Enterpreneurship 2


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Enterpreneurship 2

  1. 1. Entrepreneurship By- Avinash Kumar kumaravinash23@gmail.com
  2. 2. G Everyone in the world has at least one talent, one passion, one hobby that can become profitable if used correctly.
  3. 3. G Entrepreneur  one who organizes, manages and assumes the risks of a business or enterprise  "Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled"
  4. 4. G Impact of entrepreneurial firms  Job creation  Economic growth  New technology  Serving small markets
  5. 5. G Entrepreneurship Development: Role of Financial Institutions  Industrial growth and economic development of developing nations depend to a great extent on the role played by entrepreneurs. There are many instances of individual entrepreneurs whose creativity has led to the industrialization of many nations.  However, in India the economic and industrial growth was slow due to lack of efficient entrepreneurs, industrial environment, technical know-how .  Government and financial institutions have played a very important role in the entrepreneurship development.
  6. 6. s Efforts to Foster Entrepreneurship in India  Many of India's leaders have perceived the need for the development of entrepreneurship in their country, and a number of programs have emerged to meet this need. Various agencies participate in entrepreneurial development across India. Such as:-  The National Institute for Entrepreneurship and Small Business Development (NIESBUD).  The Entrepreneurship Development Institute of India (EDII).  Industrial Development Bank of India (IDBI).  Small Industries Development Bank of India (SIDBI).  North Eastern Development Finance Corporation Limited (NEDFi)  RBI’s role and steps for the development of SSI sector
  7. 7. s The Entrepreneurship Development Institute of India  Sponsored by several financial institutions, namely (ICICI), (IDBI), the Industrial Finance Corporation of India (IFCI), and the State Bank of India.  One of the institute that, focuses on creating entrepreneurial personalities among youth.  EDII launched a variety of programs to do just that. The Rural Entrepreneurship Development division, for instance, concentrates on rural development, employment generation, and poverty alleviation through the promotion of micro-enterprises. This division also has an informal micro-credit delivery system.
  8. 8. s Contd….  EDII's entrepreneurship camp involves teenagers from across India coming to the EDII campus for a ten-day period.  The program is designed to increase the self-confidence and thereby to develop their concern for enterprise and for achievement. Methodology includes role playing and simulation exercises, with the following objectives in mind:  enabling participants to realize their latent potential;  developing capabilities by sharpening skills;  motivating individuals to seek independent, innovative, and challenging careers;  fostering entrepreneurial traits including creativity, concern for excellence, leadership, and problem-solving;  providing an opportunity to interact with achievers.
  9. 9. s Credit Flow of Commercial Banks to Small Scale Industry(SSI) and Tiny Sectors Credit to ( 1995 1996 1997 1998 1999 in lakhs ) SSI sector 25,8431 29,485 31,542 38,109 42,674 (15.29) (15.99) (16.6) (17.5) (17.33) Tiny 7,734 8,183 9,515 10,273 NA sector (29.93) (29.93) (30.2) (27.0) Net Bank 1,69,038 1,84,381 1,89,684 2,18,219 2,46,203 credit RBI website source
  10. 10. S Credit Flow of Commercial Banks to SSI and Tiny Sectors ie,very small sector 250000 200000 150000 100000 50000 0 1995 1996 1997 1998 1999 SSI Sector Tiny sector Net Bank credit RBI website source
  11. 11. M Role of Small Industries Development Bank of India(SIDBI)  SIDBI was established in April 1990 under an Act of Parliament as a wholly- owned subsidiary of Industrial Development Bank of India and as the principal financial institution for the following three-fold activities:  Financing the small scale sector by providing:  Indirect assistance to primary lending institutions  Loans granted by PLIs for new SSI projects and their expansion, technology up gradation, modernization, quality promotion etc.  Loans sanctioned by PLIs to small road transport operators, qualified professionals for self- employment, small hospitals and nursing homes and to promote hotels and tourism-related activities. RBI website source
  12. 12. Contd…  Direct assistance to small scale units  SSI units for new/expansion/diversification/modernization projects.  Marketing development projects which expand the domestic and international marketability of SSI products.  Existing well-run SSI units and ancillaries/sub-contracting units/ vendor units for modernization and technology up gradation.  Infrastructure development agencies for developing industrial areas.  Leasing and hire purchase companies for offering leasing/hire purchase facilities to SSI units.  Existing export-oriented units to enable them to acquire ISO-9000 Series Certification  Promoting small industries through development and support services;  Coordinating the functions of other institutions engaged in similar activities Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
  13. 13. M Growth of Credit Flow from SIDBI to SSI Sector Year Sanction ( in Disbursemen Sanction Growth of cr) (express t Disbursemen Disburseme permission) (pay out t Gap nt (%) money) 1990- 2410 1839 571 - 91 1991- 2847 2028 819 10.23 92 1992- 2909 2146 763 5.82 93 1993- 3357 2672 685 24.51 94 1994- 4706 3390 1316 26.87 95 1995- 6066 4801 1265 41.62 Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
  14. 14. M Growth of Credit Flow from SIDBI to SSI Sector 8000 7000 6000 5000 4000 3000 2000 1000 0 91 92 93 94 95 96 97 98 - - - - - - - - 90 91 92 93 94 95 96 97 19 19 19 19 19 19 19 19 Sanction(in cr) Disbursement Sanction Disbursement Gap Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
  15. 15. Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164. M Growth of Credit Flow from SIDBI to SSI Sector 50 41.62 40 26.87 30 24.51 20 10.23 5.82 14.31 10 0 -4.5 0 -10 1 2 3 4 5 6 7 8 -9 -9 -9 -9 -9 -9 -9 -9 90 91 92 93 94 95 96 97 19 19 19 19 19 19 19 Growth Disbursement(%) 19
  16. 16. M Role and Steps taken by RBI for the Development of SSI Sector  Credit to SSI sector is monitored periodically by Reserve Bank of India, Department of SSI and National Advisory Committee of SIDBI, State Level Bankers Committee and District Level Coordination Committees of the Bank.  The Central Government on the recommendation of RBI has raised the investment limit for SSIs from Rs.60 lakhs to Rs.300 lakhs and for tiny units from Rs.5 lakhs to Rs.25 lakhs.  Public sector banks have been advised to make it operational more specialized SSI branches at centers where there is a potential for financing many SSI borrowers.  To extend 'Single Window Scheme' of SIDBI to all districts to meet the financial requirements (both term loan & working capital) of SSIs. Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
  17. 17. M Contd…..  With a view to moderating the cost of credit to SSI units, banks are advised to accord SSI units with a good track record the benefits of lower spread over the Prime Lending Rate.  In order to take expeditious decision on credit proposals of SSI units, banks have been advised to delegate enhanced powers to the branch managers of the specialized SSI branch so that most of the credit proposals are decided at the branch level.  Initiatives Announced:- a) Launching of A New Credit Insurance Scheme b) Enhancement of Limit of Composite Loan Scheme c) Enhancement of Limit of Working Capital Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
  18. 18. M Institutional Network: Finance and Credit in India Long-term Short-term & Agriculture -All India Medium-term Credit Financial -Commercial -Cooperative Institutions Banks Banks (AIFIs) --Regional Rural -NABARD -Regional DFIs Banks ( RRBs) Non-banking Government Non-Govt. Finance owned Organisations Companies Institutions/ (NGOs) & Micro (NBFCs) Corporations Finance Institutions (MFIs) RBI website source & FICCI Source
  19. 19. M All India Financial Institutions(AIFIs) Financial Assistance 250000 228570 206655 200000 RS IN MILLION 150000 103658 104484 100000 50000 0 2003-2004 2004-2005 YEAR (April - Septem ber) Sanctions Disbursements (Data Relate to All India Development Banks and Investment Institutions only) Viz. IDBI, IFCI, SIDBI, IIBI, IDFC and LIC, GIC, National Insurance Co. Ltd, New India Ass. Co. Ltd , Oriental Insurance Co. Ltd., United India Insurance Co. Ltd.
  20. 20. M ALL FINANCIAL INSTITUTIONS 1400000 1200000 1000000 RS IN MILLION 800000 600000 400000 200000 0 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 YEAR Sanctions Disbursements Source : Report on Development Banking in India 2003-04
  21. 21. M Long Term Loans by Commercial Banks Amt (in Crs) % of Tot. Credit 160,000 35.00% 140,000 30.00% 120,000 25.00% 100,000 20.00% 80,000 15.00% 60,000 10.00% 40,000 5.00% 20,000 - 0.00% Mar-90 Mar-95 Mar-00 Mar-02 Source : RBI Website Year Amt(Crs) % of Tot. Credit
  22. 22. M Long Term Loans by AIFIs 140,000 90.0% 80.0% 120,000 70.0% 100,000 60.0% 80,000 50.0% 60,000 40.0% 30.0% 40,000 20.0% 20,000 10.0% 0 0.0% Mar-90 Mar-95 Mar-00 Mar-02 Source: RBI website LT Credit % to totalcredit
  23. 23. M Comparative Chart – in Rs cr 180,000 Rs in crores 160,000 Banks AIFI 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - Mar-90 Mar-95 Mar-00 Mar-02 Source: RBI website
  24. 24. M FICCI STUDY ON LONG TERM FINANCING NEEDS OF THE INDIAN INDUSTRY AND THE ROLE OF DEVELOPMENT FINANCIAL INSTITUTIONS IN PROMOTING “Entrepreneurship” IN VARIOUS INDUSTRIAL SECTOR  Survey conducted Feb – March 2004, elicited(factual) response from 248 companies with a wide geographical and sectoral spread  The companies which participated in the survey ranged from Rs. 1 million to 5000 million  The Survey represents a wide array of activities and includes sectors such as paper, cement, automobiles and auto ancillary, consumer electronics, electrical machinery, textile, wires and cables, petrochemicals, iron and steel, real estate and pharmaceuticals.
  25. 25. M PLANS FOR FRESH INVESTMENTS IN NEAR FUTURE No 11% Yes 89% Yes No Source : FICCI Study – March 04
  27. 27. M PROPORTION OF PROJECT COST TO BE MET FROM DEBT FINANCE 30 25 24 PROPORTION OF RESPONDENTS 22 20 20 15 10 10 9 7 7 5 1 0 less than 20-40 40-50 50-60 60-70 70-80 80-90 90-100 20 Source : FICCI Study – PROPORTION OF DEBT FINANCE March 04
  28. 28. M FICCI STUDY ON LONG TERM FINANCING NEEDS OF THE INDIAN INDUSTRY AND THE ROLE OF DEVELOPMENT FINANCIAL INSTITUTIONS HIGHLIGHTS  The economy today stands at the beginning of an investment cycle  A whopping 80% of the respondents are of the opinion that revival and strengthening of DFIs is extremely important  Corporate India’s heavy dependence of debt financing for fresh investments continues  Respondents have voiced concerns about the low levels of activity of the DFIs
  29. 29. M Cont…  The Industry is divided in its opinion on the emergence of alternative structures for raising debt finance  An important finding in the above context is the skewness, in terms of turnover, that emerges  The participants in the present survey have expressed apprehensions about the role Universal Banks can pay  Revival and Strengthening of DFIs would go a long way in ensuring that fresh investments in the economy are not hampered
  30. 30. D The National Institute for Entrepreneurship and Small Business Development  The institute organizes:-  Entrepreneurship development programs,  Prepares manuals, and produces educational videos;  Its training activities are stimulating, supporting, and sustaining entrepreneurship.
  31. 31. D Industrial Development Bank of India (IDBI)  IDBI is the tenth largest bank in the world in terms of development.  The National Stock Exchange (NSE), The National Securities Depository Services Ltd. (NSDL), Stock Holding Corporation of India (SHCIL) are some of the institutions which has been built by IDBI.  IDBI is a strategic investor in a plethora of institutions which have revolutionized the Indian Financial Markets.  IDBI Bank, promoted by IDBI Group started in November 1995 with a branch at Indore with an equity capital base of Rs. 1000 million.
  32. 32. D Main functions of IDBI  IDBI is vested with the responsibility of coordinating the working of institutions engaged in financing, promoting and developing industries. It has evolved an appropriate mechanism for this purpose.  Developmental Activities of IDBI:-  Promotional activities:  the Bank continues to perform a wide range of promotional activities relating to developmental programmes for new entrepreneurs, consultancy services for small and medium enterprises and programmes designed for accredited voluntary agencies for the economic upliftment of the underprivileged
  33. 33. D  Technical Consultancy Organizations:  With a view to making available at a reasonable cost, consultancy and advisory services to entrepreneurs, particularly to new and small entrepreneurs, IDBI, in collaboration with other All-India Financial Institutions, has set up a network of Technical Consultancy Organizations (TCOs) covering the entire country.  Entrepreneurship Development Institute:  Realizing that entrepreneurship development is the key to industrial development, IDBI played a prime role in setting up of the Entrepreneurship Development Institute of India for fostering entrepreneurship in the country.  It has also established similar institutes in Bihar, Orissa, Madhya Pradesh and Uttar Pradesh. IDBI also extends financial support to various organizations in conducting studies or surveys of relevance to industrial development.
  34. 34. D Role of North Eastern Development Finance Corporation Limited  NEDFi is the premier financial and development institution of the North East of India.  The main objectives is to carry on and transact the business of providing credit and other facilities for promotion, expansion and modernization of industrial enterprises and infrastructure projects in the North Eastern Region of India  Also carry on and transact business of providing credit and other facilities for promotion of agro-horticulture, and sericulture plantation, aquaculture, poultry, dairy etc in order to initiate large involvement of rural population in the economic upsurge of the society and faster economic growth of the region.
  35. 35. D NEDFi Initiatives  The corporation launched its Micro Credit Finance Scheme to benefit agriculture, fishery, animal husbandry, horticulture and rural industries.  Its initiatives which is being sponsored by UNDP with NEDFi being the implementing agency, and the Design Centre for Handloom and Handicrafts, were undertaken not only to improve the lot of thousands of rural artisans all over the North-East, but also help promote exports in the sector.  Establishment of IT Park at Guwahati and an appropriate financing scheme for IT industries to help increase the lending portfolio of NEDFi.  Making some headway in promoting bio-technology in the region by negotiating with foreign promoters.  Preparing a master plan for the development of tourism and particularly embarking on a big private sector adventure tourism project.
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