2. • SME play vital role for growth of Indian
economy by contributing 45% of industrial
output, 40% of exports and employing 60
million people and creating 1.3 million jobs
every year and produce 8000 quality products.
3. India
Classification Manufacturing Enterprises Service Enterprises
Micro Upto Rs.25 lakh Upto Rs.10 lakh
Small Above Rs.25 lakh & upto Above Rs.10 lakh &
Rs.5 crore upto Rs.2 crore
Medium Above Rs.5 crore & upto Above Rs.2 crore & upto
Rs.10 crore Rs.5 crore
Source : Ministry of Small Scale Industries vide its notification
No. S.O. 1722(E) dated October 5, 2006.
4. Top 5 GDPs of World v/s India
Country GDP GDP(In Rs. trillion) SME % Loan Value
(Rank) In $ (@ 45.02, GDP as % of GDP
trillion 31 March 2010) (2010-
2011)
USA(1) 14.582 657.4 51 4.93
China(2) 5.878 265.02 58.5 48.67
Japan(3) 5.497 247.82 - 35.90
Germany(4) 3.309 149.206 53.8 -
France(5) 2.560 115.410 56 10.64
India(9) 1.729 77.947 8 4.34
(World GDP $ 63.044 trillion )(World Bank, 2010)
Source: www.CGAP.org (Independent Evaluation Group)
www.data.worldbank.org , European Commision (SBA Fact Sheet)
ASSOCHAM, www.gov.cn(China Government Website)
5.
6.
7. Competitors
• Indian Bank Crore Rs(Advances)
• SBI 1,10,812
• ICICI 71720
• PNB 45296
• Canara Bank 29958
• Bank Of Baroda 27365
• Bank Of India 21000
• UCO Bank 15727
• Central Bank of India 11901
8. StakeHolders
• End User
SME(http://rbidocs.rbi.org.in/rdocs/content/PDFs/78396.pdf)
• Rating Agency.
• Banks.
• Promoters
• Employee.
• Government.
• Government Schemes.
• Government Bodies like NABARD, PFC.
• RBI.
• Lobbyist.
• NBFC.
• Venture capitalist.
• IT service providers.
9. Value Parameters
• No. of Branches.
• Geographical coverage.
• Interest Rate.
• Transparency.
• Information Confidentiality.
• Efficiency in Operation.
• Fees and Charges.
• Interest.
• Services(Funded, Non funded, Value Added Services, Internet
Banking).
• Collateral/Security.
10. FRONT END DISTRIBUTION CHANNELS
• Relationship managers
In-house • Websites
• Existing customers Database.
• Branches
External • Direct Sales Agent ( 1% of lending
amount)
• Charted Accountants (1-2% of lending
agencies
amount)
• Rating Agencies.
11. WORKFLOW FOR SME SALES TEAM
Advertising Events Industry Outbound Sales Branch
Lead (SMS, Internet,
association referrals
genera- Inbound Call tele-calling walk-in
Centre) tie-ups
tion
Sales
Coordinator
Head
Sales
...
Sales team
Proposal Relationship
Relationship
Manager
genera- Activities performed (RM)
Officer (RO)
tion Contacting customer for preliminary
information
In-principle check on viability of lending
Proposal Given to
Compilation of proposal
generated local Credit
Hub 11
12. Parameters for Loan consideration
Individual
Organization
• Integrity
• Credit Rating
• Intentions
• Debt Equity ratio
• Educational Background
• Balance Sheet
• Past Experience in the
Sector • Feasibility of the
Product
• Owners Capital
• Lenders experience
• Capability to Pay back
with the organization
• Asset and Mortgages
offered
13. Value parameters from Borrowers
Perspective
• Interest Rate.
• Turn around Time.
• Collateral.
• Pre sanction amount facility.
• Documentation.
• Products/Schemes available.
• Relationship with Bank.
14. WORKFLOW FOR SANCTION AND 14 day
12 day
DISBURSEMENT PROCESS (1/2)
1 3 6
10 day
8 day
6 day
Data entry 4 day
File with Request for
Credit for credit
Receipt of ratios and advocate, valuer 2 day
Support rating and credit
proposal and TEV reports
Officer financial rating (where required)
analysis Time meter for cases
where TEV is not
required
Proposal
2 4 7
File with
inspection Satisfactory
Study of file, pre-
Check on report response to
sanction visit,
Credit complete- customer
customer meeting
Officer ness of queries,
Complete and raising customer File with
proposal preparation of
proposal queries appraisal
appraisal note note
Incomplet 5
e proposal
In-principle
decision to go-
Sanc-
ahead with
tioning
Authority
Returned proposal or not,
to RM/RO for together with
Credit Officer 14
completion
15. WORKFLOW FOR SANCTION AND
DISBURSEMENT PROCESS (2/2)
8 11 12 13 14
Receipt of
Issue of final Execution of
advocate,
Credit sanction letter Preparation and documents in Vetting of
valuers and
Support with signature stamping of presence of documents by
TEV reports
Officer from Credit documents Branch Officer/ advocate
(where
Officer Manager
required)
File with
reports
Sanctioned and
9 14 day vetted
documents
12 day released for
Check on
disbursement
Credit advocate, 10 day
Decided
Officer valuers and files 8 day
TEV reports
6 day
4 day Disburse
File with 2 day -ment by
reports
Branch
10 Time meter for cases
where TEV is not
required
Final
Sanc-
sanction by
tioning
Sanc-tioning
Authority
Authority
15
16. Need Gap
• Back end
1. Documents are submitted by the client at the
front end of the branch and are forwarded to
SME factory for due diligence and processing
2. CMA data is developed using balance sheet
and P&L account and gives the current status
and the future projection for 5-6yrs
3. Every CA prepares the CMA data in their own
format
17. Consulting Service
• Small Business diversification.
• Paid Consulting not affordable.
• Time and Energy Spend to know the Registrations
and other procedures.
• Delays in complying with the preconditions can
frustrate entrepreneurs.
• Bank provide consultancy to help start business in
terms of assistance to expedite the startup. This
will enhance customer experience.
18. SME Groups
• A single Entity will become guarantor.
• Derisking.
• Leveraging.
• Pressure for Repayment.
• Reduced Transaction cost.
19. Women Entrepreneur
• Many Incentives from Government.
• Dedicate Cell to track and cater Women
Entrepreneur.
• Eg: Financing women-owned SMEs (Nigeria)
and Women Entrepreneurs’ Package (Turkey)
20. Interest Rate Deregulation
• RBI taking steps towards Interest Rate
regulation.
• Interest Rate war will set in.
• Help SME entrepreneurs.
