. And among them the major share is of public sector banks i.e. 57%. Thus it is clear that the most common source of finance for SMEs is Bank Financing. There is no. of banks that help in assisting the SMEs for financing. The main channel used by the SMEs via Banks is Specialized loans by various Banks. The Main reason for choosing bank loans by SMEs compared to other sources of financing like venture capital, PE funding etc is that is only interest to be paid no stake is to be diluted thus the whole command of the SME is with the owner only. There are a number of Private as well as Public sector banks who assist SME in Financing Figure 1.4 Sources Of SME Finance (2006-07)

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Others 18%

Private sector abnks 25%

Public sector banks 57%

The role of Banks, in general, has become very important in the above context The SME sectors demands were comprehensively taken care of by the Public sector Banks through several initiatives such as:

Single Window dispensation,

Quick decision with least Turnaround Time through specially constituted SME Cells, and above all, Better service. Cluster-based Schemes are also on the list of the Banks initiatives. The Bank prioritized the following more particularly:-

Provision of timely and adequate credit to the SMEs, Encouraging Technology Up gradation, for better quality and competitiveness of their product(s), and Proactively detecting sick and viable units in time so as to nurse them back to health through appropriate re-structuring. Financing of Clusters with adequate and concessional Bank finance on liberal terms in several pockets for specified activities concentrated in these pockets, which would result in reducing transaction cost and greater economies of scale.

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Credit to SME sector from Public Sector Banks The table below gives the status of credit flow to the micro and small enterprises (SME) sector from the public sector banks since 2000: Table 1.5 Credit to SME sector from Public Sector Banks Year Net Bank Credit Credit to SMEs % of NBC 2000 316427 46045 14.6% 2001 341291 48400 14.2 2002 396954 49743 12.5 2003 477899 52988 11.1 2004 558849 58278 10.4 2005 718772 67634 9.4 2006 1017614 82492 8.1 2007 1317705 104703 8.0 (http://www.rbi.org.in/scripts/PublicationsView.aspx?id=11993 last accessed on 11 Jan, 2010) Figure 1.5 Steps For SME Loans By Public Sector Banks

24

Application for loan by SME to local branch of a particular bank in that area

. Inspection/Survey of SME by the Executives of that Local branch.

Sending the Documents of survey by Local branch to SMECC branch Preparing credentials of Promoters and firm by SMECC branch and investigating the same Estimating the amount of loan to be sanctioned and forwarding the documents for sanctioning. If the loan is been sanctioned by the central authority then disbursement of the loan amount into account of the SME.

The above figure shows the steps for availing finance through Public sector Banks using loans. Here is the brief description of the above shown procedure: First of all the SME who wants to avail loan has to visit the local branch office of the bank of their area, where by the loan application is been filled by the SME. After that the executives of that branch check whether all the necessary

documents are provided by the SME or not, then if all necessary documents are submitted the next step comes whereby the officials of that local branch go to the premises of that SME and just have a brief survey of promoter as well as the premises. After they are satisfied they send the file of necessary documents to the SMECC branch, which is a special branch for SME loans. Where by the credit appraisal takes place, which consist of credit appraisal of promoter, financial appraisal, determining cost of project, understanding various means of finance used, profitability estimate, cash flow projections , marketing appraisal 25

etc., which is explained in next section. This step brings out the clear picture whether the loan should be given to the SME or not? If the SMECC branch is satisfied with the details then it forward the request of granting loan to the sanctioning authority. And finally after the verification by sanctioning authority, the disbursement of loan amount takes place in the account of that SME This whole procedure right from application to disbursement of loan amount takes approximately 20-25 days as the procedure involves analysis of documents by various branches and thus the movement of documents amongst them, if all this procedure would have taken place at single place then it would take only 10-12 days for disbursement. Some Public sector Banks offering SME financing schemes are as follows: 1) State bank of India and its subsidiaries 2) Allahabad Bank 3) Oriental Bank of Commerce 4) Bank of Baroda 5) Bank of India 6) Punjab & Sind Bank 7) Central Bank of India 8) Punjab National Bank 9) IDBI Bank 10) Indian Bank 11) Canada Bank 12) Corporation Bank

State Bank of India

State Bank of India has been playing a vital role in the development of small scale industries since 1956.The Bank has financed over 8 lakhs SSI units in the country. It has 55 specialized SSI branches, 99 branches in industrial estates and more than 400 branches 26

with SIB divisions. The Bank finances for Small Business activities which are of special significance to a large number of people as many of these activities can be started with relatively lower investment and with no special skills on the part of the entrepreneurs. The following are the SME products offered by State Bank Of India: Commodity Packed Warehouse Receipt Financing Surabhi Deposit Scheme Traders Easy Loan Scheme SSI Loans Business Current Accounts Open Term Loan Retail Trade Doctor Plus SBI Shoppe Cyber Plus SME Credit Plus Small Business Credit Card SME Petro Credit Dal Mill Plus Paryatan Plus Auto Loans Transport Operators Rice Mills Plus School Plus

IDBI Bank
IDBI Bank has been actively engaged in providing a major thrust to financing of SMEs. With a view to improving the credit delivery mechanism and shorten the Turn around Time (TAT), IDBI Bank has developed a special business model to serve the SMEs in India. The Bank has set up 24 City SME Centres (CSCs) across India in Mumbai, Delhi,

27

Kolkata, Chennai, Bangalore, Hyderabad, Pune to name a few. These CSCs are the Bank's hubs while dedicated SME desks have been set up in several branches across these cities. These branches serve as front offices for sales delivery and customer service. IDBI Bank has a wide variety of products and services catering to the needs of different segments within small business. Long years of experience in being the trusted partner of large and mid corporates has translated into deeper understanding of needs of business and industries. The Bank has parameterised products for transporters, dealers, traders, and vendors. In addition, it has a separate Transaction Banking Group that has expertise in products like cash management services, letter of credit, bank guarantees and treasury products IDBI Bank provides following SME products: Sulabh Vyapar Loan Dealer Finance Funding Under CGFMSE Direct Credit Scheme-SIDBI Preferred Customer Scheme Vendor Financing Programme Lending against the security of future Credit Card Receivables Working Capital Financing Finance to Medical Practitioners Loans to SRWOTs SME Hosiery Special Current Account

(http://www.idbi.com/sme/ last accessed on 27 Nov, 2009)

Bank of Baroda
Bank of Baroda started its operation in the year 1908 in Baroda though its Corporate Centre is in Mumbai now. Its mission is "to be a top ranking National Bank of International Standards committed to augment stake holders' value through concern, care and competence. Bank of Baroda offers following SME products and services: 28

Baroda Vidyasthali Loan Baroda Arogyadham Loan Baroda Laghu Udhyami Credit Card Baroda Artisans Credit Card Technology Upgradation scheme SME short term loans SME medium term loans Composite Loans

(http://www.bankofbaroda.com/bbs/sme.asp last accessed on 26 Nov, 2009)

Union Bank of India

Union Bank is committed to extend its best services to Micro, Small and Medium enterprises and at a very competitive price. Union Bank of India has adopted a policy package for stepping up credit to Small & Medium Enterprises. Union Bank of India has adopted a policy package for stepping up credit to Small & Medium Enterprises [SME] with the approval of the Board in its meeting held on 30th September 2005 and subsequently following steps have been initiated in this direction. Union High Pride Union Procure Union Supply Union Cyber Union SME Plus Union Transport Financing SMALL HOSIERY UNITS in Kolkata

(http://www.unionbankofindia.co.in/cb_sme.aspx last accessed on 27 Nov, 2009)

Canara Bank
Canara Bank was founded by Shri Ammembal Subba Rao Pai, a great visionary and philanthropist, in July 1906, at Mangalore, then a small port in Karnataka

29

The Bank has adopted a Policy for lending to SME sector, in tune with Govt. of India guidelines as per MSMED Act, 2006, which has come into force w.e.f. 2nd October, 2006. LOAN PRODUCTS Schemes for Capital Investment Term loan for acquisition of fixed assets Standby credit for capital expenditure Standby term loan scheme for Apparel Exporters Loan scheme for reimbursement of investment made in fixed assets by SMEs Soft loan scheme for Solar Water Heaters Scheme for Energy Savings for SMEs Technology Upgradation Fund scheme (TUFS) for textile & jute industries in SME sector Credit linked capital subsidy scheme (CLCSS) Loans under Interest Subsidy Eligibility Certificate (ISEC) Scheme of Khadi & Village Industries Commission (KVIC) to eligible institutions Schemes for Working Capital Simplified Open Cash Credit (SOCC) Open Cash Credit (OCC) Micro financing joint liability groups (Handloom weaver & Agarbathi manufacturer groups) Laghu Udhyami Credit Card (LUCC) Bill of Exchange discounting facility to Small Enterpreneurs at concessional rate of interest (BE-SE)

30

CHAPTER 2 REVIEW OF LITERATURE

REVIEW OF LITERATURE
A review of literature is a critical analysis of a segment of a published body of knowledge. Various studies on a number of issues concerning small and medium enterprises had been conducted in foreign countries. However, in Indian context, the 31

number is quite few. A number of studies had been conducted related to SME Financing schemes of Public sector banks. Due to shortage of time and inability to cover all these past studies, some of these studies have been considered in this section that has provided a base for this research. Wtterwulghe and Jannsen (1997) conducted a research and analyzed the role of banks in financing medium enterprises in Belgium. It shows that, like small firms, mediumsized businesses have a preference for self-financing. As far as external funding is concerned, debt is generally their main source. How ever, their low debt ratios indicate that, as compared to the large firms, these enterprises take less recourse to banks and, as a result, pay little attention to their financial function. The banker does not play an important role as an adviser either, except when the firm decides to raise funds through the stock market. The article calls for greater specialisation on the part of the banks so that they can avoid conflicts of interest arising out of the mismatch between their service priorities and the needs of their clientele Kaura and Sharma (1999) made a research and analyzed the attitudes of the financial institutions whether belong to Central Government or Governmental Agencies promoted for state Government or the this purpose. In the wake of the MSME Act,

2006 passed in the interest of the small scale sector by the Government of India, the attitude of the financial institutions towards SME sector is totally changing. New innovations are being made for fulfilling the financial needs of SME units. The attitude of the Employees of above said financial institutions is also changing. Raju (2002) conducted a research by revisiting the Seoul and Bologna Charters on the SMEs and clarifies that the SME definition centers round the small scale industries in the absence of a clearly defined medium industry sector in India. A review of the policy, laws and the regulatory and institutional framework has been done in sufficient detail with a view to highlighting the fact that the SSIS in India require globally compatible facilitation in order to be competitive both domestically and internationally. The author maintains that easy and adequate institutional finance support is a necessary but not

32

sufficient condition for the growth of this dynamic and vibrant sector. He envisages a clear role for the Small Industry Associations recognized on the basis of well-defined criteria. He argues for a quick enactment of a comprehensive enabling law for the sector and for restructuring the office of the DC-SSI, to attain the envisaged competitiveness Nambiar (2007) conducted a research on financing for the priority sectors that paved the way for thinking strategy for financing of small scale and medium scale industries by the bank officers. The government of India through its industrial policy clearly stated that the commercial banks should give priority treatment to the SMEs. The nature of the banking officials was also discussed in the article. But that is not sufficient to because the sector was totally neglected for the last promote the SME sector

several decades due to invention of the MNCs. By enacting the MSME act, 2006, the government of India clearly indicated the signal to the banking people to provide the credit facilities to the SMEs. Raju (2008) conducted a study and analyzed that SMEs form the backbone of the Indian manufacturing sector and have become engine of economic growth in India. It is estimated that SMEs account for almost 90% of industrial units in India and 40% of value addition in the manufacturing sector. This paper closely analyses the growth and development of the Indian mall scale sector from opening of the economy in 1991. Third part looks into the present scenario of SMEs and the problems they phases like lending, marketing, license raj issues in detail. The Micro, Small and Medium Enterprises Act, 2006 is intended to boost the sector. The provisions of the Act are examined closely. The final part provides some future policy framework for the sustainability of the sector. Rani and Rao (2008) conducted a research that Small and Medium Enterprise sector is a vibrant and dynamic one, and an engine of growth for the present millennium. Financing of Micro and Small Enterprises (MSEs), which is part of the SME sector, has been given special attention by banks and financial institutions, and is included in priority sector lending. In spite of the special efforts, only 14.3% of registered small enterprises have availed institutional credit, as per the 3rd All India Census of Small Scale Industries of

33

2001-02. From 2000 to 2004, institutional credit for MSEs has shown disturbing trends, despite the high level of liquidity in the banking system and the initiatives taken by the Union Government and Reserve Bank of India (RBI). This paper examines the recent trends in credit flow to MSEs, in particular, and medium enterprises, in a limited way, from commercial banks and the Small Industries Development Bank of India (SIDBI), and outlines the recommendations of A S Ganguly Working Group and Internal Group chaired by C S Murthy. The Union Finance Ministry's directive to public sector banks is to double the credit flow to SMEs during the five-year period 2005-10. The year, 2005-06 has shown good progress in this direction. The task is to be pursued vigorously in the next four years, of which 2006-07 has been completed with encouraging performance. Innovative approaches and directions for the future are presented in the paper. SMEs need special treatment through devising special instruments of credit for strengthening their competitiveness. Torre et al (2008) made a research and investigated the conventional wisdom in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs , small and niche banks have an advantage in doing so because they can overcome SME opaqueness through relationship lending. This paper shows that there is a gap between this view and what banks actually do. Banks perceive SMEs as a core and strategic business and seem well positioned to expand their links with SMEs. The recent intensification of bank involvement with SMEs in various emerging markets documented in this paper is neither led by small or niche banks nor highly dependent on relationship lending. Rather, all types of banks are catering to SMEs and larger, multiple-service banks have in fact a comparative advantage in offering a wide range of products and services on a large scale, through the use of new technologies, business models, and risk management systems. Mercieca et al (2009) conducted a research and analyzed that how the concentration and competition in the European banking sector affects lending relationships between small and medium sized enterprises (SMEs) and their banks. Recent empirical evidence suggests that concentration and competition capture different characteristics of banking

34

systems. Using a unique dataset on SMEs for selected European regions, we empirically investigate the impact of increasing concentration and competition on the number of lending relationships maintained by SMEs. They find that competition has a positive effect on the number of lending relationships, weak evidence that concentration reduces the number of banking relationships and weak persistent evidence that they tend to offset each other. Popli and Rao (2009) made a research that in banking sector, the quality of customer service plays an important role, particularly in the context of growing competition and sustained business growth. The study is an attempt to ascertain the service quality provided by Public Sector Banks to Small & Medium Enterprises which play a key role in Indias economy. The major findings of the study have been that 1. Modernization and Communication affect the services to a large extent and there is a need of training to the staff for improvement of service to the SMEs customers; 2. The service quality of private banks is superior to that of Public sector banks; 3. Majority of the respondents revealed that the credit flow to SMEs sector is not sufficient and the Government will have to initiate necessary steps for making the required funds available easily on convenient terms; 4. Majority of the respondents feel that the policies for SME Sector of other countries are far better from the policies of India; 5. Delay in loan application processing due to unhelpful nature of the staff members, as claimed by the majority of the respondents. The banks usually provide finance against security and as high as 86% of the respondents are of the view that the banks ask for collateral security/guarantee from a third party even where the project has been assessed as viable and primary security is adequate. Popli and Rao (2009) conducted a study and analyzed that Small and Medium Enterprises have been globally recognized as vital components of a domestic economy and major contributors to employment generation in a country, regardless of global barriers. SMEs form the lifeblood of any vibrant economy. In an emerging economy like India, SMEs have a significant socio-economic role to ensure overall development of the nation. Electronic Sector is an upcoming sector in India. The Indian Electronic

35

Industry is undergoing transformation due to the new economic policy and business environment in the post WTO regime. This paper examines the problems, strategies for investments, competences development, technological up gradation, quality improvement, Govt. Policies, Equity participation by MNCs and overall improvement of this sector in the post WTO regime. The study has been done by using data acquired from an extensive survey of Indian SMEs in the Textile Sector and from the experienced Bankers/ Officials/Policy makers of Govt. of India. The key findings of the study are that lack of quality consciousness, growth conducive environment, inadequate government support and difficulties in raising funds from market. Further, the study highlights the need to upgrade technology in the Indian Electronic SME Sector and also develop a strong and supportive Financial System. The perusal of literature reveals that Small and Medium enterprises face a lot of problems, and inadequate financing is the major one. A rich literature house has been developed over time, mostly in foreign countries, with regard to SME funding. A very few studies has been conducted in India regarding the effectiveness of SME financing schemes of the public sector banks. That is why a need was felt to conduct a study in Indian context and that too in case of SME financing schemes of public sector banks and their usage that has not been extensively researched.

36

CHAPTER-3 NEED, SCOPE AND OBJECTIVES OF THE STUDY

NEED, SCOPE AND OBJECTIVES OF THE STUDY

3.1 Need of the study

37

The researches that were conducted in past by the various professionals are in foreign context and not in Indian context. Study relating to SMEs, their problems and source of financing has been done but regarding the SME financing schemes of public sector banks has not been done. This gap has been identified and it has led to the present research to be undertaken. So, the need was felt to cover the areas neglected. Thus, here a study on SME financing schemes of public sector banks was taken care of. 3.2 Scope of the study The scope of this study was limited to Ludhiana city only.

3.3 Objectives of the study Objectives are the guiding lights of a study. The present study was undertaken to achieve the following objectives: . To know about the various SME financing schemes of public sector banks and their usage. To know the effectiveness of various SME financing schemes of public sector banks. To know the problems faced by SMEs in getting credit from public sector banks. To know the benefits of SME financing schemes of the public sector banks. To check the satisfaction level of Small and Medium enterprises regarding SME financing schemes of the public sector banks.

38

CHAPTER - 4 RESEARCH METHODOLOGY

RESEARCH 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 39

reporting of data and finding relevant solution to a specific marketing situation or problem. D. Slesinger and M.Stephenson in the encyclopedia of Social Sciences define Research as the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art. Research is, thus, an original contribution to the existing stock of knowledge making for its advancement. The purpose of Research is to discover answers to the Questions through the application of scientific procedures. Our project has a specified framework for collecting data in an effective manner. Such framework is called Research Design. The research process followed by us consists of following steps: 4.1 RESEARCH DESIGN This research was descriptive and conclusion oriented research. Conclusion Oriented Research: -Research designed to assist the decision

maker in the situation. In other words it is a research when we give our own views about the research. Descriptive Research: -A type of conclusive research, which has as its major objective the description of something-usually market characteristics or functions. In other words descriptive research is a research where in researcher has no control over variable. It just presents the picture, which has already studied.

4.2 SAMPLING DESIGN Sampling can be defined as the section of some part of an aggregate or totality on the basis of which judgment or an inference about aggregate or totality is made. The sampling design helps in decision making in the following areas: 4.2.1 Universe of the study-The universe comprises of two parts as theoretical universe and accessible universe Theoretical universe- It includes all the SMEs throughout the universe.

40

Accessible universe- It includes the SMEs in Ludhiana city.

4.2.2 Sample Frame-Sample frame was Small and Medium enterprises all over India. 4.2.3 Sample Unit- Sampling unit is the basic unit containing the elements of the universe to be sampled. The sampling unit of the present study was SMEs located in Ludhiana city in Punjab. 4.2.4 Sample Size- Sample size is the number of elements to be included in a study. Keeping in mind all the constraints 100 respondents were selected. 4.2.5 Sampling Techniques- The sampling techniques used were convenience technique and simple random sampling technique. 4.3 DATA COLLECTION AND ANALYSIS 4.3.1 Data Collection: Information has been collected from both Primary and Secondary sources of data collection. Secondary sources- Secondary data are those, which have already been collected by someone else, which already had been passed through the statistical process. Secondary data had been collected through websites, newspapers and journals. Primary sources- Primary data are those, which are collected are fresh and for the first time and thus happen to be original in character. Primary data had been collected by conducting surveys through questionnaire, which include several questions and personal and telephonic interview. b) Tools of Analysis and Presentation: To analyze the data obtained with the help of questionnaire, following tools were used: Tools of Analysis: Summated Score: This tool was used for the analysis of questions based on Likert scale.

41

Weighted Average Score: This tool was used to calculate highest and lowest rank.

Tools of Presentation: Tables: This tool was used to present the data in tabular form. Bar Graphs and Pie Charts: These tools were used for analysis of data.

4.4 LIMITATIONS OF THE STUDY Due to constraints of time and resources, the study is likely to suffer from certain limitations. Some of these are mentioned here under so that the findings of the study may be understood in a proper perspective. The limitations of the study are: The research was carried out in a short period. Therefore the sample size and the parameters were selected accordingly so as to finish the work within the given time frame. The information given by the respondents might be biased as some of them might not be interested to give correct information. Some of the respondents could not answer the questions due to lack of knowledge. Some of the respondents of the survey were unwilling to share information.

42

CHAPTER-V DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPETATION

43

1. Demographic Profile of Respondents. Table 5.1 Demographic Features Demographics Designation Owner Partner Other Total Location Ludhiana Other Total Gender Male Female Total Business Hosiery Other Total Analysis and Interpretation: It had been analyzed from the table that 73% of the respondents were the owner, 19% were co-partners and 6% were at some other designation.100% of the respondents were from the Ludhiana city. 95% of the respondents were male and only 5% were female. All the respondents i.e. 100% were from the hosiery business. So it had been interpreted that maximum of the respondents were male, owner of the business and from Ludhiana city. All the respondents were from hosiery business. No. Of Respondents 73 19 6 100 100 0 100 95 5 100 100 0 100 %Age Of Respondents 73 19 6 100 100 0 100 95 5 100 100 0 100

2. What are the sources of finance used by your enterprise?

44

Table 5.2 To Know The Sources Of Finance Used By SMEs Sources of Finance Owners Financing Private financial institutions Equity finance Bank financing Venture capital Hire purchase and leasing Business angel financing Total No. Of Respondents 80 46 12 75 14 24 29 280 Figure 5.1 To Know The Sources Of Finance Used By SMEs
No. Of Respondents
Owners Financing Private financial institutions

%Age Of Respondents 29 16 4 27 5 9 10 100

10% 9% 5% 29%

Equity finance Bank financing Venture capital Hire purchase and leasing Business angel financing

27% 4%

16%

Analysis and Interpretation:The number of respondents had increased from 100 to 280, as this is a multiple-choice question. From the survey it was found that respondents use multiple sources for 45

financing their enterprises. The figure shows that 29% respondents rely on their own funds for financing SMEs.28% respondents use bank financing and 16% take credit from private financial institutions. Equity finance and venture capital are the least used.

3. Rank the obstacles that are faced by your enterprise in its growth from 1 to 5; 1 being the biggest obstacle. Table 5.3 46

Obstacles In The Growth Of Enterprise Obstacles The frequent need to renew the equipment Instability of demand for product or service Obtaining adequate financing Low profitability of the sector Taxation levels Rank1 Rank2 Rank3 Rank4 Rank5 12 7 40 11 30 19 16 27 12 26 28 16 17 21 18 24 28 8 29 11 17 33 8 27 15 Weighted Average Score 315 364 217 349 255

Analysis and Interpretation: In this above table weighted average score method is used where 1 rank is given to the biggest obstacle in the growth and 5 is the least important rank. As in the above table various obstacles faced by the enterprises in their growth are being ranked. The obstacle of obtaining adequate finance is ranked first with summated score of 217. Second rank is given to the taxation levels charged by the government and third rank to the frequent need to renew the equipment. The Fourth rank is given to the low profitability of the sector and fifth to the instability of demand of product or service. From the above table it can be concluded that obtaining adequate finance is the biggest obstacle faced by SMEs in their growth followed by burden of heavy taxes on them. Easy financing schemes should be provided. Rates of taxes should also be decreased; it will help in the growth of SMEs in India.

4. Have you ever raised finance from public sector banks? Table 5.4 To Know Whether SMEs Raise Finance From Public sector Banks

47

Raised Finance Yes No Total

No. Of Respondents 100 0 100 Figure 5.2

%Age Of Respondents 100 0 100

To Know Whether SMEs Raise Finance From Public sector Banks

No. Of Respondents

0%

Yes No

100%

Analysis and Interpretation:The above figure shows that 100% of the respondents have raised finance from the public sector banks .This shows that public sector banks are the most popular source of SME financing. The reason is low rates of interest which gives them capital at low cost. The service fees and bank charges are also less which results in low cost of financing than the other sources.

5. What type of loan is taken by you? Table 5.5 Type Of Loan

48

Type of Loan Sulabh Vyapar loan Transport loan Paryatan plus loan Open term loan Working capital loan Total

No. Of Respondents 67 25 56 38 54 240 Figure 5.3 Type Of Loan

No. Of Respondents

%Age Of Respondents 28 10 23 16 23 100

23%

28% Sulabh Vyapar loan Transport loan Paryatan plus loan Open term loan 10% 23% Working capital loan

16%

Analysis and Interpretation: The number of respondents has increased from 100 to 280, as this is a multiple-choice question The above graph shows that 28% of the respondents have taken Sulabh Vyapar loan.23% of the respondents have taken Paryatan plus and working capital loan. So Sulabh Vyapar loan is the most popular scheme of public sector banks for financing SMEs.

6. For what purpose, your enterprise has taken loan? Table 5.6 Purpose Of Taking Loan

49

Purpose Of Taking Loan Real estate acquisition to house the business To increase the production Construction, renovation or leasehold improvements For the flooring of inventory and for working capital For modernization and upgradation of technology Total

No. Of Respondents 40 63 33 71 58 265 Figure 5.4 Purpose Of Taking Loan

N Of R o. espondents

%Age Of Respondents 15 24 12 27 22 100

22%

15%

R estate eal acquisition to house the business T increase the o production C onstruction, renov ation or leasehold improv ements For the flooring of inv entory and for w orking capital

24%

27% 12%

For modernization and upgradation of technology

Analysis and Interpretation:The number of respondents has increased from 100 to 265, as this is a multiple-choice question.27% of respondents have taken loan for the flooring of inventory and working capital and 24% to increase the size of production. Most of the firms are taking loans for fulfilling their frequent needs for the capital. For technological upgradation and modernization, 22% of the respondents have taken loan showing that SMEs require capital to upgrade their technologies which is changing at a very fast phase. 7. Rank the benefits of these schemes on the scale of 1-5; 1 being the most important and 5 being the least important. Table 5.7

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Benefits Of SME Financing Schemes Benefits Better Service Single Window Dispensation Attractive financing conditions Easy access Low rates of Interest Rank1 Rank2 Rank3 Rank4 Rank5 8 8 40 4 40 12 12 28 12 36 12 22 20 32 14 30 30 4 30 6 38 28 8 22 4 Weighted Average Score 378 358 212 354 198

Analysis and Interpretation: In this above table weighted average score method was used where 1 rank is the most important rank and 5 is the least important rank. As in the above table various benefits of SME financing schemes were being ranked. The benefit ranked first with summated score of 198 was low rates of interest. This shows that public sector banks financing schemes provide finance at cheap rates. Second rank is with summated score of 212 was given to the attractive financing conditions of these schemes. The schemes are designed in such a way that makes financing easier for SMEs. The third rank was given to easy access. The fourth rank was given to Single window dispensation and fifth to Better service, being least preferred by the respondents. This shows that respondents were not satisfied by the service provided by these banks. From the above table it can be concluded that Low rates of interest was most preferred of all other benefits. Attractive financing conditions and easy access were next in the preference order. Single window dispensation was the next preferred benefit. Better service was the least preferred benefit by the respondents. 8. What were the problems faced by your enterprise in raising finance from public sector banks? Table 5.8

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Problems Faced By SMEs In Raising Finance Problems Faced Insufficient collateral Poor documentation Delay in the sanction of loan Cost involved is high Biasness High rate of interest Total No. Of Respondents 68 39 80 25 76 20 308 Figure 5.5 Problems Faced By SMEs In Raising Finance
No. Of Respondents Insufficient collateral 6% Poor documentation Delay in the sanction of loan 13% 8% 26% Cost involved is high Biasness High rate of interest

%Age Of Respondents 22 13 26 8 25 6 100

22%

25%

Analysis and Interpretation:The number of respondents has increased from 100 to 308, as this is a multiple-choice question. The most common problem faced by SMEs in raising finance is the delay made in sanctioning the loan with 26%.The public sector bank employees work very slowly and usually an application takes a lot of time for approval.25% respondents say biasness was one another problem faced by them.22% respondents find the inability to provide sufficient collateral as a problem. 9. What are the most common reasons given to your enterprise by the public sector bank for rejecting an application for Loan? Table 5.9 52

Reasons For Rejecting An Application For Loan Reasons The management team is too inexperienced The application did not meet the criteria The application was not correctly completed Poor credit history The enterprise could not provide enough guarantees Not a profitable venture Total Figure 5.6 Reasons For Rejecting An Application For Loan
No.Of Respondents The management team is too inexperienced The application did not meet the criteria The application was not correctly completed Poor credit history

No.Of Respondents 28 43 24 48 60 54 257

%Age Of Respondents 11 17 9 19 23 21 100

21%

11%

17%

23%

9%

The enterprise could not prov enough ide guarantees Not a profitable v enture

19%

Analysis and Interpretation:The number of respondents has increased from 100 to 308, as this is a multiple-choice question. The above figure shows that 23% respondents says that the most common reason given by the banks for rejecting an application is that they could not provide enough guarantees.21 % says that banks reject an application because they believe that it is not a profitable venture.19% says an application got rejected because of poor credit history as banks lie on the past performance of enterprises before granting any loan. 10. What factors demotivate you in applying for finance from these schemes of public sector banks? Table 5.10 53

Factors that Demotivate In Applying for Finance Factors that Demotivate We were turned down before Procedure to obtain this type of financing is too complicated The process is lengthy Too much of documentation is required Total Figure 5.7 Factors that Demotivate In Applying for Finance
No. Of Respondents

No. Of Respondents 40 25 62 38 165

%Age Of Respondents 24 15 38 23 100

23%

24%

We were turned down before Procedure to obtain this type of financing is too complicated The process is lengthy

15% 38% Too much of documentation is required

Analysis and Interpretation:The number of respondents has increased from 100 to 165, as this is a multiple-choice question. The above figure shows that 38% respondents says that the factor that demotivates them for applying for finance from these schemes is the lengthy process involved.24% respondents says that they were turned down before.23% respondents says that they do not apply for loan from these schemes as too much of documentation is required. 11. Are the Private sector banks SME financing schemes are better than SME financing schemes of public sector banks? Table 5.11

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Whether Private Sector Banks Schemes Are Better Than Public Sector Banks Schemes Private Sector Bank Schemes Are Better Yes No Total No. Of Respondents 64 36 100 Figure5.8 Whether Private Sector Banks Schemes Are Better Than Public Sector Banks Schemes
No.Of Respondents

%Age Of Respondents 64 36 100

36%

Yes No 64%

Analysis and Interpretation:The above figure shows that 64% of respondents think that private sector banks schemes of financing are better than that of public sector banks financing schemes and only 34% think that public sector banks schemes of financing are better than that of private sector banks. The private sector banks use latest technology and provide better service. Moreover, the time involved for obtaining loan is also comparatively less. But private banks charge heavy rates of interest and charge heavy service fees.

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12. Please indicate your level of satisfaction with various aspects of obtaining finance from these public sector banks. Kindly rate them on 5-point scale basis; 5 being strongly satisfied and 1 being strongly dissatisfied Table 5.12 Satisfaction Regarding Various Aspects Of Obtaining Finance From Public sector Bank Schemes
Various Aspects Strongly Satisfie d Satisfie d Neutral Dissatisfie d Strongly Dissatisfie d Summated Score

11.1) The amount granted by the bank relative to the amount requested 11.2) The simplicity of the application form 11.3) Interest rate 11.4) Service fees 11.5) Time to obtain approval 11.6) Guarantees required by the institution 11.7) Behavior of the bank staff

15

48

24

12

212

12 24 15 6 0 10

52 71 48 8 16 22

31 2 24 10 21 12

3 3 12 34 36 30

2 0 1 42 27 26

231 184 236 398 374 340

Number of respondents -100 Maximum Score - 500 Minimum Score - 100 Analysis and Interpretation: As from the above table no. 5.11 comparison was done between maximum score and Summated score. Maximum score is the score, which represents the dissatisfaction level among the respondents. So, information related to the level of satisfaction or least satisfaction to various factors influencing the satisfaction level of respondents was interpreted in following manner-:

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It was clear that respondents were satisfied with the Rate of Interest as this aspect lies between strongly agreed and agreed with summated score of 184. So the respondents were satisfied with this aspect. The factor amount granted by the bank relative to the amount requested lies between agree and neutral with summated score of 212 but was more close to satisfied. So, respondents are satisfied with the interest rate and the amount sanctioned. About other 2 factors Simplicity of the application form and Service fees were with summated score of 231 and 236 were between agreed and neutral but are more close to agreed level. So the respondents were satisfied with these aspects. The other three factors behavior of the bank staff, guarantees required by the institution and the time to obtain the approval are between the neutral and dissatisfied. Respondents were not very satisfied with these aspects.

13. Apart from such schemes, what initiatives government can take for improving SME business in India? 57

Table 5.13 Initiatives For Improvement Various Initiatives Decrease the amount of taxes Support innovative technological companies Guidance for upgrading skills & knowledge of entrepreneurs Assistance and support for revival of sick units Introduce a Single Window concept for helping SMEs Total No. Of Respondents 35 26 15 29 20 125 %Age Of Respondents 28 21 12 23 16 100

Figure 5.9 Initiatives For Improvement

No. Of Respondents Decrease the amount of taxes 16% 28% Support innovative technological companies Guidance for upgrading skills & knowledge of entrepreneurs 23% Assistance and support for revival of sick units 21% 12% Introduce a Single Window concept for helping SMEs

Analysis and Interpretation:The number of respondents has increased from 100 to 125, as this is a multiple-choice question. The above graph shows that the 28% of respondents believe that there is need for guidance for upgrading skills and knowledge of entrepreneurs,23% respondents believe that assistance and support should be provided for the revival of sick units as

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number of sick SME units are increasing at a rapid ratew..21% of the respondents believe government should support innovative technological companies. Moreover government can introduce a single window concept for helping SMEs and can provide guidance for upgrading skills and knowledge of entrepreneurs.

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CHAPTER-VI FINDINGS OF THE STUDY

FINDINGS OF THE STUDY

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After undertaking the study, the following findings were made about the usage of SME financing schemes of the public sector banks: The respondents had used multiple sources for financing their enterprises. Most of the respondents had relied on their own funds for financing SMEs and bank financing. Private financial institutions came third in the preference. Obtaining adequate finance was the biggest obstacle faced by SMEs in their growth followed by burden of heavy taxes on them. Easy financing schemes should be provided. Rates of taxes should also be decreased; it will help in the growth of SMEs in India. Public sector banks were the most popular source of SME financing. The reason was low rates of interest which gives them capital at low cost. The service fees and bank charges were also less which results in low cost of financing than the other sources. Sulabh Vyapar loan was the most popular scheme of public sector banks for financing SMEs followed by working capital loan. Most of the firms were taking loans for fulfilling their frequent needs for the capital. They took credit for the flooring of inventory and working capital and to increase the size of production. They had taken loans for technological upgradation also as SMEs require capital to upgrade their technologies which is changing at a very fast phase. The most preferred benefit of these schemes was low rates of interest as government is charging very less rates in comparison to other sources. These schemes offer attractive financing conditions and easy access also. The most common problem faced by SMEs in raising finance was the delay made in sanctioning the loan. The public sector bank employees work very slowly and

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usually an application takes a lot of time for approval. Biasness and insufficient collateral were another problems faced by them. The most common reason given by the banks for rejecting an application was that the enterprises could not provide enough guarantees. Banks reject an application because they believed that it was not a profitable venture. An application also got rejected because of poor credit history as banks lie on the past performance of enterprises before granting any loan. Most of the respondents get demotivated for applying for finance from these schemes because of the lengthy process involved and because they were turned down before. Some of the respondents did not apply for loan from these schemes as too much of documentation was required. The time to obtain the approval for loan and documentation involved demotivates the SMEs. Most of the respondents think that private sector banks schemes of financing were better than that of public sector banks financing schemes .The private sector banks use latest technology and provide better service. Moreover, the time involved for obtaining loan was also comparatively less. But private banks charge heavy rates of interest and charge heavy service fees. Most of the respondents were satisfied with the interest rate charged, amount of loan sanctioned and service fees .Respondents showed their dissatisfaction regarding time to obtain the approval, behaviour of the bank staff. Most of respondents were of the opinion that there is need for guidance for upgrading skills and knowledge of entrepreneurs, that assistance and support should be provided for the revival of sick units as the number of sick SME units is increasing at a rapid rate. Some of the respondents were of the view that government should support innovative technological companies. Moreover government can introduce a single window concept for helping SMEs and can provide guidance for upgrading skills and knowledge of entrepreneurs.

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CHAPTER 7 CONCLUSION AND RECOMMENDATIONS

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CONCLUSION OF THE STUDY

Over a period of time, it has been proved that SMEs are dynamic, innovative and most importantly, the employer of first resort to millions of people in the country India has a vibrant SME sector that plays an important role in sustaining economic growth, increasing trade, generating employment and creating new entrepreneurship in India. But the SME sector faces a lot of obstacles in obtaining adequate finance. Government of India has started a number of SME financing schemes in its public sector banks .These public sector banks are playing a major role in the development of SME sector in India. But due to few obstacles, these schemes are not as effective as they should be. The review of researches has showed that SME sector plays an important role in the economic development of a country but obtaining adequate finance has emerged as a major problem faced by SMEs. The need, scope and objectives of the study provided the framework for further research. The basic purpose of conducting the study was to study the usage of SME financing schemes of the public sector banks. The data was collected from SME units. Various tools of data analysis and interpretation were used for carrying out the research. The major findings of the study were that bank financing is the most popular source for financing SMEs in India. The SME financing schemes provide credit to this sector at low rates of interest and at attractive conditions but the procedure involved is lengthy. Moreover, too much of documentation is required .Insufficient collateral and biasness are also the major problems. The re-orientation program, workshops and seminars should be organized at district level to provide latest information to the SMEs about the various SME financing schemes of the public sector banks. New credit products may be developed to take care of the diverse, unexpected and short-term requirements of the SME customers in a hassle free manner and in a short time the process followed in sanctioning the loan and documentation required is cumbersome; hence it is suggested to make the process easier.

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RECOMMENDATIONS
After carrying on the study, the following recommendations have been made: The re-orientation program, workshops and seminars should be organized at district level to provide latest information to the SMEs about the various SME financing schemes of the public sector banks. Product innovations in banks have set the rule of the game Innovate or perish. The same rule applies to SME segment. At present, there is a vast gap between requirements of the SME customer and availability of suitable/matching products and services in the public sector banks. New credit products may be developed to take care of the diverse, unexpected and short-term requirements of the SME customers in a hassle free manner and in a short time. The conventional credit appraisal systems are heavily dependent on financial statements and miss the softer strengths inherent in the business. Banks may adopt a balanced score card model for credit assessment under which risk weights may be assigned to (i) managerial, technical and commercial competence of the entrepreneur (ii) quality of trade references from suppliers/buyers (need not be in writing) (iii) potential of the industry, unit and person. The appraisal system is to be made more realistic and transparent. The applicant and if required, his consultant, should be briefed on the objective procedures which bank applies to arrive at decisions so as to educate them to understand the requirements of bank and to prepare credit proposals in a scientific manner . As 95.8% of SME customers are proprietorship type of customers, it is essential for the banks to closely focus on the non-financial parameters also during appraisal (i.e. ability of person behind the show). The process followed in sanctioning the loan and documentation required is cumbersome; hence it is suggested to make the process easier.

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Small entrepreneurs should make feasibility studies before they finalize their projects. They should undertake only such projects which are technically, operationally and economically and financially viable.

The problem that the SMEs face while acquiring funds from Public sector Banks is that their financial systems lack transparency. Credit Ratings can benefit both the parties. The credit ratings will give Public sector Banks ratings an easy access to the financial information of SMEs that highlight the unit's strength and weaknesses, making it easy for them to take a decision while lending.

The issue of high cost of acquiring, serving and monitoring SME customers can be resolved by offering products which reduce frequent visit of SME customers to the branch, provide flexibility to the borrowers as well as to the bankers and fulfill other financial needs of the customer.

Most SME customers have to make several small payments through cash, bankers cheques or drafts. Banks may capitalize on emerging electronic payment and settlement systems such as ECS, EFT, RTGS, etc., to offer customized and cost effective retail payment/remittance solutions or cash management services to the SME customers.

Public Sector Banks should develop flexible systems and procedures for dealing with SME customers and modify their role to be a facilitator. It may either provide software to these customers to prepare stock and financial statements or help and guide them in preparation of renewal proposal / statements.

Banks may publish periodicals/magazines to disseminate information pertaining to various schemes of bank, various ministries, RBI, SIDBI, CBDT, CBEC and other tax related policy matters. through its website and e-mails. It may also provide the same information

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REFERENCES

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REFERENCES
Kaura, M.V. and Sharma, G.L. (1999). Financing Small Industries Institution Should Change Their Attitudes, Procedures. Journal of Industry and Trade, 34(3). Kothari, C.R. (1995). Research Methodology. Edition 2005. New Delhi: Tata McGraw Hill. Mercieca, S. and Scheack, C. (2009). Bank Market Structure, Competition And SME Financing Relationships In European Regions. Journal of Financial Services Research, 36(2-3), 137-155. Nambiar, P.C.D. (2007). Financing For Priority Sectors. S.B.I Monthly Review, 6(8). Popli, G.S. and Rao, D.N. (2009). An Empirical Study Of Smes In Electronics Industry In India: Retrospect & Prospects In Post WTO Era. Global Business Review, 3(2). Popli, G.S.and Rao, D.N. (2009). Service Quality Provided By Public Sector Banks To SME Customers: An Empirical Study In The Indian Context. Journal of Financial Services Research, 4. Raju, B.Y. (2002). Small Scale Industries In The Liberalized Era Beg For Attention. Global Business Review, 3(2), 351-367. Raju, B.Y. (2008) .Small And Medium Enterprises (Smes) In India: Past, Present And Future. PHDCCI Working Paper, 10. Rani and Rao, D.N. (2008). Financing Small enterprises: Recent Trends. ICFAI Journal of Entrepreneurship Development, 5(1), 6-22. Torre et al (2008). Bank Involvement With Smes: Beyond Relationship Lending .World Bank Policy Research Working Paper Series, 1(7).

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Wtterwulghe and Janssen (2005) .The Role Of The Banker In Financing Medium Sized Firms In Belgium: Lender Or Advisor. Journal of Entreneurship, 6(1), 75-85.

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ANNEXURES

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QUESTIONNAIRE I, Aditi Jain of MBA of Apeejay Institute of Management is conducting a research on Usage of SME financing schemes of the Public sector banks. So, we request you to spare a few minutes from your busy schedule and fill this form. We assure you that the information provided by you will be kept confidential. DEMOGRAPHICS: Name Designation Name of the company Location

.. . . .

Questions
Q1. What are the sources of finance used by your enterprise? a) b) c) d) e) Owners financing Private financial institutions Equity finance Bank financing Venture capital

f) Hire purchase and leasing

g) Business angel financing Q2.Rank the obstacles that are faced by your enterprise in its growth from 1 to 5; 1 being the biggest a) The frequent need to renew the equipment b) Instability of demand for product or service

c) Obtaining adequate financing

d) Low profitability of the sector

e) Taxation levels
Q3. Have you ever raised finance from public sector banks? a) Yes b) No

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Q4. What type of loan is taken by you? a) Sulabh Vyapar loan b) Transport Loan c) Paryatan plus Loan Q5 For what purpose, your enterprise has taken loan? a) Real estate acquisition to house the business b) Increase the production c) Construction, renovation or leasehold improvements d) For flooring of inventory and working capital d) Open term loan

e) Working capital loan

e) For modernization and upgradation of technology

Q6.Rank the benefits of these schemes on the scale of 1-5; 1 being the most important: 6.1) Better service 6.2) Single window dispensation 6.3) Easy access Q7. What were the problems faced by your enterprise in raising finance from public sector banks? a) Insufficient collateral b) Poor documentation c) Delay in the sanction of loan d) Cost involved is high e) Biasness f) High rate of interest 6.4) Attractive financing conditions 6.5) Low rates of interest

Q8. What are the most common reasons given to your enterprise by the public sector bank for rejecting an application for Loan? a) The management team is too inexperienced b) The application did not meet the criteria c) The application was not correctly completed d) Poor credit history

e) The enterprise could not provide enough guarantees

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f) Not a profitable venture

Q 9.What factors demotivate you in applying for finance from the SME financing schemes of the public sector banks?

a.) b.)
c.) d.)

We were turned down before Procedure to obtain this type of financing is too complicated The process is lengthy Too much of documentation is required

Q.10 Are these private sector bank schemes are better than public sector bank schemes? a) Yes Q11. b) No

Please indicate your level of satisfaction with various aspects of obtaining finance

from these public sector banks. Kindly rate them on 5-point scale basis; 5 being strongly satisfied and 1 being strongly dissatisfied: Strongly Satisfied 12.1) The amount granted by the bank relative to the amount requested 12.2) The simplicity of the application form 12.3) Interest rate 12.4) Service fees 12.5) Time to obtain approval 12.6) Guarantees required by the institution 12.7) Behavior of the bank staff Q12. Apart from such schemes, what initiatives government can take for improving SME business in India? a) Decrease the amount of taxes b) Support innovative technological companies c) Guidance for upgrading skills & knowledge of entrepreneurs d) Assistance and support for revival of sick units e) Introduce a Single Window concept for helping SMEs Satisfied Neutral Dissatisfied Strongly Dissatisfied

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Thank you for the co-operation

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