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y The Total Business increased to Rs. 3,10,763 crores as on March 31, 2011
y Net Profit for the year 2010-11 amounts to Rs. 1252 crore, a growth of
19% over the previous year. Net NPA ratio declined to 0.65% as on March 31, 2011 from 0.69% as on 31.03.2010.
y Access To Finance.
Lack of availability of adequate and timely credit, High cost of credit, Collateral requirements, Limited access to equity capital. The share of the credit to the MSME sector in Net Bank Credit (NBC) has declined from 22.3 % to 15.9 % during 2000-09.
y Access to Markets. y Access to Infrastructure. y Access to People. y Access to Technology & Environmental Constraints. y Issues regarding Regulatory Facilitation.
Enterprises.
y To understand the various steps involved in the credit appraisal process
existing facilities of credit and the ideal requirements as well as the expectations of the sector.
y Recommend certain measures for better credit facilities to MSMEs on
FUND BASED REQUIREMENTS y For the acquisition of capital assets e.g. land/ building / machinery / equipments etc. OR y Purchase of stocks of raw materials / finished goods, extending credit to trade debtors and for other day-to-day business operations. OR
y Both the above.
y SUBMISSION OF LOAN APPLICATION. y INITIAL PROCESSING OF THE LOAN APPLICATION y APPRAISAL OF THE PROPOSED PROJECT
y CREDENTIALS / TRACK RECORD. y SITE VISIT. y ANALYSIS OF PAST & PROJECTED FINANCIAL STATEMENTS. y ACCOUNTING RATIOS. y VARIOUS STEPS IN THE APPRAISAL PROCESS. y CREDIT RATING
y ISSUE OF THE LETTER OF SANCTION y ACCEPTANCE OF TERMS & CONDITIONS BY THE BORROWING
y SAMPLING UNIT : The MSMEs in the sample area, i.e. Shahdara Industrial
Sampling was done through database provided by the Bank, websites which have the addresses and the contact numbers of the business enterprises (like www.indiamart.com) and by cold calling.
y DATA COLLECTION : The primary instrument for data collection in this
research was questionnaires, which contained a mixture of closed and open ended questions.
y LIMITATIONS.
their low rates of interest. However, they bring their own set of problems like delay in the documentation process.
y Credit options, interest rates, collateral security and documentation
process are the chief concerns among the MSMEs. Micro enterprises feel that banks stress a lot on collateral security and lend each pie on the basis of it.
y A considerable no of MSMEs especially in the micro sector are unaware of
their ability to grow depends on their potential to invest in technology, restructuring, innovation and human resource development.
y There is a need for banks to focus their attention on the MSME sector
without affecting their profitability and without compromising on the quality of lending.
y Heavy dependence on debt rather than equity. This calls for an
Basel II, many MSMEs are confronted for the first time with internal rating procedures or credit scoring system by their banks.
y Focus on more customized products. y Loans should be more of secured by a charge of overall assets of a
business. y Effects of high risk profile. The appraisal process should consider the sector s limited access to equity finance and high dependence on debt markets, blocking or delayed payments by vendees etc.
y Banks should gear up to offer entrepreneurs information about
industry, products, markets etc in addition to financial assistance. y The banks should communicate the relevant criteria affecting the rating of MSMEs and inform them about its assessment in order to allow MSMEs to improve. y Faster documentation process. y Prompt response to the queries on loans with the simplified details.