SME credits


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SME credits

  1. 1. Appraisal and Monitoringof SME Credits Financing services available for Small and medium enterprises 1
  2. 2. Introduction Punjab National Bank(PNB) is one of the well-renowned banks of India.Mr.K.R.KAMATH is the Chairperson of PNB bank.Punjab National Bank (PNB) was registered on May 19, 1894 under theIndian Companies Act with its office in Anarkali Bazaar Lahore.PNB hadauthorized 175 branches for handling foreign exchange Businesses. Bank hasits Corporate Office at New Delhi and supervises 67 Circle Offices underwhich the branches function.It has opened International Service Branch atDelhi.There are 5675 branches under PNB. PNB has 1064 approved banksworldwide to facilitate trade transactions of its clients. It has also set up 11specialized International Banking Branches (IBBs) at important centers forproviding services to its exporter/ importer clients. 2
  3. 3. Introduction to SME credits SME credit services are the special services tomeet the specific needs of Small and Medium Enterprises and thus enhancetheir development.Small and Medium enterprises play a very significant rolein strengthening Indian economy. SMEs constitute the dominant form ofbusiness organization, accounting for over 95% and up to 99% of enterprisesdepending on the country. They are responsible for between 60-70% net jobcreations in Developing countries. Small businesses are particularly importantfor bringing innovative products or techniques to the market. Classification Investment Ceiling for Plant, Machinery or Equipments Manufacturing Service Enterprises Enterprises Micro Upto Rs.25 lakh Upto Rs.10 lakh Small Above Rs.25 lakh Above Rs.10 lakh & upto Rs.5crore & upto Rs.2crore Medium Above Rs.5 crore Above Rs.2 crore & upto Rs.10 & upto Rs.5crore 3 crore
  4. 4. Objectives of the Study To know about the various SME financing schemes of PNB and their usage. To know the scope of SME credits ,in future, for PNB. To know the effectiveness of various SME financing schemes provided by Punjab National Bank. To know the problems faced by SMEs in getting credits. To know the benefits of SME financing schemes to the Punjab national bank. To check the satisfaction level of Small and Medium enterprises regarding SME financing schemes provided by PNB. 4
  5. 5. Research MethodologyResearch DesignA type of conclusive research, which has as its major Objective thedescription of something-usually market characteristics or functions.In otherwords descriptive research is a research where in researcher has no controlover variable.It just presents the picture, which has already studied.Tools Used:Tables-This tool was used to present the data in tabular form.Bar Graphs and Pie Charts- These tools were used for analysis of data 5
  6. 6. Data CollectionInformation has been collected from:Secondary sources of data collection-Secondary sources-Secondary dataare those, which have already been collected by someone else, which alreadyhad been passed through the statistical process . Secondary data had beencollected through websites, newspapers and journals. 6
  7. 7. Analysis and Discussion Medical Sector Bank PNB HDFC Interest rate < Rs.2 0 lakh - 17.50% to 22.00% 10.50% >Rs.20 lakh - 11.25% Service charge < Rs.20 lakh - NIL 2% of loan amount >Rs.20 lakh - 0.60 % Loan amount Need based maximum of 80% of the quotation value Repayment 10 years 12 - 84 months Collateral <Rs.10 lakh - no Collaterals are not mandatory collateral. >Rs.10 lakh - two third party guarantees is to be obtained. Eligibility Qualified To be eligible for a Healthcare loan registered you must belong to one of the medical following categories: practicing with Speciality Hospital , Nursing minimum Home ,Diagnostic Centre , qualification of Pathology Lab , Speciality Clinics MBBS. (like Skin and Dental Clinics) ,Dialysis Centre , Endoscopy Centre , IVF Centre , Educational Institute , Med ical/Paramedical College, Dental College 7
  8. 8.  Business Sector Bank PNB HDFC working capital 17.50% to Interest rate < Rs.5 cr ore - 10.5%+4.25% 22.00% > Rs.5 cr ore - 10.5+4.50 Others Rs.5crore 10.5%+4.25% +0.50 % < Rs.2 lakh - NIL 2 .50 % of Service charge >Rs.20 lakh - 0.60% +ST of loan loan amount amount. Loan amount Need based 50,000/ - to Rs. 15, 00,000/ - Repayment 5 - 7 years 12 - 36 months 12 - 60 for professional s. Collateral <Rs.10 lakh - no collateral. Collaterals >Rs.10 and <Rs.25 lakh – good are not track record and financial mandatory position. Eligibility Micro Minimum Enterprises: Enterprises Turnover of engaged in the Manufacturing Rs. 40 or Pro duction upto Rs. 25 lakh. Lakhs. Small Enterprises: Enterprises engaged in the Manufacturing or Production, Processing above 25 lakh upto 500 lakh. 8
  9. 9.  Construction Sector Bank PNB HDFC Interest working capital 17.50% to 22.00% rate <Rs.5crore10.5%+4.25% >Rs.5crore - 10.5+4.50 Others Rs.5crore10.5%+4.25%+0.50% Service < Rs.2 lakh and upto Rs.5 crore 2% of loan amount charge - 1% >Rs. 5 crore and upto Rs.50 crore - 0.75 % Loan Need based Upto Rs.15 lakhs. amount Repayment 8/10 years 12 - 36 months Collateral V alid mortgage of land, Collaterals are not buildings and other immovable mandatory assets of the entrepreneurs Eligibility Cooperative Societies, Self Employed ( Private partnership firms and joint stock Ltd. Co. and Partnership companies who have sponsored Firms) include Private projects for establishing Companies and economically viable industrial Partnership firms in the estates and have the necessary Business of approval of State Directorate of Manufacturing, Trading Industries and local authorities. or Services. 9
  10. 10.  AutomobileSector Bank PNB HDFC working capital 17.50% to 22.00% Interest rate <Rs.5crore10.5%+4.25% >Rs.5crore- 0.5+4.50 1 Others Rs.5crore10.5%+4.25%+0.50% 1.00% of the loan amount 2%of loan amount Servicecharge Or Rs.5000 which is lowest. Loan amount Need based 80% of invoice value Repayment 5-7 years Upto 48 months Or 1-7 years Collateral <Rs.10 lakh- o collateral. 0 n Collaterals are not >Rs.10 lakh – 0 third party mandatory guarantee is required. Eligibility Small Scale Service Units including those which go in for - modernisation / technology upgradation. 10
  11. 11. Summary and ConclusionsFrom the above comparison between SME plans provided by PNB andHDFC bank it can be judged that for a SME belonging to a particular sectorwhich bank is providing a better SME plan. It can be tabulated as follows: Sector Public Sector Bank (PNB) Private Sector Bank (HDFC Bank) Medical Transport Business Construction 11
  12. 12. Recommendations Customer feedback should be taken regarding services so that improvements can be done. New products should be provided in particular sectors ( garments,gems and jewellery etc.)to provide financing services to customers. All kind of charges should be disclosed before giving loan to the customers. Agents should be well educated and trained and able to convince customers. Fastest settlement of customer’s problems should be carried out. Programme like customer awareness should be organized so that more and more people attract towards the SME sevices offered by bank. Special offers should be launched periodically to attract customers and agents. 12
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