1. A study on financing
Micro,Small,and Medium
Enterprises with reference to

2. Agenda
• Industry profile
• Company profile
• Vision and mission
• Products and services
• Organizational chart
• Functional areas
• Importance of the study
• Objective of the study
• Definitions
• Problems
• SMERA

3. • Policies and products
• Credit frame work
• Rating models
• Rating process
• Rating design
• Rejection of proposal
• Rate of Interest
• CGMSE
• Research design
• Data analysis
• Conclusion

4. Executive Summary
• The study covers the different products of Syndicate bank
for MSMEs, different policies undertaken to finance the
MSMEs. The study also highlights one of the most
important scheme of the Ministry of MSME i.e. Credit
Guarantee scheme for Micro and Small Scale Enterprise
(CGMSE). The main objective of this study is to know
the different schemes of the banks to finance the MSMEs,
to know the effectiveness of the bank in this area and to
suggest the promotional steps to popularize their
products.

5. Industry Profile
Banking Regulation Act of India, 1949
Broadly classified into two major categories
Scheduled banks and non- scheduled banks
Scheduled banks can be divided into co
operative banks and commercial banks

6. • State Bank of India and its
associates,
Commercial • Nationalized Banks,
banks can • Regional Rural Banks,
be divided • Foreign Banks and
• Other Indian Scheduled
into Commercial Banks (in the
private sector).

7. The Evolution of Tech Banking in India
1981: Bank automation starts
1985: Bank of India sets up India‟s first computerized bank
branch in Mahalakshmi,Mumbai
1986: Magnetic Ink character Recognition (MICR)
cheques introduced ,215 years after Bank of Hindoostan
introduced the first cheque in the country
1987: Hongkong Bank (now HSBC)sets up first ATM ,in
Mumbai
1995: Launch of electronic clearing service ,aka ECS ,and
electronic funds transfer systems
2004: Standard Chartered Bank puts through the first real –
time gross settlement deal in the country. Ticket size :Rs.10
crore .Client : Hindustan Lever(HUL)

8. 2008: Cheque truncation, national electronic funds transfer
take off
2008: Speed clearing of cheques, mobile banking goes on
stream. Use of satellites to increase banking penetration
mooted
2008: ICICI Bank launches immobile banking application
2009: HSBC launches an integrated E-card for farmers
supply chain
2010: Business correspondents start to use „handheld
ATMs‟ to dispense cash as part of financial inclusion
2010: Punjab National Bank sets up biometric ATM at
Ranikhera village near New Delhi

9. Company Profile
Syndicate Bank was established in 1925 in Udupi
By three visionaries –
• Sri Upendra Ananth Pai, a businessman,
• Sri Vaman Kudva, an engineer and
• Dr.T M A Pai, a physician –
Objective
• extend financial assistance to the local weavers .
• The bank collected as low as 2 annas daily at the doorsteps of
the depositors through its Agents under its Pigmy Deposit
Scheme started in 1928.
• This scheme is the Bank's brand equity today and the Bank
collects around Rs. 2 crore per day under the scheme.

10. Vision and mission
Vision Statement (2011- Mission Statement
2021) (2011-2021)
• To be a bank of choice of
every Indian and a • To achieve consistent
preferred Banking partner growth in business
globally” • To endeavor for inclusive
development and ensure
service excellence through
effective harnessing of
human capital and
technology

11. Products and services
Banking activities:
• Syndicate Bank Global Debit Card
• Syndicate Bank Global Credit Card
Bank assurance :
• The bank was providing insurance services in
association with Bajaj Allianz
Deposit Schemes:
• Synd 400 Plus and Synd 500 Plus
• Savings Deposit account
• Special premium savings account
• Fixed deposit scheme

12. Synd Bank Services (BPO)
Loan Products
• Synd rent
• Synd saral
• Synd senior
• Synd vidyarthi
• Synd Nivas
• Synd Pigmy
• Synd kisan
Agricultural loan products
• Animal husbandry scheme
• Development of irrigation infrastructure
• Farm mechanization scheme

13. Other services:
• Telebanking
• Internet banking
• Any branch Banking
• Synd bill pay
• Online collection of direct taxes
• Online railway ticket booking
• Western union money transfer
• Synd Instant (RTGS system for instant transfer of
funds)
• Electronic funds transfers (EFT) system
• Syndicate gift cheques
• Insurance cover for deposits

15. Functional Areas
• Accounts
• Audit and Inspection
• Credit
• Human resources
• Information technology
• Insurance
• Recovery
• Risk management

16. Accounts
• Maintaining Books of Accounts
• Inter Branch Reconciliation
• Handling Cash Management Services
• Maintain government deposits
• Handle tax related matters

17. Audit and Inspection
• Audit and Inspection
• Vigilance
• Providing Information under the Right to Information
Act, 2000(RIA)
Credit
• Credit and policy formulation
• Small and Medium Enterprises (SME)

18. Human Resources
• Training
• Industrial Relations
• Recruitment
Information Technology
• ATM Network
• Internet Banking
• SMS Banking
• Electronic Payment Settlement through NEFT &
RTGS

19. Insurance
• The bank has also entered the insurance sector and has
tie-ups with some of the major companies of the
insurance world. The bank provides the insurance
cover association with Bajaj Allianz Life Insurance
• InvestGain
• CashGain
• ChildGain
• RiskCare
• TermCare
• Life time care

20. Recovery
• Handling DRT cases
• Rehabilitation of Sick Units:
• Out of court settlements
• Synd Adalat
• Lok Adalat

21. Risk Management
• Foreign Exchange
• Asset and liability management
• Gold selling
• Fund Investment and Management
• Interest Rate Formulation
• Managing Overall Credit Rating of the Bank

22. Importance of the study
• The study covers the different products of Syndicate
bank for MSMEs,
• Different policies undertaken to finance the MSMEs.
• Credit Guarantee scheme for Micro and Small Scale
Enterprise (CGMSE).

23. Objective of the study
• To know the financing schemes for MSMEs from
syndicate bank
• To know the problems faced by the enterprises while
applying for the loan in the banks
• To know the effectiveness of the financing schemes of
syndicate bank in this area
• To suggest the various promotional strategies to
popularize the Schemes of the Syndicate Bank.

24. Definition of Micro, small and
medium enterprises
• A micro enterprise is an enterprise where
investment in plant and machinery does not exceed
Rs.25 lakh
• A small enterprise is an enterprise where the
investment in plant and machinery is more than
Rs.25 lakh but does not exceed Rs.5Crore,and
• A medium enterprise is an enterprise where the
investment in plant and machinery is more than 5
Crore but does not exceed Rs.10 Crore.

25. Enterprises engaged in providing or
rendering of services
• A micro enterprise is an enterprise where the
investment in equipment does not exceed Rs.10 lakhs
• A small enterprise is an enterprise where the
investment in equipment is more than 10 lakhs does
not exceed Rs.2 Crore
• A medium enterprise is an enterprise where the
investment in equipment is more than Rs.2Crore but
does not exceed Rs.5 Crore

26. Growth rate of Micro Small and
Medium Enterprises
• Monitored by the Ministry of MSME by conducting
the All India Census of the sector, periodically in the
country
• The number of registered working enterprises
increased from 13.75 lakhs to 15.64 lakhs, recording
annual compound growth rate of 2.61% during the
period from 2001-02 to 2006-2007.

27. Financing of Small and Medium
Enterprises
Types of finance
Short-term Medium term Long term
i. Bank credit i. Issue of shares i. Issue of shares
ii. Trade credit ii. Issue of debentures ii. Issue of debentures
iii. Installment credit iii. Loans from banks and other iii. Loans from financial
iv. Customer advances financial institutions institutions
iv. Public deposits(for existing iv. Ploughing back of profits
concerns) (for existing concerns)
v. Ploughing back of profits (for
existing concerns)

28. Source of finance
Source of
Finance
Fixed Working Capital
SFCs NSIC SSICs SIDCs Commercial
State Govt Banks
Commercial Industrial Indigenous Money
Coop.Banks
Banks investments Banks lender
co op corp.

29. Steps for Small and Medium
Enterprises loans by Public sector
Banks

30. Problems faced by the banks while
lending loan to Small and Medium
Enterprises
• Information Asymmetry
• Granularity
• Pecking Order Theory
• Switching Costs

31. Small and Medium Enterprises
Rating Agency (SMERA)
• An independent third party comprehensive assessment
of the overall condition of the SME
• financial condition and several qualitative factors that
have bearing on credit worthiness of the SME
• consists of two parts, a composite appraisal /condition
indicator and a size indicator
• SMERA rating categories SMEs based on size, so as
to enable fair evaluation of each SME amongst its
peers

32. Importance of SMERA
• comprehensive, transparent and reliable rating
process;
• have a wider acceptance within the banking system of
the country
• simplify the process of credit requests and make
process more cost effective.

34. Products to MSME
Target Group:
Manufacturing, trading
and service units, small
and medium
manufacturing
SYND UDYOG concerns,anciallary units
who are vendor to larger
manufacturer, agro
processing units, traders,
dealers, distributors of
consumer products etc

35. Purpose: To
meet the credit
SYND SME requirements
of small and
Purpose: to medium
meet credit entrepreneurs
SYND requirement of including
all types of micro
VYAPAR traders, service enterprises,
providers and traders, small
professionals business man ,
and self self-employed
employed /professional.

36. Purpose:
General credit
SYNDICATE needs of the
GENERAL customers of
Purpose: To small means ,
provide CREDIT
adequate timely CARD without
SYND insistence on
SWAROZGAR credit to small
artisans, purpose or
CREDIT CARD handloom end use
weavers,
fishermen,
service sector,
self-employed
persons and
micro
entrepreneurs

37. Purpose: To meet genuine
credit requirement of the
SYND SMALL entrepreneurs of small means
who contribute towards
CREDIT “Pigmy Plus 2007” Account in
branches where “Pigmy Plus
2007” scheme is in operation

38. Credit Rating Framework for SME
Risk Assessment Model
Large corporate model (with and without project) non retail asset
• There are three variants of the LCM model
• Borrower with significant project
• Borrowers without significant project
• Green field model
SME –Manufacturing Model
SME-Services model
Business Loan model

39. Sl.N Grade From Up to Description
o.
1 SYND 1 8.50 10 Highest Safety-borrowers rated SYND 1 are
judged to offer highest safety of timely
payment. Though the circumstances providing
this degree of safety is likely to change, such
changes as can be envisaged are more
unlikely to affect adversely the fundamentally
strong position of such borrowers.
2 SYND 2 7.50 8.5 High Safety Plus- Burrowers rated SYND 2
are judged to offer high safety of timely
payment. Changes in circumstances providing
this degree of safety have low impact on the
fundamentally strong position of such
borrowers.
3 SYND 3 6.50 7.5 High Safety – Borrowers rated SYND 3 are
judged to offer high safety of timely payment
.they differ in safety from SYND 2 rated
borrowers only marginally
4 SYND 4 5.75 6.5 Adequate Safety- borrower rated SYND 4 are
judged to offer adequate safety of timely
payment .however changes in circumstances
can adversely affect such borrowers more
than those in higher rated grades.

40. 5 SYND 5 5.00 5.75 Moderate Safety Plus- Borrowers rated
SYND 5 are judged to offer moderate
safety of timely payment of interest and
principal for the present .however changes
in circumstances are likely to lead to a
weakened capacity to repay interest and
principal than for borrowers in higher
rated grades.
6 SYND 6 4.25 5.00 Moderate Safety- Borrowers rated SYND 6
are judged to offer moderate safety of timely
payment of interest and principal for the
present .there is only marginal difference in
the degree of safety provided by borrowers
rated SYND 6 compared to borrowers rated
SYND 5
7 SYND 7 3.50 4.25 Inadequate Safety – borrowers in SYND 7 are
judged to carry inadequate safety of timely
payment while they are less susceptible to
default rather than other speculative grades in
the immediate future, the uncertainties that
the borrower faces could lead to inadequate
capacity to make timely payments.

41. 8 SYND 8 2.50 3.50 High Risk- borrower rated SYND 8 have
greater susceptibility to default .While
currently payments are met, adverse
business or economic conditions can lead to
lack of ability or willingness to repay.
9 SYND 9 1.50 2.50 Very High Risk-borrowers rated SYND 9 are
vulnerable to default .timely payment of
interest and principal is possible only if
favorable circumstances continue
10 SYND 10 0 1.50 Extremely High Risk – borrowers rated
SYND 10 are in bad shape or are expected to
default on maturity .Such investments are
extremely speculative and returns from these
may be realized only on recognition or
liquidation
11 DEFAULT Default

42. Rating Process
The risk rating will be based on audited financial
statements immediately after completion of audit in
any case not later than 7 months of the closure of
financial year of the borrower and submitted to the
conforming authority.
In cases where rating is done based on unaudited
/provisional financial statements, upward revision,
if any, in the rating will not be considered.
However, down gradation .if any will be taken into
consideration for credit decisions.

43. Rating Design
• Company rating = management risk + industry risk +
business risk + financial risk
• Company model scale rating (without project) =
company rating
• Company models scale rating (with project)=
company rating + project rating
• Single scale rating (SYND)=Mapping Company
model scale rating using the matrix
• Facility Rating (FR)=Facility Structure +collateral
• Combined rating (CR)=single scale
rating(SYND)+facility rating

44. Rejection of Proposals
• Branch level to be disposed of in 30 days
• Regional office levels are to be disposed of in 45 days
• Corporate office levels are to be disposed of in 90 days
• In case of priority sector proposals the Branch Manager can
reject the proposal provided case of rejection is subsequently
verified by Regional Head .
• A register is to be maintained by the branch with the details
of sanction /rejection of proposals which should be made
available to inspecting officials.

45. Rate of Interest on advances
• Base Rate (BR) w.e.f. 01.05.2012 – 10.50% effective
for all loans and advances Sanctioned / renewed from
01/07/2010
• Maximum rate of interest payable on defaulted loans
(penal rate is 2% p.a. over and above the applicable
rate)

46. Micro and Small Enterprises (including
KVI Sector)
Size of credit limit Interest rate*
Micro and Small Enterprises (MSE)-(Manufacturing and
Service Sector)
Up to Rs.50000/ BR + 0.50%
Above Rs.50000 to Rs.10 BR + 1.00%
lacs
*Tenor premium of 0.25% on all Term Loans to be added to the
above rates.

47. Above Rs.10.00 lakhs:
Rating Above Rs.10 lacs ABOVE Rs.100
up to Rs.100 lacs lacs
SYND 1 & 2 BR + 1.25% BR + 2.00%
SYND 3 & 4 BR + 1.50% BR + 2.50%
SYND 5 & 6 BR + 2.00% BR + 3.00%
SYND 7 & Below BR + 2.50% BR + 3.50%
*Micro Enterprises will get rebated of 0.50% in rate of interest for
prompt repayment.

48. Medium Enterprises
Rating Interest Rate*
Up to Rs.10.00 lakhs BR + 2.00%
SYND 1 BR + 2.25%
SYND 2 BR + 2.50%
SYND 3 BR + 2.75%
SYND 4 BR + 3.00%
SYND 5 BR + 3.25%
SYND 6 BR + 3.50%
SYND 7 & Below BR + 3.75%
*Tenor premium of 0.25% on all Term Loans of 36 months and above to
be added to the above rates.

49. Credit Guarantee Fund Scheme for
Micro and Small Enterprises
(CGMSE)
• credit guarantee cover to the collateral free credit
• avail credit facilities up to Rs.100.00 lac
• Period of term loan in case of Term Loans and 5 years
in case of working capital facility

50. Research Design
• Data-The data collected are from both primary and
secondary sources.
• Research instrument- I have used the „questionnaire‟
as the research instrument
• Sampling Unit: In this research the sample units are
organizations belonging to micro, small and medium
enterprises

51. Time and Place:
• The research was conducted for one week in the month of
July .The area covered under this study is Peenya Industrial
Area
Sample Size:
• The sample size is 22.The study could cover only 22
respondents.

52. Data analysis
• Which of the following category does your company
belong?
Percentage of respondents
18%
27%
Micro Enterprises
Small Enterprises
Medium Enterprises
55%

53. • What is the source of financing to your company?
Percentage of respondents
0% 0%
0%
9%
Owners Fund
Equity finance
Bank financing
Angel financing
others
91%
The survey revealed that the majority of the enterprises i.e. 91%
of the respondents have taken loan from the bank

54. • If it is bank financing, from which bank has the company
taken loan?
Percentage of respondents
0%
9% 5%
State Bank of India
9%
0% Canara Bank
Syndicate bank
Corporation Bank
others
77% Not applicable
The survey reveals that, 17 respondents i.e. 77% which forms the
majority of the respondents have raised the loan from Syndicate
Bank

55. • What are the obstacles you have faced while seeking the
bank finance?
Percentage of respondents
Guarantor
9%
Collateral
37%
27% Long procedure in
submitting application
None
9%
18% Not applicable
• The survey revealed out of 17 respondents who are from
Syndicate Bank majority i.e. 8 respondents faced problem in
guarantor

56. • How you came to know about the financing scheme of the
above bank?
Percentage of respondents
9%
5% I have my account
5% Friends
0%
Relatives
13%
Advertisement
68% Others
Not applicable
The survey revealed that the majority of the respondents came to
know about the schemes as they have their account and 13
respondents out of 17 customers of the Syndicate Bank

57. • Are you aware of Credit Guarantee Fund for Micro and
Small Enterprises (CGMSE) scheme?
Percentage of respondents
18%
Yes
No
82%

58. • Whether your account is covered under the CGMSE
Scheme?
Percentage of respondents
18%
Yes
46%
No
Not applicable
36%
As told earlier majority of them aware of the CGMSE 10
customers are eligible for the scheme

59. • Was the amount granted by the bank relative to the
amount requested?
Percentage of respondents
0%
5% 5%
5%
Strongly satisfied
13% Satisfied
Neutral
Dissatisfied
Strongly dissatisfied
72% Not applicable
The survey revealed that majority that is 72% of respondents are
satisfied with the amount granted by the bank

60. • Are you satisfied with the interest rate charged on the
loan?
Percentage of respondents
0% 0%
5%
5%
Strongly satisfied
Satisfied
Neutral
36% 54% Dissatisfied
Strongly dissatisfied
Not applicable
The majority of the respondents are satisfied with the interest rate

61. • Have you heard about the different schemes in SME
financing of Syndicate Bank?
Percentage of respondents
23%
Yes
No
77%
• The survey revealed that 73% of the customers are aware of
the different schemes of the Syndicate Bank

62. • If yes, which among the following is beneficial?
Percentage of respondents
Synd Udyog
18% Synd Vyapar
22%
Synd SME
0%
5% 14%
Synd Swarozgar Credit
Card
Other Schemes
41%
Not applicable

63. • According to you what should be the steps that Syndicate
Bank take to popularize their schemes?
Percentage of respondents
9% Television advertisements
14%
40% Newspaper
advertisements
Gifts or presents to the
customers
Others
37%

64. Conclusion and Recommendation
• Syndicate bank has many schemes which can support
the MSMEs
• schemes need to be promoted among non-Syndicate
bank customers .
• So, if the bank will take promotional steps, surely it
can earn lots of customers and can gain the market
share.

65. Limitations of the Study
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.

66. Bibliography
Books
• Desai, Vasant, Small-Scale Industries and Entrepreneurship.
Mumbai: Himalaya Publishing House, 1994(Edition2011)
• Kothari, C.R, Research Methodology New Delhi: Tata McGraw
Hill, 1995(Edition 2005)
• Syndicate bank study materials
Magazines and Newspaper articles
• Nayak,Mahesh, „The Quick and Easy Solution‟, “Business
World”,Dated:28 November 2011
• Goyal,Virendra,SMERA
• Prasad, C.S. „Micro, Small and Medium Enterprises
Financing in India-Issues and Concerns‟, “Cab Calling”, July-
September 2006.
• Srinivas,Y. „Bank Finance to the SME Sector-Issues and
Perspective‟, “The Chartered Accountant”, September 2006

67. Websites or webpages
• www.businessworld.in
• www.syndicatebank.in
• http://syndicatebank.in/scripts/FinancialResults.aspx
• http://syndicatebank.in/downloads/cgmse-scheme.pdf
• http://www.syndicatebank.in/downloads/Revised_web_FINAL_RTI
-16A-RATE-INT-ADV-BaseRate.pdf
• http://syndicatebank.in/downloads/SyndBank-sme-sc.pdf
• http://www.researchandmarkets.com/reportinfo.asp?report_id=4020
&t=t
• http://www.dnb.co.in/topbanks/overview.asp
• http://www.scribd.com/doc/36019627/Sme-Financing
• http://www.scribd.com/doc/22529973/Study-of-Organisational-
Structure-Syndicate-Bank