This document discusses the impact of an industrial slowdown on credit flow and the quality of small and medium enterprises (SMEs) in India. It analyzes secondary data on credit flow to SMEs from public sector banks in Rajasthan over recent years. The analysis finds that while there was consistent growth in credit to SMEs, the pace increased sharply from 2007-2008. However, the numbers may be inflated due to an expansion in what is included under SMEs in 2006. Despite the global recession, the number of SME beneficiaries in Rajasthan continued growing between late 2008 and early 2009.

1. IMPACT OF INDUSTRIAL SLOWDOWN ON CREDIT FLOW AND QUALITY OF SMEsAman MehraPresented By

2. dMr. U.K Ghosh(Chief Manager, Credit department)Brig. S.K.Gaur, (Director- FMS-IRM)Prof. P.S. Sali (Officiating Director FMS-IRM) Prof . Dr.Susmit Jain Prof. Asha Sharma(FACULTY-FMS-IRM )And all those who have directly or indirectly helped me in the successful completion of the project.

3. Research TypeResearch DesignResearch ObjectiveResearchLimitationsData Collection

4. BJECTIVESTo understand SMEs in Indian economy.

5. To understand the overall slowdown and its impact on Indian economy.

6. Analyzing the overall flow of credit toward SMEs over recent years in Rajasthan.

7. Analyzing the number of proposals coming up for financing new project over recent years.

8. Analyzing the flow of credit by SBBJ toward SMEs over recent years in Rajasthan.

9. To analyze the impact of slow down on the health of SMEs.Primary Data –Discussions with concerned persons.Secondary Data – Internal Secondary Data- Annual Reports, Circulars & reports Files and office documents.

10. External Secondary Data- Various books, Internet, RBI Report & SLBC publications

11. Descriptive and Diagnostic research DesignData CollectionResearch Type

12. LIMITATIONS OFRESEARCHThe results in the analysis are approximate percentages and might vary to some extent. My research was totally based on secondary data so it is assumed that information published is verified.Cost and time constraints. Due to lack of information available it is assumed that –Reluctance on the part of SBBJ employees to share informationThe increase in the number of account symbolizes increment in the proposals from MSMEs for development or growth purpose.

13. The increase in the amount of loan disbursed to this sector is assumed to be for the expansions and developmentFINANCIAL STATUS

14. COMPANY PROFILEBank of Bikaner and Jaipur was established in 1963 after amalgamation of erstwhile State Bank of Jaipur (established in 1943) with State Bank of Bikaner (established in 1944) as a subsidiary of State Bank of India.

15. The Bank's main area of operation is in the State of Rajasthan, with a presence at all important centers in the country.

16. SBBJ has 974 branches spread over the country State Bank of Bikaner and Jaipur headquarter is in JaipurThe Bank boasts of having as many as 950 ATMs throughout India, all of them being the part of over 10000 ATMs of State Bank GroupFINANCIAL STATUS AS ON 31st march 2010The net profit of SBBJ bank has risen by 12.82 % to 455.16 crore as compared to 403.45 crore as on 31st march 2009

17. It also recorded a business growth of 17.8 percent at Rs 12,310 crore in 2009-10, The SBBJ board of director announced a dividend of 144 percent (Rs 14.40 per share on face value of Rs 10) higher than dividend of 120 percent announced previous year.FINANCIAL STATUS

18. DefinitionIn accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two ClassesManufacturing Enterprises

19. Service EnterprisesThey are defined in terms of investment in equipment as notified by RBI, industrial development & regulation act 1951 TOSMEsAccepted as the engine of economic growth and for promoting equitable development

20. High employment potential at low capital cost than large industries all around the globe for ex

21. In the USA, nearly half of the private workforce is employed in small firms.

22. In Japan, 78 percent of jobs are generated by SMEs.

23. The same sector in Korea accounts for 99 percent of all manufacturing enterprises and 69 percent of employment in this sector constitute

24. over 90% of total enterprises in most of the economies

25. SBBJ & SMEsThe Bank has set up branches in Industrial Areas / Estates to provide finance to small and medium enterprises

26. The Bank also finances Small Business activities which are of special significance to a large number of people Laghu Udhyami Credit Card Scheme (LUCC).Tatkal Vyapar Suvidha” SchemeGeneral Purpose Term Loan.SME Smart Card” SchemeArtisans Credit Card.SBBJ Tourism Plus.SBBJ Shoppe.Car Loan To SME UnitSchemes offered by SBBJ

27. Mortgage Advances.Working Capital Requirements Of SMEsMedium Term Loan Requirement of SMEs.1 Term Loan Requirement of SMEs.2SBBJ Transport Operators Scheme.SBBJ Professional plusSME CARE.15SME HELPContd…………..

28. ROLE OF SME in Indian economy8 per cent of the country’s GDP.

29. 45 per cent of the country’s manufactured output.

30. 40 per cent of its country’s exports.

31. The labor to capital ratio in MSMEs and the overall growth in the MSME sector is much higher than in the large industries.

32. The geographic distribution of the MSMEs is also more even.

33. This sector employs an estimated 59.7 million persons spread over 26.1 million enterprises.

34. India has the second largest population of SMBs among BRIC countries and the US the second largest employment provider next to agriculture. Thus, MSMEs are important for the national objectives of growth with equity and inclusion.

35. Enactment of the Micro, Small and Medium Enterprises Development Act, 2006,

36. Amendments to the Khadi and Village Industries Commission Act,

37. Announcement of a Package for Promotion of Micro and Small Enterprises (MSEs),

38. Launching of new/innovative schemes under National Manufacturing Competitiveness Programme (NMCP),

39. Launching of Prime Minister’s Employment Generation Programme (PMEGP) to generate employment opportunities, etc.

40. The government of India has taken a major initiative on 26th of august 2009 when Prime Minister has announced the setting up of a task force to reflect on the issues raised by the association having representative of 19 prominent MSME associationGOVERNMENTINITIATIVEAPPROACH

41. What Is Recession ?Recession is a contraction phase of the business cycle……..

42. What Causes Recession ? A recession normally takes place when consumers loose confidence in the growth of the economy and spend less.

43. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment.

44. Investors spend less as they fear stocks values will fall and thus stock markets fall on negative sentiment. World EconomyThe Global Economy

45. Stock market crashedDollar value DeclinedAll this slowed down the growth of economy.

46. GDP growth rate fell to 2%

47. Rising oil prices at $100 a barrel

48. Subprime mortgage crisis (home loan defaults)All this put together has driven the U.S. economy in recession.

49. GLOBAL IMPACTBiggest banking shakeout since the savings-and-loan meltdown.

50. In Iceland involved all three of the country's major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.

51. Decline in the GDP The first quarter of 2009, the annualized rate of decline in GDP was 14.4% in Germany, 15.2% in Japan, 7.4% in the UK, 18% in Latvia, 9.8% in the Euro area and 21.5% for Mexico. By March 2009, the Arab world had lost $3 trillion due to the crisis