DEPARTMENT OF MANAGEMENT

Project Report on

Financing of Small Scale industries Banks

Submitted to Cordia Institute Of Business Management

Sanghol
(Approved by AICTE, Affiliated to Punjabi university patiala)

In partial fulfilment of the

Requirements for the award of Degree of

Masters of business Administration

Submitted by:

AADIL AHMAD PARREY

University Roll No.

3754

1
Declaration

This is to certify that the project titled ‘Financing of Small Scale Industries In
Bank. is the original work carried out by the me submitted to the Cordia Institute
Of Business Management Sanghol under the supervision of Ms Ritika Sharma
submitted in partial fulfilment for the award of degree in Integrated Masters of
Business Administration (IMBA)
This project was completed within the stipulated time period as per the statues of
the university.
It is further certified that this work has not been submitted earlier in this university
or any other university for any degree/diploma.

Signature

2
Acknowledgment
First of all I would like to express my deepest gratitude to Almighty Allah who
bestowed his blessings on me and gave me the courage and right type of
environment for the completion of my project. I owe a deep sense of indebtedness
to my family which has always been a perennial source of inspiration for me.
I am very thankful to my project guide Ms Ritika sharma for providing me with
the handful information required for the successful completion of the project.
Besides these I would like to thank all the pioneers in the field of financial
Management and allied fields, which shaped my understanding through their rich
and valuable contribution in these fields.
Last but not the least; I would like to thank all the employees of J & K Banks to
whom I owe an irreparable debt for their valuable guidance and cordial support
throughout the course of this project.

Aadil ah.

.
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List of Abbreviations used

● J K: Jammu and Kashmir.

● JKB: Jammu Kashmir Bank
● SSIs: Small Scale Industries.
● MSME: Micro Small and Medium Enterprises.
● SIDBI: Small Industries Development Bank of India.
● IDBI: Industrial Development Bank of India.
● SFC: State Financial Corporation.
● PSUs: Power Supply Units.
● SIDCO: State Industrial Development Corporation.
● SICOP: Small Scale Industries Development Corporation.
● SISI: Small Industries Service Institute.
● CST: Central Sales Tax
● VAT: Valve Added Tax
● DICs: Department of Industries and Commerce.
● NOC: NON Objection Certificate
● GOI: Government of India.
● RBI: Reserve Bank of India.
● SCBs: Scheduled Commercial Banks.
● PCBs: Public Sector Banks.

LIST OF CONTENTS

1. Introduction

● Industrial Profile of J&K State

● Department of Industries & Commerce
● Introduction of SSI’s
● Guidelines for financing of Small and Medium Enterprises(SME’s)
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 ● Processing of loan applications by J&K Bank
2. Company profile

● Banking industry in India

● Challenges faced by Indian banking industry
● Performance of J & K Bank
● Vision
● Mission
● Unique characteristics and services of J&K Bank
● Product profile
3 .Literature Review

4. Research methodology

● Title Financing of SSI’s by J&K Bank.

● Scope of the study.
● Objectives of the study.
● Methodology of the study.
● Plan of the analysis.
● Data collection.
● Sample Size
● Limitations of the study.
Analysis and interpretation of data and Findings, Suggestions and Conclusion

Government Sponsored Schemes

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Executive Summary

This study was done in J&K Bank, (Credit Department) . The study firstly is
concentrated on introduction to industrial profile of Jammu & Kashmir. Then the
research design of the work carried out is briefly given followed by the profile of
the Jammu and Kashmir Bank Ltd. Lastly the analysis and interpretation of the
data available has been done followed by findings, suggestions and conclusion.
The title of the study undertaken for the research work is “Financing of Small
Scale Industries by J&K Bank Ltd in Kashmir Division”. The study is confined
to five small scale industries in Kashmir ( Handi-Crafts, Sericulture, Cement,
Khadi and Food Processing industries). The study is related to the role played by
the J&K Bank Ltd in financing the small scale industries operating in Kashmir to
ascertain how far the bank has succeeded in fulfilling the working capital financial
requirements of these industries and what factors influence the loan disbursement
to small‐scale industries. Objectives of a project tell us why project has been taken
under study. It helps us to know more about the topic that is being undertaken and
helps us to explore future prospects of the topic. It essentially tells what all has
been studied while drafting the project. The various objectives of the study are:

● To study the key role of J&K Bank in financing SSI.

● To study the problems faced by small scale industries in availing the
credit facility.

● To Study the level of satisfaction of SSI’s holders with J&K bank

regarding the financial help provided by the bank.

● To find out the present requirements of financing products by SSI’s.

● To study the incentives provided by the Department. Of Industries &

Commerce J&K for SS’s in the Valley.

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The industrial sector plays an important role in the economic growth of both
developed and developing countries. The Small Scale Industrial (SSI) sector is
very important for any country irrespective of the level of development because,
SSI contributes maximum socio economic benefits with low level of investment
and results in employment creation, income generation, poverty alleviation and
restricts migration of unemployed and underemployed workers into cities. It is also
one that maximizes the utilization of local resources and results in innovations,
new technology and is a pathway to emerging entrepreneurs. It is a starting point
for industrial growth. The main aim behind making this project report is to know
how J & K Bank is operating its business and how the corporate play their role to
its operations. This study has become necessary due to the following reasons:

● The project was done to know the compatibility between J&K bank & SSI’s
regarding financing of SSI’s
● The project was done to know the present expectations of SSI’s from J&K
bank.
● The project was done to know the current arrangements/ schemes made by
the bank to help SSI’s
● The project was done to identify the problems of financing of SSI in
Kashmir.
● The project was done to identify the reason why there is less number of
industries in Kashmir.

7
INDUSTRIAL PROFILE OF JAMMU & KASHMIR STATE

Jammu and Kashmir is an Indian state that has its own distinct and peculiar
cultural ethos. The state has a predominant place as it shares the international
boundary with Pakistan and China. It is enriched with the boundless beauty of
snow-clad mountains, large natural lakes, forests, rivers and springs. It comprises
three main natural regions, namely, Jammu, Kashmir and Ladakh. Jammu and
Kashmir is an industrially backward state without a strong industrial base.
However, many small and medium-scale industries have come up both in the
traditional and new areas in the state. With the government’s support in the form of
loans and incentives to set up industrial units, their number increased from
35,641in 1995 to 42,808 in March 2001. At the same time, employment increased
from1, 54,621 persons in March 1995 to 1, 87,399 in March 2001. Though the
number of SSIs in the state has gone up, there are also cases of sickness of units as
some of the units are dysfunctional and missing. Due to the difficulty in recovery
of loans along with law-and-order problems, industrial financing has come down
drastically in the state. In fact, SIDBI and IDBI stopped refinance from 1992-93 till
1995-96though SFC has marginally increased the disbursement of loans in 1998-
99.Mineral deposits available in the state are bauxite, limestone, sapphire, gypsum,
coal-land marble, and most being located in border areas and in difficult terrain.
Roadways are the only means of transportation since railways are not well
developed in the state. Therefore it cannot compete with other states like Rajasthan
due to high transportation cost. The fragile ecology of the state also inhibits the
setting-up of large industries based on minerals. Among the twenty PSUs, majority
are running into losses with the exception of four that are earning revenues to meet
their day-to-day expenses. The state, however, does not have any functional policy
towards restructuring / revival of the loss making PSUs. Though the concerned

8
departments were asked to come up with the proposal to restructure or revive the
PSUs, the finance department has not yet received any such proposal.
Disinvestments, as another option, are also being explored and the state has
initiated the process by disinvesting in a few units owned by Jammu and Kashmir
Industries Ltd. Industrial promotion agencies such as SIDCO, SICOP, Small
Industries Service Institute (SISI) and Directorate of Industries and Commerce
perform various functions to promote industrialization in the state. Both central
and state governments announced a package of incentives to attract industrial
investments in J & K. Still, the industrial scenario of the State has been very dismal
and an action plan would therefore consist of the following:
a) Sector-specific strategies should be adopted to promote industries in Jammu
and Kashmir keeping in mind the climate, accessibility, raw material
availability, human resources and consumption pattern.
b) To encourage investments in the state, Government should play a lead role
to build up the confidence of the private investors
c) A comprehensive and analytical review of existing industrial estates in the
state is required so that reasons for the failure or non-performance of units
located in the industrial estates can be ascertained and corrective action
taken.
d) Common Facilities Centers should be provided to the industrial units set up
in the estates.
e) Better infrastructure including uninterrupted power supply and connectivity
should be provided to the units.
f) A restructuring fund could be created by the Central Government to
downsize or restructure the financially non-viable public sector corporation
in a phased manner.

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Jammu &Kashmir has not been able to attract investments in this sector and
remained an industrially backward state due to its unique economic disadvantages
arising out of remoteness and poor connectivity, hilly and often inhospitable
terrain, weak resource base, poor infrastructure, sparse population density, shallow
markets and most importantly the political uncertainty. Moreover the natural
factors are more conducive for handicrafts, village and Small Scale Industries and
less to large and heavy industries. Nevertheless, despite all odds and limitations the
Jammu &Kashmir State is on the path of industrialization in a modest way. Many
small and medium-scale industries have come up basically in the traditional sectors
along with some new areas like food processing, agro-based units and metallic and
non-metallic products. Besides, due to saturation of employment opportunities in
the government/traditional non-governmental sectors like Agriculture, Industrial
sector has been declared as the main vehicle for accelerating economic tempo
besides providing employment to the educated unemployed youth in the State
Industrial development always remains a thrust area in the Government agenda.
Government’s endeavour is to provide efficient and cost effective infrastructure,
skilled human resources, stable environment and good governance which are the
pre-requisites for creating a proper investment environment for sustainable
industrial growth. Dispersal of industries to the 266 underdeveloped areas in the
state through creation of necessary infrastructure and providing financial/fiscal
incentives is focused. In the perspective of industrial growth, Industries and
Commerce Department has been established with a well knit system for carrying
its activities effectively. The Industries and Commerce Department is
concentrating to attract investment in the State for developing world class
infrastructure to achieve objectives like:

10
1. To explore available resources in the State.
2. To create conducive industrial employment.
3. To promote labour intensive industries to lessen the pressure on unemployment
market in the State.
4. To improve industrial performance by providing necessary inputs so as to
reduce the dependence of the State on imports.
The department is focusing on key sectors like food processing, pharmaceuticals,
biotechnology, textiles, sports goods, information technology etc. to accelerate
industrial growth in the State. Industrially, J&K State is lagging behind and
occupies the place on the lowest side when compared to other states of the union
India. The industrial sector of the State is confined to small scale & medium
industries. The large-scale & heavy industries do not exist in the State. This
sluggish industrial growth is mainly attributing to lack of sufficient infrastructure
and considering the extreme geographical location of the State. The cost of raw
material & transportation adds to manufacturing cost, thereby making the J&K
products uncompetitive. The number of small scale industrial units as on
31.03.2012 registered with the State Directorate of Industries & Commerce has
reached to forty seven thousands providing employment opportunities to 2.32 lakh
people. The availability of land is a major constraint in developing new industrial
estate. State Package Fiscal Incentives
● 100 percent subsidy on purchase of new Diesel Generating sets.
● 100 percent subsidy on project report and quality testing equipment.
● 75 percent subsidy on Research and development.
● 3 percent interest subsidy on working capital.
● 5 percent rebate on interest on term loan for technocrats.
● Special incentive for brand promotion and modernisation

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 ● Land and Power at concessional rates.
● 30 percent capital investment subsidy on land, building and plant and
Machinery.
Tax Incentives
● Toll tax exemption on import of raw material and export of finished
products.
● CST exemption
● VAT remission
● Stamp duty exemption

Central Package Fiscal Incentives

● 15 percent subsidy on capital investment on plant and machin ery.
● 3 percent interest subsidy on working capital.
● 100 percent insurance cover to Industrial units.
● 90 percent Transport subsidy

DEPARTMENT OF INDUSTRIES AND COMMERCE

The Department of Industries & Commerce has a history of hundreds of years.
However, the department was organized in the systematic manner after
independence. The last official document available in the department is of year
1945. Since then Department is continuously making efforts to promote and
develop industrial activity in the state of Jammu & Kashmir. The Department
provides authorization to consultancy set up by unemployed but skilled and
educated youth. At present there are about twenty two consultancy units
functioning under the said departmental authorized to encourage new entrepreneurs

12
to establish new industrial units. The department has the following approach &
strategy to augment industrial activities.

i) Rehabilitation of potentially viable sick industrial units.

ii) Enabling manufactures of quality consistent products to augment their sales
within and outside the state by brand promotion.
iii) Export promotional measures to augment export of products of the state outside
the country.
iv) Environment protection, to conform to state, national & global regulations.
v) Entrepreneurship development in the state, to provide opportunities to educated
but unemployed.
vi) To encourage research and development.

Objectives:

● To achieve sustainable industrial development in all regions for

increasing the rate of growth, value of output, employment, income &
overall economic development of the state.
● To strive towards balanced economic and social development in all
regions of the state by promoting industrialization particularly of the
industrially backward areas.
● To encourage and sustain the cottage and tiny industrial sector which,
with law investment, is able to provide employment to a large number of
people in the state.
● To create a supportive environment with transparency and easy access n
information, technology and financial resource.
● To revive potentially viable sick industrial units so as to put to optimum
use the capital and other resources already employed in such enterprises.
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 ● To promote the growth of thrust and export oriented industries and
encourage high tech and knowledgeable based industries including
information technology.
● To take necessary steps in the field of Human Resources Development to
make available skilled/ technical man power as per the needs of Industry.
● The Directorate of Industries and Commerce is the premier organisation
which deals with all the aspects of Planning and Development of small
scale/tiny industrial units in the State of J&K. It acts through 14 District
Industries Centres, one in each districts of the state.
Apart from creating infrastructural facilities for industrial development in the
shape of Establishing Industrial Estates/Areas/Growth Centres, where fully
developed land, power, water roads etc. are available and where prospective
entrepreneurs are encouraged to establish their industrial ventures, by allotting land
in their favor, the organisation provides the facilities of according various
registrations, imparting training to entrepreneurs, licensing with different sister
agencies, granting of different state Govt./central Govt. incentives to the various
industrial unit s etc.

An effort has been made to help the entrepreneurs know the procedure for
provisional registration, obtaining of various NOCs from Pollution Control Board,
Power Development Department, procedure for land allotments and how to get
loan cases sanctioned from different financial institutions including State Financial
Corporation, State Industrial Development Corporation etc. The readers are
requested to get in touch with the General Manager of the nearest DICs for any
further clarification.

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INTRODUCTION OF SMALL SCALE INDUSTRIES
Small and medium scale industries (SMIs) have been considered essential for
economic development not only in less developed countries (LDCs) but also in
more developed regions of the world. Since they are seen as being more dynamic,
innovative and have higher labor absorptive capacities than their corporate
counterparts, the SMI sector has been the backbone of industrial development in
many developed countries. However, systematic economic policies have not been
designed for the development of small‐scale industries yet, in Kashmir. Therefore
small‐scale industries face a lot of difficulties with regard to financial, marketing,
cost of production, skilled labor and lack of technology. Lack of access to credit is
recognized as one of the most pressing problems faced by small scale industries
(SSI).

DEFINITION OF SMALL SCALE INDUSTRY

Previously the definition of SSI was any industrial undertaking in which the
investment in fixed assets in plant and machinery whether held on ownership terms
on lease or on hire purchase does not exceed Rs 10 lakh. But after the enactment of
MSME Act 2006 from in order to ensure the balanced developed of the industrial
sector throughout the country. Under this act the erstwhile “Industry” has been
replaced by the nomenclature “Enterprise” and this has been done with the view to
emphasise the importance of service sector. The act has classified the enterprises
into two categories:
1) Enterprises engaged in the manufacturing of goods
2) Enterprises engaged in providing of services
Manufacturing industries have been defined in terms of investment in machinery
and equipment as under and further classified into:

15
MICRO ENTERPRISES INVESTIMENT UPTO RS. 25.00 LACS
SMALL ENTERPRISES INVESTIMENT ABOVE RS.25.00 LACS
UPTO RS. 5 CRORE
MEDIUM ENTERPRISES INVESTIMENT ABOVE RS.5.00 CRORE
UPTO RS. 10.00 CRORES

J&K Bank Financing For SSI

Guidelines for financing of Small & Medium Enterprises (SME’s)

The small-scale industries produce about 8000 products, contribute 40% of

the industrial output and offer the largest employment after agriculture. The sector
presents an opportunity to the nation to harness local competitive advantages for
achieving global dominance. In recognition of these aspects Govt. of India has
decided to give greater technological, investment and marketing support to small-
scale industry. A comprehensive legislation, which would enable the paradigm
shift from small-scale industry to small and medium enterprises, is under
consideration of Parliament. The Humble Finance Minister Government of India
has announced certain measures in the Parliament on August 10, 2005 for stepping
up of credit to small and medium enterprises. Accordingly the Reserve Bank of
India has issued detailed guidelines to the banks for increasing finance, debt
restructuring mechanism and one time settlement (OTS) for the SME sector. Up till
now there was no definition of Medium Enterprises. In order to segregate the small
and medium enterprises the Reserve Bank of India has come out with a definition
of Medium Enterprises till enactment of Small and Medium Enterprises
Development bill. As per the definition given by RBI, the units with investment in
plant and machinery in excess of SSI limit and up to Rs.10.00 crore shall be
16
treated as Medium Enterprises (ME). Till outcome of parliamentary bill definition
of SSI will remain unchanged. At present, a small-scale industrial unit is an
industrial undertaking in which investment in plant and machinery does not exceed
Rs.1.00 crore except in respect of certain specified items under hosiery, hand tools,
drugs and pharmaceuticals, stationery items and sports goods where this
investment limit has been enhanced to Rs.5.00 crore. However loan to SSI sector
will be categorized under priority sector.
In order to increase the outreach of formal credit to SME sector, RBI has issued
policy package for financing, debt restructuring and one time settlement in respect
of SMEs. RBI has advised the Banks as under:
● To initiate necessary steps to rationalize the cost of loans to SME sector by
adopting a transparent rating system with cost of credit being linked to the
credit rating of enterprise. SIDBI has developed a Credit Appraisal and
Rating Tool as well as a Risk Assessment Model and a comprehensive
rating model for risk assessment of proposals for SMEs. The banks have
been advised to consider taking advantage of these models as appropriate
and reducing their transaction costs.
National Small Industries Corporation has recently introduced credit rating scheme
for encouraging SME units to get themselves credit rated by reputed
agencies. Banks may consider these rating models for rating the SME
borrowers.
● To make concerted efforts to provide credit cover on an average to at least 5
new small/medium enterprises at each of their semi urban/ urban branches
per year.
● To formulate a comprehensive and more liberal policy with the approval of
their Board of Directors in respect of loans to SME sector.

17
 ● To consider cluster based approach for financing SMEs as it offers
possibilities of reduction in transaction cost, mitigation of risks and also
provide an appropriate scale for improvement in infrastructure.

PROCESSING OF LOAN APPLICATIONS:

● Viability:
The borrowers should invariably provide a detailed project report prepared by a
reputed project Consultant covering all aspects of its viability. The borrower
should provide all the necessary details and required information regarding
the proposal.
● Issue of Acknowledgement of Loan Applications:
Branches should give acknowledgement for loan applications received from the
Borrowers.
● Disposal of Applications:
All loan applications received under SME Sector shall be disposed Off by the
branches within a maximum period of 4 weeks provided the loan applications are
complete in all respects. In case the proposal of the borrower does not fall within
the competence of branch, the branch should send one advance copy of the
proposal to the sanctioning authority followed by final copy with recommendations
from the branch.
Proposal received register:
A register should be maintained at branch wherein the date of receipt,
sanction/rejection/disbursement with reasons therefore etc., should be
recorded. The register should be made available to all inspecting agencies.
● Rejection of applications for fresh limits/enhancement of existing limits
should not be done without the approval of the next higher authority.
18
 ● Sanction of reduced limits should be reported to the next higher authority
immediately with full details for review and confirmation.
Security
Branches should not insist for any tangible collateral security for limits upto Rs 5.
For limits beyond Rs 5.00 lacs branches may obtain adequate tangible collateral
security.

Debt Equity ratio

Debt equity ratio of 2:1 is desirable. However in well-managed SSI’s units ratio of
3:1 can be considered on merits.
Rate of Interest:

Sector Rate of Interest

Agriculture & 1% below the rate prescribed for each
Allied activities Rating Grade
SMEs 0.50% below the rate prescribed for each
Rating Grade

19
 COMPANY
PROFILE

20
BANKING INDUSTRY IN INDIA

Banking in India originated in the last decades of the 18th century. The oldest bank
in existence in India is State Bank of India, a government-owned bank that traces
its origins back in 1886 and is the largest commercial bank in the country. Central
banking is the responsibility of the Reserve Bank of India, which in 1935
formally took over these responsibilities from the then Imperial Bank of India,
regulating it to commercial banking functions. The Reserve Bank of India acts as a
centralized body monitoring any discrepancies and shortcoming in the system.

● With the growth in the Indian economy expected to be strong for quite some
time-especially in its services sector, the demand for banking services,
especially in retail banking and mortgages are expected to be strong. The
Reserve Bank of India is the foremost monitoring body in the Indian
financial sector.
● The liberalize policy of Government of India permitted entry to private
sector in the banking, the industry has witnessed the entry of nine new
generation private banks. The major differentiating parameter that
distinguishes these banks from all the other banks in the Indian banking is
the level of service that is offered to the customer.
● With years, Private Banks are also adding services to their customers. The
Indian banking industry is passing through a phase of customers market. The
customers have more choice in choosing their banks. A competition has
been established within the banks operating in India. With stiff competition
and advancement of technology, the service provided by bank has become
easy and convenient.

21
 ● The popularity of these banks can be gauged by the fact that in a short span
of time, these banks have gained considerable customer confidence and
consequently have shown impressive growth rates. Today, the private banks
corner almost four per cent share of the total share of deposits. Most of the
banks in this category are concentrated in the high-growth urban areas in
metros (that account for approximately 70% of the total banking business).
With efficiency being the major focus, these banks have leveraged on their
strengths and competencies viz. Management, operational efficiency and
flexibility, superior product positioning and higher employee productivity
skills.
The private banks with their focused business and service portfolio
have a reputation of being niche players in the industry. India has 88
scheduled commercial banks (SCBs) - 28 public sector banks (that is with
the Government of India holding a stake), 29 private banks (these do not
have government stake; they may be publicly listed and traded on stock
exchanges) and 31 foreign banks. They have a combined network of over
53,000 branches and 17,000 ATMs. According to a report by ICRA Limited,
a rating agency, the public sector banks hold over 75 percent of total assets
of the banking industry, with the private and foreign banks holding 18.2%
and 6.5% respectively Financial System is the most important institutional
and functional vehicle for economic transformation of any country. Banking
sector is reckoned as a hub and barometer of the financial system. As a pillar
of the economy, this sector plays a predominant role in the economic
development of the country.
In a country like India where reach is the biggest issue, banking technology
plays a major role. “In the past 10-15 years, technology has made a
significant difference to the way banking functions. Technology is purely
22
 used to offer our customer the choice and a positive experience. It has been
seen that Indian banks aren’t lacking behind when it comes to technology.
Technology has become a great leveler and now it has become productive,
and one can get access to technology which results in cost efficiency.

CHALLENGES FACED BY INDIAN BANKING INDUSTRY

Developing countries like India, still has a huge number of people who
do not have access to banking services due to scattered and fragmented locations.
But if we talk about those people who are availing banking services, their
expectations are raising as the level of services are increasing due to the emergence
of Information Technology and competition. Since, foreign banks are playing in
Indian market, the number of services offered has increased and banks have laid
emphasis on meeting the customer expectations.

Now, the existing situation has created various challenges and opportunity for
Indian Commercial Banks. In order to encounter the general scenario of banking
industry we need to understand the challenges and opportunities lying with
banking industry of India.

Rural Market

Banking in India is generally fairly mature in terms of supply, product range and
reach, even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian
banks are considered to have clean, strong and transparent balance sheets relative
to other banks in comparable economies in its region. Consequently, we have seen
some examples of inorganic growth strategy adopted by some nationalized and

23
private sector banks to face upcoming challenges in banking industry of India. For
example recently, ICICI Bank Ltd. merged the Bank of Rajasthan Ltd. in order to
increase its reach in rural market and market share significantly. State Bank of
India (SBI), the largest public sector bank in India has also adopted the same
strategy to retain its position. It is in the process of acquiring its associates.
Recently, SBI has merged State Bank of Indore in 2010.

Financial Inclusion
Financial inclusion has become a necessity in today’s business environment.
Whatever is produced by business houses, that has to be under the check from
various perspectives like environmental concerns, corporate governance, social and
ethical issues. Apart from it to bridge the gap between rich and poor, the poor
people of the country should be given proper attention to improve their economic
condition. Dev (2006) stated that financial inclusion is significant from the point of
view of living conditions of poor people, farmers, rural non-farm enterprises and
other vulnerable groups. Financial inclusion, in terms of access to credit from
formal institutions to various social groups. Apart from formal banking
institutions, which should look at inclusion both as a business opportunity and
social responsibility, the author conclude that role of the self-help group movement
and microfinance institutions is important to improve financial inclusion. The
study suggested that this requires new regulatory procedures and de-politicisation
of the financial system

Interest rate risk:

Interest rate risk can be defined as exposure of bank's net interest income to
adverse movements in interest rates. A bank's balance sheet consists mainly of
rupee assets and liabilities. Any movement in domestic interest rate is the main

24
source of interest rate risk. Banking in the recent years had been reduced to a
trading operation in government securities. Recent months have shown a rise in the
bond yields has led to the profit from treasury operations falling. The latest
quarterly reports of banks clearly show several banks making losses on their
treasury operations. If the rise in yields continues the banks might end up posting
huge losses on their trading books. Given these facts, banks will have to look at
alternative sources of investment.
Competition in retail banking:
The entry of new generation private sector banks has changed the entire scenario.
Earlier the household savings went into banks and the banks then lent out money to
corporate. Now they need to sell banking. The retail segment, which was earlier
ignored, is now the most important of the lot, with the banks jumping over one
another to give out loans. The consumer has never been so lucky with so many
banks offering so many products to choose from. With supply far exceeding
demand it has been a race to the bottom, with the banks undercutting one another.
A lot of foreign banks have already burnt their fingers in the retail game and have
now decided to get out of a few retail segments completely. The nimble footed new
generation private sector banks have taken a lead on this front and the public sector
banks are trying to play catch up. The PSBs have been losing business to the
private sector banks in this segment.

ABOUT J&K BANK

Jammu and Kashmir Bank Limited was incorporated on 1st October, 1938 and
commenced its business from 4th July, 1939 at in Kashmir (India). The Bank was
first in the country as a State owned bank. According to the extended Central laws
of the state, Jammu & Kashmir Bank was defined as a govt. Company as per the

25
provision of Indian companies’ act 1956. In the year 1971, the Bank received the
status of scheduled bank. It was declared as "A" Class Bank by RBI in 1976. The
Jammu and Kashmir Bank is one of the fastest growing banks in India with a
network of more than 556 branches spread across the country offering world class
banking products/services to its customers. Today the bank has status of value
driven Organization and is always working towards building trust with
shareholders, Employees, Customers, borrowers, regulators, and other diverse
stakeholders for which it has adopted a strategy directed to developing a sound
foundation of relationship and trust aimed at achieving excellence, which of course
comes from the wombs of good corporate governance. Good governance is a
source of competitive advantage and a critical input for achieving excellence in all
pursuits. JK Bank considers good Corporate Governance as the SINE QUA NON
of a good banking system and has adopted a policy based on all the four pillars of
good governance-transparency, disclosure, accountability and value, enabling
it to practice trusteeship, transparency, fairness and control leading to stakeholder
delight, enhanced share value and ethical corporate citizenship. It also ensures that
bank is managed by an independent and highly qualified board following best
globally accepted practices, transparent disclosure and empowerment. Besides
ensuring to meet shareholders aspirations and societal expectations following the
principles of management executive freedom to drive the bank forward. The bank
has recently bagged three very prestigious awards for fair business practices and
commitment to social obligations.

26
CORPORATE HEADQUARTER

27
CORPORATE GOVERNANCE
J&K Bank has been committed to all the basic tenets of good Corporate
Governance well before the Securities and Exchange Board of India and the Stock
Exchanges pursuant to Clause 49 of the Listing Agreement mandated these. Now,
it is our Endeavour to go beyond the letter of the Corporate Governance codes and
apply it innovatively in a more meaningful manner thereby making it relevant to
the organization that is operating in a specific environment, which is different from
the generic Anglo-Saxon one. In line with the vision, J&K Bank wants to use
Corporate Governance innovatively in a transitional economy like Jammu and
Kashmir. The Bank wants to use Corporate Governance as an instrument of
economic and social transformation. In due course, we would set our self-targets of
social and economic reporting as a part of annual disclosures. This will help us
conceptualize and contextualize the form and content of Corporate Governance in
a developing state. Given the fact that J&K Bank is and is seen as a great success
of” public-private partnership”, our Bank as a business is expected to play a role in
social transformation of the economy. This lends urgency to implementation of
good governance practices which go beyond the Corporate Governance code.
Operating in an environment that is emerging from a situation of civil strife, the
issue of Corporate Governance assumes a different and greater relevance. We, as
the prime corporation of Jammu and Kashmir, have a vested interest in making the
state a safe place for business. J&K Bank has a key role to play in providing public
and private services, financial infrastructure and employment. As such, the
efficiency and accountability of the corporation is a matter of both private and
public interest, and governance, therefore, comes at the top of the agenda. The fact
that the bank is state owned but professionally managed, having a large size of
international investors, governance is critical of our directors to make J&K Bank

28
an engine of social transformation. As an eminent corporate jurist (Chancellor
William T. Allen) from US says, “A corporate director has civic responsibility.
The people, who accept this responsibility, do it conscientiously and well deserve
our respect as they are serving a nation. But those who as directors are passive and
view their role as mere advisers, are pliable and pleasant but do not insist on a real
monitor’s role, do small service to anyone and deserve little respect”. Our directors
belong to the former category.

Vision statement

The Bank's vision is to be financially sound, profitable, growth and technology

oriented, committed to building and maximizing sustainable value for all its
stakeholders. The Bank is committed to achieve healthy growth in profitability and
simultaneously to remain consistent with the Bank's risk appetite and at the same
time ensuring the highest levels of ethical standards, professional integrity and
regulatory compliance. “To catalyze economic transformation and capitalize on
growth”. Our vision is to engender and catalyze economic transformation of
Jammu and Kashmir and capitalize from the growth induced financial prosperity
thus engineered. The bank aspires to make Jammu and Kashmir the most
prosperous state in the country, by helping create a new financial architecture for
the J&K economy, at the center of which will be the J&K Bank.

Mission Statement

The mission of the bank is two-fold: To provide the people of J&K international
quality financial service and solutions and to be a super-specialist bank in the rest
of the country. The two together will make us the most profitable bank in the
country.

29
Unique Characteristics & Services of Jammu & Kashmir Bank Ltd.

➢ J&K Bank carries out banking business of the Central Government

➢ In spite of a government equity holding of 53 per cent, Jammu & Kashmir Bank
(J&K Bank) is regarded as a private sector bank

➢ J&K Bank is the one and only banker and lender of last resort to the
Government of J&K

➢ Plan and non-plan funds, taxes and non-tax revenues are routed through the
J&K Bank

➢ J&K Bank claims the distinction of being the only private sector bank that has
been designated as agent of RBI for banking

➢ The services of J&K Bank are utilized for the purposes of disbursing the
salaries of Government officials

➢ J&K Bank collects taxes pertaining to Central Board of Direct Taxes, in Jammu
& Kashmir

❖ Real Time Gross Settlement (RTGS)

❖ National Electronic Fund Transfer (NEFT)

30
 REVIEW OF
LITERATUR
E

31
Review of literature:
Magnus Magnusson et.al (May 2012):In this paper the researcher concludes that
the most developing countries face a shortage of long-term, local-currency
financing for small-scale infrastructure projects impedes local economic
development. Inadequate fiscal transfers, little own source revenue and low
creditworthiness make it difficult for local governments to fully fund projects on
their own. Though the paper proposes the use of project finance as a means to
attract financing from domestic banks and institutional investors. Donors can play
a catalytic role by providing technical assistance to develop projects and credit
enhancement to attract commercial financing.
Keywords: infrastructure finance, issuers, investors, financial sector, structured
finance
C. Gonzaleset et.al (Dec 2001): In this paper researcher urges that in many
industrial projects in Asia, financing is becoming the single-most important factor
for their successful implementation. Companies, many of which are having
liquidity problems, are finding it difficult to provide the equity needed for the
projects, much less to pay for the project costs from their internal funds only.
Commercial lenders, on the other hand, having experienced - and are still battling
with - the effects of “non-performing loans” brought about by the recent economic
crisis in Asia, are cautious in providing new loans particularly to projects involving
technologies.
Rubayat et.al: In this research paper the researchers finds that the there has
emerged a greater interest in understanding firms’ access to finance and the
financing of small scale industries (SSIs) in particular. Various studies have
indicated that one of the major obstacles for the formation and development of SSI
is related with the SSI’s access to financing. The industrial units belonging to the

32
SSI sector, many of which are having liquidity problems, are finding it difficult to
possess the equity needed even to run the day-to-day business. Commercial
lenders, on the other hand, having experience - and are still battling with – the
effects of "non-performing loans", are cautious in providing loans particularly to
the SSIs. Therefore, in Bangladesh, the SSIs face difficulties having access to
financial facilities and typically rely on their own savings and loans from friends
and relatives, especially during the start-up phase. This paper examines the issues
involved and the options related to the financing of SSIs in the country. The first
part of the paper aims to provide an understanding of the present financing
environment, various financing mechanisms and experiences in the country.
Subsequent to this, practical suggestions and options are presented on the ways
whereby certain financing mechanisms and supports can promote greater access to
financial services and efficient use of funds provided. The issue of financing the
SSIs is probably the most talked about one, but compared to the demand, very less
has so far been done in this area.
Nayak, Purusottam: In this research paper this researcher urges that, the
movement of entrepreneurship promotion and development in the past few decades
has gone a long way in North East India, particularly in the state of Assam. Both
governments and various industrial promotion and support institutions are making
considerable efforts to facilitate the process of emergence of new entrepreneurs for
setting up enterprises in small scale sector. These efforts involved making
attractive schemes of availability of finance and various other assistances including
technical knowhow, training, sales, purchases, etc. It is believed that these efforts
have made a favourable impact on the growth of these enterprises in the State as
well as in the region. There are today a large number of organizations like North
Eastern Industrial and Technical Consultancy Organization (NEITCO), National
Institute of Small Industry Extension Training (NISIET) [till it was merged with
33
the Indian Institute of Entrepreneurship (IIE)]and the North Eastern Industrial
Consultants Ltd (NECON) who has been actively involved in entrepreneurship
development activities in the region. Their efforts have been supported by the
North Eastern Council (NEC) in general and financial institutions like
Industrial Development Bank of India (IDBI), Small Industries Development Bank
of
India (SIDBI), North Eastern Development Finance Corporation Limited (NEDFi)
and various commercial banks in particular. The present paper in this regard is an
attempt to examine the role of financial institutions in promoting small scale and
tiny industries in terms of growth of entrepreneurs, enterprises and its contribution
to State Domestic Products.
G T,Fatunla et.al (jan1999): in this paper the researchers conclude that industrial
development involves the development of a technical arrangement that moves an
economy from the traditional method of production to a more complex system of
mass manufacture of a variety of goods and services involving technology and
management techniques It enables country to utilize fully its factor endowments
and depend less on the external sector for its growth and sustenance. Through
industrialization, an economy gains the versatility and resistance that enable it to
raise the standard of living of its people and cope better with internal stress and
strains. While the importance of the industrial sector in modern economies is
universally accepted, the developing countries have since the 1970s shown greater
interest in the promotion of the growth of small and medium scale industries
(SMSI) for three main reasons; the failure of past industrial policies, which are
anchored on the establishment of large firms, to generate efficient self-sustaining
growth; increased emphasis on self-reliant, approach to development; and the
greater attention paid to aspects of development other than investment and output
growth. These other element of growth which SMSI contribute to include more
34
economic use of resources, more employment creation per unit of capital
investment; mobilization of domestic entrepreneurship; personnel development,
greater utilization of local resources and more equitable income distribution.
Saikia, Hemanta(sep 2011): In this paper researcher urges that Globalization of
Indian economy and fast and large industrialization questioned the sustainability
and endurance of small scale industries (SSIs) from 1991. In this regard
productivity and performance is remaining an issue that needs analysis for their
development. However economic underdevelopment is remain a problem for the
development of small scale industries. In this paper an attempt has been made to
examine the productive performance of in small scale industries in India in
underdeveloped areas with special reference to Assam. In modern era with the
development of Indian economy and rapid expansion of trade, the small scale
industrial sector has emerged as a vibrant and dynamic segment in the process of
industrialization which is considered not only as a key factor to lift up the per
capita income but also a vital mechanism for a larger transformation of Indian
economy. The small scale sector has played a very important role in the socio-
economic development of India during the past 50 years. It has significantly
contributed to the overall growth in terms of the Gross Domestic Product (GDP),
employment generation and exports. The performance of the small scale sector,
therefore, has a direct impact on the growth of the overall economy. In India this
sector constitutes 95% of the industrial units and contributes 40% to the total
industrial output of the country and 35% of the direct export.
There are about 3.6 million small scale industrial units in India and these have
employed approximately 19.3 million people, which is second highest next to
agriculture. However, the growth of small scale industries in the country is not
evenly distributed among the states.

35
The growth of Small-Scale Industries in The North Eastern Region is slow in
comparison to the other parts of the country. The development pattern of the small-
scale industries of the region is far from encouraging and these are plagued by
innumerable of problems.
The level of sickness of the sector is quite high and this is being aggravated by the
basic structure of the small scale industrial sector. In case of state Assam, the
scenario of small scale industry is very underprivileged with regards to growth and
production is concerned
Key words: Small scale Industry, Total factor productivity, underdevelopment.
Laturkar, Dr. V.N. et.al(Aug 2011): In this journal the writers conclude that
theSmall Scale industries encompass vast scope covering activities like
manufacturing, servicing, financing, construction, infrastructure etc. In view of
Government of India’s ever increasing importance given to the small scale
industries in the national economy more & more small scale industries are to be set
up in the years to come. By contributing it’s increasing share to the national
production, employment & exports, small scale industries also contribute to the
economic development of the country. However, these industries are also plagued
by the problems of raw material, finance, marketing, underutilization of capacity,
etc. cash has become a big problem for small & even big businesses today. Lack of
finance has driven many small business units into bankruptcy. Unfortunately many
small businesses will become bankrupt because their owners have neglected the
principal of cash management which normally determines their successes or
failure. Cash is like oxygen to a business. Small scale enterprises, given their small
resources find it difficult to have these own. Finance has been the important
resource to start & run an enterprise4because it facilitates the entrepreneur to
procure land, labour, material, machine& so on from different parties to run his/her
enterprise. Report of third all India censuses also clearly indicate that lack of
36
demand& shortage of working capital are the main reasons behind sickness/
incipient sickness of registered & unregistered small scale industries. Developing
cash forecast is essential for new business because early sales do not generate
enough cash to keep the company afloat. Better financial management can lead the
company ahead in competition as well as it will help the entrepreneur to avoid the
situation of bankruptcy & industrial sickness. This paper is an attempt to
understand various financial techniques to help the entrepreneurs to avoid the
situation of industrial sickness.
Key Words: Cash Management, Small scale entrepreneurs, Industrial sickness

37
 Research
Methodology

38
TITLE:

Financing of Small Scale Industries by J&K Bank Ltd in Kashmir Division.

The title of the study undertaken for the research work is “Financing of Small
Scale Industries by J&K Bank Ltd in Kashmir Division”. The study is confined
to five small scale industries in Kashmir ( Handi-Crafts, Sericulture, Cement,
Khadi and Food Processing industries). The study is related to the role played by
the J&K Bank Ltd in financing the small scale industries operating in Kashmir to
ascertain how far the bank has succeeded in fulfilling the working capital financial
requirements of these industries and what factors influence the loan disbursement
to small‐scale industries

SCOPE OF THE STUDY

This study is confined to five small scale industries ( Handi-Crafts, Sericulture,

Cement, Khadi and Food Processing industries), operating in the Kashmir division
.This study is related to the role played by The Jammu & Kashmir Bank in
financing the small scale industries in Kashmir.

OBJECTIVES OF THE STUDY

Objectives of a project tell us why project has been taken under study. It helps us
to know more about the topic that is being undertaken and helps us to explore
future prospects of the topic. It essentially tells what all has been studied while
drafting the project.

39
The various objectives of the study are:

● To study the key role of J&K Bank in financing SSI.

● To study the problems faced by small scale industries in availing the
credit facility.

● To Study the level of satisfaction of SSI’s holders with J&K bank

regarding the financial help provided by the bank.

● To find out the present requirements of financing products by SSI’s.

● To study the incentives provided by the Department. Of Industries &

Commerce J&K for SSI, s in the Valley.

RESEARCH METHODOLOGY OF THE STUDY

Survey method and personal interview is used to collect data from the randomly
selected five small scale industries by using the close‐ended structured
questionnaire. This study is empirical and mostly depends on primary data. Study
is based on the various data provided by bank officials and data from research
literature is thoroughly studied and interpretations made thereof. Primary data has
also been collected from anonymous bank staff. The responses of all the questions
in the questionnaire were tested by using the five points Likert scale.

PLAN OF ANALYSIS

The data collected is raw and it is compiled, classified, tabulated and then analyzed
using financial techniques and statistical tools. Graphs and charts are used to
highlight the statistics. Based on this data and analysis, inferences were drawn.

40
SOURCES OF DATA COLLECTION

Data collection method is highly influenced by the methodology chosen.

Following are the methods of collecting data:

PRIMARY DATA:

Questionnaire was used to collect primary data from respondents. The

questionnaire was structured type and contained questions relating to different
dimensions of banking. The questions included in the questionnaire were close-
ended. Personal interview and observational methods were also adopted to collect
primary data.

SECONDARY DATA

Secondary data has been collected through various search engines like google,
yahoo, etc. Additionally many finance blogs were consulted including some books
and some journals, pump-lets published by DIC as well. Some research papers on
financing of small scale industries also proved to be of very great help.

SAMPLE SIZE
In the study the sample size was 60, the respondents were selected from different
regions across the valley. For the study I have targeted respondents from major
areas.
These areas were selected for the data collection due to certain reasons. Here I
have easy access to the targeted people, easily targeted different income group
respondent. The target respondents were Entrepreneurs, Managers and employees
of SSI’s. I have targeted respondent from different Managerial levels and
occupations. The technique of sampling used is Simple Random Sampling

41
DATA COLLECTION

Respondent were given a questionnaire and the interviewer noted down the
responses after giving the information about the purpose of the study and
instruction about the questions.

DATA INTERPRETATION

The data collected was analysed with the help of using Microsoft Excel

● Pie Chart
● Bar Chart
● Mean
LIMITATIONS OF THE STUDY

● Some of the information is considered confidential and not available for

study
● The data taken for interpretation is for a limited period.
● The study is limited to the Kashmir region only.
As the questionnaire was self-administered personal bias of administrator may be a
limiting factor.

42
Analysis & Interpretation

1: Age of the industry?

0- 10- 20- 30- Above

10yrs 20yrs 30yrs 40yrs 40yrs
15 6 29 7 3

43
 2: Investment of
the industry?

3: Banking Relationship?

44
4: Amount of loan taken from the JK bank:

Rs 0-5 5- 10- 15- 20- 25 - 30-35 Abov

Lac 10 15 20 25 30 lacs e 35
s lacs lacs lacs lacs Lacs lacs
For Term 12 17 20 8 2 1 0 0
loan
For 24 20 9 4 2 1 0 0
Working
Capital
loan

45
5: Satisfaction level with the JK bank?

46
6: Awareness about the RBI guidelines?

7: Satisfaction with the security demanded by the JK Bank

for loans?

47
8: JK bank keeps privacy & confidentiality of your business
& personal information?

48
9: How much of your profitability has been increased by
getting loan?

49
10: Which measure will be more effective to improve SSI’s?

Implemen Decreas Introdu Advertis Decreasing

tation ing ction ement Demand for
of Interest new securities
schemes rate schemes
8 26 5 6 13

11: is JK bank transparent to you?

50
Q12: Most effective type of Working capital loan?

Cash Letter Bank Bill of

Credit of of Purch
Credi warra ase
t ntee
40 10 7 3

51
13: Is the bank advertising their schemes regarding
financing of SSI’s to make you aware about these schemes?

Yes No
15 45

14: what type of Promotional mix will be effective to make

you aware about the schemes regarding financing of SSI’s?

52
FINDINGS
● JK Bank is the bank providing loans to SSI’s at very low interest rate.
● The study reveals that about 90% of Small Scale Industries in Kashmir have
maintained their relationship with JK Bank and only 10% of SME’s have
maintained their relationship with other (i.e. SBI ,PNB etc) banks.
● The study reveals that most of the SSI’s have investment not greater than 20
lacks i.e. these industries are at the bottom of given value of investment
given by RBI for an industry for being an SSI (i.e. 1 corer).
● The study reveals that most of the SSI’s are satisfied with the overall
contribution of JK bank towards SSI’S.
● The study reveals that most of the SSI’s are not fully aware from the
guidelines given by RBI to the banks for financing SSI’s.
● About 70% of SSI’s are not satisfied with securities demanded by the bank
for getting loans. According to them bank is demanding collateral securities
which is about two times greater than the actual loan to be taken, While as
other banks are demanding less collateral securities in comparison to JK
Bank.
● The study reveals that 70-75% Management of SSI’s in Kashmir are not
satisfied with the Privacy & confidentiality of their information(both of
business & personal) kept by the bank.
● About 85% of SSI’s are saying that they are making a reasonable increase
(from 5-15%) in the profit by getting loan from the bank.
● Most of the SSI’s are more interested in getting working capital loan rather
than Term loans .Only about 25% of SME’s are interested in taking Term
loans for purchasing the new technological machineries.

53
 ● Most of the SSI’s want decrease in the Interest rate, also are unsatisfied with
commitments of the bank to implement new schemes & also are unsatisfied
with the Advertisement strategy of the bank for the new schemes.
● Most of the SSI’s are more interested in the Cash credit type of working
capital loan.
● About all SSI’s are complaining about the low consideration by the
government.
● Bank is continuously taking steps to improve SME’s.
● SSI managers are also complaining about the slow service & overall
behaviour of the bank staff.
● This time bank is continuously organizing meetings with the entrepreneurs
of SSI’s in order to discuss the new steps that should be taken to improve
SSI’s.
● The managers of SSI’s are also complaining about the non-implementation
of the scheme i.e. lower down rate and also rescheduling the instalment
schedule.
● The managers of SSI’s are also complaining about the winding up of
Business Development Promotion Cell (BDPC) and are not satisfied with
Cluster making strategy by the bank.
● Most of the Sick industries are winded up in the valley because of 30%
margin kept by bank to sick industries.
● .Most of the %age of the managers of SME’s are complaining about the
editing of Project plan (deposited by SME’s to the bank for which they have
applied for loan) by the bank.
● Most of the %age of the managers of SSI’s are not satisfied with the
Marketing strategies of the bank.

54
Suggestions and Recommendations

● RBI should make new strategies to make Industries and SSI’s particularly
aware about their guidelines to the banks for financing Industries and SSI’s
in the Valley.
● The formalities for SSI’s for getting loan should be reduced.
● The Securities especially Collateral securities demanded for getting loans,
which are about twice the actual amount of loan, should be decreased.
● Although the bank is providing loan to SSI’s at low rate of interest in
comparison with the other banks , but SSI’s have more expectations on J&K
Bank ,so the bank should decrease the interest rate which is PLR-1.50 for
2-5 lacks should be decreased to PLR-2.
● J&K Bank should keep Privacy & confidentiality of information (both of
business & personal) of SSI’s.
● Bank should not do any kind of editing in SME’s Project plan for which they
have applied for loan because it can make failure of that plan.
● All loan applications received under SSI Sector should be disposed Off by
the branches within in minimum period of time
● The bank should follow sharply all the RBI guidelines in financing SSI’s .
● The bank should make available, free of cost, simple standardized, easy to
understand, and application form for loans.
● The bank should focus more on improvement of SSI’s and should achieve
targets in Priority Sector Lending.
● The bank should restore Business Development Promotion Cell (BDPC).If
BDPC is restored their focal point should be industries.
● The bank should locate branches in every industrial area for the convenience
of SSI’s.

55
 ● Every SSI Entrepreneur should be given rights to present their grievances
and suggestions to the bank.
● Government should help SSI’s through providing Subsidy, good
Infrastructure and also should help them in the marketing of their products.
● The new schemes/policies should be implemented which needs sharp
supervision on middle and lower management.
● Bank should do proper recruitment, and train the staff about the proper and
quick service.
● Bank should make regular advertisement of their new schemes for SSI’s in
order to make them familiar with the new schemes introduced by the bank.
● There should be more than 20 lacks sanctioning competence to the branch
placed in the industrial area.
● The bank should introduce new schemes for SSI’s in order to improve them.
● Government intervention is very must for the Small Scale industries in the
valley.
● Sound government policy is required for the promotion of this industrial
sector.
● Financial institutions need to be strengthened.
● Entrepreneurs of SSI’s need to come forward with their innovative projects.

CONCLUSION
● The industrial sector plays an important role in the economic growth of both
developed and developing countries.
● The Small Scale Industrial (SSI) sector is very important for any country
irrespective of the level of development because, SSI contributes maximum
socio economic benefits with low level of investment and results in

56
 employment creation, income generation, and poverty alleviation and
restricts migration of unemployed workers into cities.
● SSI’s is also one that maximizes the utilization of local resources and results
in innovations, new technology and is a pathway to emerging entrepreneurs.
● SSI’s are the starting point for industrial growth.
● Small and medium scale industries (SMIs) have been considered essential
for economic development not only in less developed countries (LDCs) but
also in more developed regions of the world. Since they are seen being more
dynamic, innovative and have higher labour absorptive capacities than their
corporate counterparts, the SMI sector has been the backbone of industrial
development in many developed countries.
● SMIs have played a significant role in Valley’s economic development. In
Kashmir, SSI’s have been estimated as providing 21% of total employment
and have fulfilled important functions such as being the foundation for local
entrepreneurship and innovation, as critical supporting industry.
● Problems faced by the SMI sector in the Valley can be divided into those
from the demand and supply side.
● Constraints of the demand side cover competition from domestic and foreign
sources, non-availability of market information and inadequate market
access
● While the supply side constraints include low technology, shortage of
finance, access to raw materials, inadequate Infrastructure, lack of
managerial skills, shortage of skilled labour and low productivity.
● The working in DIC is slow which should be streamlined for disposal of
cases of SSI’s
● The unit holders requires hassle free services from DIC for clearness and
registration of cases
57
 Government
Sponsored
Schemes
58
59
Over the years the unemployment problem particularly for educated youth has
acquired alarming dimensions. With the regular annual incremental increase
thousands of unemployed educated youth enter into the growing list of the
unemployed, largely due to the economic distress and mismatch, the problem is
going to be one of the biggest challenge.

The task of overcoming the unemployment problem could only be resolved to a

considerable extent by providing jobs to the unemployed educated youth outside
the Govt., departments and by promoting the self-employment ventures and thus
ameliorating that lot of job seekers.

Like all other states the state of J & K has a high rate of unemployment particularly
among the educated youth. Almost 6 lakh people are unemployed in the State. The
problem has been further accentuated due to the fact that avenues for private
employment are restricted to almost nil. This causes a strain on the resources of the
State and hampers developmental activities. With a view to generate a lasting
solution and overcoming the problem of educated unemployed youth various
schemes to provide fruitful self-employment opportunities, especially to the
educated unemployed youth, were devised and launched by both the governments
at the center and the State.

Handicrafts Sector

60
SALIENT FEATURES

● Shawls and carpet making, Crewel and Chain stitch embroidery, Gubba
making, papier machie, Kanni Shawl, Tapestry, Namda embroidery, zari
embroidery, Copperware making, wood carving, willow–wicker work, Fur
and Leather work, Silver ware, meena kari, Clay moulding, Thanka/Frasco
painting, Pholkari embroidery, Wheatstraw, Chikriwood, Shawl embroidery,
basooli painting, Nara pranda making, Calico printing, Lathe-Cum-Lackure
work, Bamboo work, Chamba embroidery.

Implementation of the Scheme of Handicrafts Year wise Target and

Achievements

Year Target Achievement

A/C Amt.(lacs) A/C Amt.(lacs) %age

61
2002-
6106 2986.03 731 278.40 9%
03

2003-
3169 1587.72 576 231.47 15%
04

2004-
9759 4181.62 775 313.69 8%
05

2005-
7464 2937.47 599 282.80 23%
06

2006-
3090 1498.20 526 271.33 18%
07

2007-
3471 1575.63 817 6432.85 27%
08

2008-
3516 1928.72 931 531.37 28%
09

2009-
3514 2097.09 912 486.37 23%
10

2010-
3435 1781.60 720 479.40 27%
11

2011-
4311 2526.45 1541 942.51 37%
12

62
2012-
4519 3691.01 8260 6412.75 174%
13

2013-
4867 4799.41 5892 5252.36 109%
14

2014-
25486 25246.55 7065 5877.51 23%
15 (HY)

SSI (DIC)

Silent features

The main objective of setting up District Industries Center was to provide all
facilities to the prospective entrepreneurs under the single roof. Government is
providing number of facilities in the shape of incentives for setting up the
Industrial units and also to develop the Industrial Estate where all infrastructures
are available at cheaper cost. The Government is announcing policies from time to
time for promotion of Industries and in January 2004 a revised Industrial Policy
likely to be extended up to 2015 has been announced. The main attraction of the
package of incentives is exemption of Excise Tax/ Sales Tax and 100% subsidy of
D.G. sets, which is considered to be the best in the country. The main objective for
providing such facility is to minimize the burden of unemployment and for the
economic growth of the State.
The District Industries Centre besides being single window clearance agency also
undertakes to provide technical assistance at whatever stage. The entrepreneurs
need technical assistance in the shape of existing techniques of production.

Arrangement for Imparting and technical skills knowledge

There are many agencies in the districts, which are imparting training/technical
skills and knowledge to rural artisans, cottage and Small Scale Industries. The
District Rural Development Agency is imparting training to rural artisans in shoe

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making, bamboo craft, blanket weaving, handloom etc. at various centers in the
district under (TRYSEM)

Implementation of the Scheme of SSI (DIC)-Year wise

Target and Achievements

Year Target Achievement %age of Ach.

A/C Amt.(lacs) A/C Amt.(lacs) (Financial)

2002- 1377 3815.95 329 930.01 24

03

2003- 1675 3474.03 209 408.91 12

04

2004- 1069 2148.56 250 653.70 30

05

2005- 1120 2429.55 216 727.32 30

06

2006- 932 2362.13 208 883.34 37

07

2007- 1188 2948.62 214 868.40 29

08

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 2008- 1229 3816.75 216 684.68 18
09

2009- 1188 2948.62 214 868.40 29

10

65
BIBLIOGRAPHY/REFERENCES

Websites

https://www.jkbank.net

● http://shodhganga.inflibnet.ac.in/bitstream/10603/684/7/07_chapter-
i.pdf
● https://www.preservearticles.com.
● https://moneycontrol.com
Research Papers
● Daniel L. Bond, Daniel Platz and Magnus Magnusson, “Financing small-
scale infrastructure investments in developing countries”,may 2012.
● Alan Dale C. Gonzales, “Financing Issues and Options for Small-Scale
Industrial CDM Projects in Asia”.
● Jesmin, Rubayat, “ financing the small scale industries in bangladesh: the
much-talked about, but less implemented issue”,vol 16 ,no1.
● Purusottam Nayak, “Role of Financial Institutions in Promoting
Entrepreneurship
In Small Scale Sector in Assam.”
● Hemanta Saikia, “Total Factor Growth in Small Scale Industries Some
Evidences from India,the Romanian Economic Journal,sep2012.
● Damayanthi Menike MGP, “Role of bank in financing SSI’s in srilanka.”
● Annul Report 2011-2012, “MSME-DI Jammu Kashmir.”
Magazines/Journals
● Prof. Jayshri J Kadam,Prof. Dr. V.N. Laturkar, Lecturer, IBMRD, A.Nagar,
India Reader, SRTMU, Nanded, India,(aug 2011), Intrernational Journal of
Exclusive Management Research”, A study of Financial Management in
Small Scale Industries in India vol 1, issue 3,pp.1 -8.

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 ● Dr. K.A. Goyal & Vijay Joshi,(2012) Indian Banking Industry Challenges
And Opportunities .International Journal of Business Research and
Management (IJBRM), Vol 3, no 1, pp.30 -48
● Dr k Ramakrishnan,(2013)The Indian Banker.the Monthly Journal
Published by the Indian Bank’s Association,vol 8, no 7, pp. 44-48
Newspapers
● https://www.greaterkashmir.com
Books
● A.K.Dewani (2005),j&k state industrial policy 2002-2015,Avinash &
Avinash.,pp 19-25
● Bajpai ,Naval,Business Research Methods,Pearson publishers Ltd.,pp 70-
86, 93-95,699-705

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