Although banks have a higher risk perception of the MSME sector, they continue to be the key players in formal financing. The higher share of bank supply can be attributed primarily to Priority Sector Lending (PSL). PSL guidelines require banks to allocate sizeable share of their credit portfolio to micro and small enterprises.
Growing NPAs and Future of Banking in India by vinay shahane vinay shahane
A healthy banking system is essential for any economy striving to achieve growth and remain stable in competitive global business environment. Multiple macroeconomic, demographic, and technological developments make the Indian banking sector one of the most attractive opportunities globally. Challenges like high stressed asset levels and fragmented ndustry structure are dragging down performance and threatening future growth. The best indicator for the health of the banking industry in a country is its level of Non-performing assets (NPAs).Urgent attention is required to ensure that the sector can continue to be a key driver of Indian economy.
A research article that touches upon the everlasting issue of rising Non-Performing Assets ( Stressed Assets) in the Indian Banking Industry.
It explores macro economic concepts coupled with evolving legal regulations that may have just given passage to a lucrative debt market in India.
Growing NPAs and Future of Banking in India by vinay shahane vinay shahane
A healthy banking system is essential for any economy striving to achieve growth and remain stable in competitive global business environment. Multiple macroeconomic, demographic, and technological developments make the Indian banking sector one of the most attractive opportunities globally. Challenges like high stressed asset levels and fragmented ndustry structure are dragging down performance and threatening future growth. The best indicator for the health of the banking industry in a country is its level of Non-performing assets (NPAs).Urgent attention is required to ensure that the sector can continue to be a key driver of Indian economy.
A research article that touches upon the everlasting issue of rising Non-Performing Assets ( Stressed Assets) in the Indian Banking Industry.
It explores macro economic concepts coupled with evolving legal regulations that may have just given passage to a lucrative debt market in India.
Indian banking 2020 opportunities and challengesSaurav Dasgupta
The last decade was very beneficial for the Banking sector. In my this article, I have tried to highlight the probable factors that may / will influence the Banking Industry in the current decade (till 2020).
Weaker Corporate Balance sheet and its implication Mohit Kumar
This presentation will give information about weak and twin balance sheet of company. What twin balance sheet is and any balance sheet is called weak balance sheet.
Research Inventy : International Journal of Engineering and Scienceresearchinventy
Research Inventy : International Journal of Engineering and Science is published by the group of young academic and industrial researchers with 12 Issues per year. It is an online as well as print version open access journal that provides rapid publication (monthly) of articles in all areas of the subject such as: civil, mechanical, chemical, electronic and computer engineering as well as production and information technology. The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence. Papers will be published by rapid process within 20 days after acceptance and peer review process takes only 7 days. All articles published in Research Inventy will be peer-reviewed.
Funding Sme – MSME FINANCE – DEMAND & SUPPLY - Part - 9Resurgent India
The present domestic market conditions do not provide enough opportunities for the MSME sector for raising low cost funds. To improve the flow of credit there is a need to provide low cost finance to the MSME sector, which has limited working capital and is dependent exclusively on finance from public sector banks. The cost of credit in the Indian MSME sector is higher than its international peers. A transparent credit rating system, simplification/reduction in documentation for accessing finance, providing interest rate subvention to the MSME sector must be taken into consideration in order to maintain the growth of the MSME sector.
Empowering MSMEs - Overall Flow of Finance to the MSME Sector - Part 1Resurgent India
Major reforms for the MSME sector have taken place in the form of introduction of schemes which have benefitted the flow of credit to the sector Working with the assumption that all finance demand by the MSME sector is met by either formal or informal sources, the estimate for overall supply of finance to the MSME sector is INR 32.5 trillion ($650 billion).
Indian banking 2020 opportunities and challengesSaurav Dasgupta
The last decade was very beneficial for the Banking sector. In my this article, I have tried to highlight the probable factors that may / will influence the Banking Industry in the current decade (till 2020).
Weaker Corporate Balance sheet and its implication Mohit Kumar
This presentation will give information about weak and twin balance sheet of company. What twin balance sheet is and any balance sheet is called weak balance sheet.
Research Inventy : International Journal of Engineering and Scienceresearchinventy
Research Inventy : International Journal of Engineering and Science is published by the group of young academic and industrial researchers with 12 Issues per year. It is an online as well as print version open access journal that provides rapid publication (monthly) of articles in all areas of the subject such as: civil, mechanical, chemical, electronic and computer engineering as well as production and information technology. The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence. Papers will be published by rapid process within 20 days after acceptance and peer review process takes only 7 days. All articles published in Research Inventy will be peer-reviewed.
Funding Sme – MSME FINANCE – DEMAND & SUPPLY - Part - 9Resurgent India
The present domestic market conditions do not provide enough opportunities for the MSME sector for raising low cost funds. To improve the flow of credit there is a need to provide low cost finance to the MSME sector, which has limited working capital and is dependent exclusively on finance from public sector banks. The cost of credit in the Indian MSME sector is higher than its international peers. A transparent credit rating system, simplification/reduction in documentation for accessing finance, providing interest rate subvention to the MSME sector must be taken into consideration in order to maintain the growth of the MSME sector.
Empowering MSMEs - Overall Flow of Finance to the MSME Sector - Part 1Resurgent India
Major reforms for the MSME sector have taken place in the form of introduction of schemes which have benefitted the flow of credit to the sector Working with the assumption that all finance demand by the MSME sector is met by either formal or informal sources, the estimate for overall supply of finance to the MSME sector is INR 32.5 trillion ($650 billion).
RBL Bank is one of the fast growing private banks in India. A detailed general environment analysis(PESTEL), Industry analysis(Porter's 5 forces), VRIO analysis carried to look at the strategy analysis and formulated strategy for different business verticals, as part of the Project in MBA
Making NBFCs relevant to ‘Make-in India’& ‘Start-up India, Stand-up India’ Resurgent India
With the economic revival of the rural and suburban economies, NBFCs' contribution in deposit mobilisation and credit extension can hardly be over-emphasised.
July 2014 Edition of BEACON, A Monthly Newsletter by SIMCON.
Inside this issue:
INDUSTRY ANALYSIS :Banking Industry
COMPANY ANALYSIS : ICICI Bank
Concept of the Month
Quiz
Did You Know?
Empowering MSMEs - Role of Banks & Financial Institutions, IT, Skill Developm...Resurgent India
MSMEs are nurseries for entrepreneurship, often driven by individual creativity and innovation, and make significant contribution to country’s GDP, manufacturing output, exports and employment generation. Moreover, MSMEs are imperative for achieving the national objective of growth with equity and inclusion.
India Budget 2012-13 - Analysis by Prabhu SrinivasanPrabhu Srinivasan
Budget 2012-13 has invited more criticisms than appreciations from the various stakeholders of the country. Given the unanticipated difficult situation the global markets are currently in, and the multiple problems that the Indian economy is facing, such as weakening of Rupee against US Dollars, High cost of funds, Inflationary pressures, and High unemployment levels to name a few, the finance ministry has opted for a stringent budget to defy these problems and bring the economy back on a sustainable growth path. I would like to conclude the analysis with my view that the key lies in implementation of the plans. Having observed in the past, that implementation of various initiatives have seen multiple road-blocks stalling them abruptly, we shall try to learn from our past to ensure growth and prosperity of the world’s largest democracy!
Financial Inclusion and Micro and Small Enterprises GrowthDr. Amarjeet Singh
The persons or firms linked with the either way of
financial transaction are known as participants of financial
inclusion financially included otherwise financially
excluded. The normal way of flow of money is routed
through banking system, post office, insurance and FBFC
channels. The MSE is financially included with operation of
saving account, current account or loan account with banks;
financial transaction with other government financial
agencies as well as some private sector NBFC. Recent
initiatives of Government of India and Indian Banking
system have accelerated the performance of financial
inclusion through various schemes such as MNREGS,
Jandhan, Atal Pension Yojna, MUDRA and so forth. The
MUDRA scheme, credit scheme for MSE, credit scheme for
KVIC & Coir firm, Kishan credit card, General Credit
Card are exclusive financial inclusion scheme for MSE
credit. Out of total size of MSEs, less than forty percent
units are getting benefits from schedule commercial banks;
as on 2017-18 only Rs. 1337 billion credit facilities given by
the lending institutions. The paper examines the current
status and potential prospect of financial inclusion at given
numbers of units and employment.
A STUDY ON PROFITABILITY OF MSME LENDING BUSINESS FOR BANKS IN INDIAJohn1Lorcan
Micro Small and Medium enterprises play a very important role in India economy. MSMEs face several
problems, non-availability of finance is an important challenge for MSMEs in India. Among MSMEs,
micro unit face even more challenges as compared to medium and small enterprises. This research paper
is a study on the profitability of MSME loans given by banks in India. The analyses conclude that the
growth of MSMEs is higher than the growth of GDP and hence MSMEs are driving growth of the country;
MSMEs are paying higher rate of interest and hence banks generate better interest income on these loans;
and the NPAs in MSME accounts are lesser than the NPAs in large accounts. Hence the study concludes
that lending to MSMEs by banks is more remunerative and is also helping the country increase its GDP
growth and employment. Therefore, the banks should provide more loans to MSMEs by simplifying their
processes.
Acquisition Opportunity! Exploring the Future of Ayurvedic & Unani Medicines!Resurgent India
Join us in acquiring INDIAN MEDICINES PHARMACEUTICAL CORPORATION LIMITED (IMPCL), a profitable venture with a strong legacy. As a trusted government-owned entity, holding Mini Ratna Category II status, we're shaping the future of natural healing together.
The goal of the demonetization move in India is to make the economy stronger and eliminate the parallel cash economy which is unaccounted and untaxed. While this can impact the GDP negatively in the short term, it should have positive long term consequences. For e-commerce companies, which already have a digital payments system in place, it should lead to higher online payment and eventually eliminate the painful cash on delivery option. However, in the short term, witness a decline in GMV from India as the economy adjusts to the “new normal”.
Msme funding – Opportunities & Challenges (Part 5)Resurgent India
In India, the preferred mode of finance is either self or other sources. This further complicates the situation, as with these sources an enterprise cannot challenge the increasing competition
Funding Sme – The Challenges And Risk Within - Mezzanine Financing - Part - 8Resurgent India
Business owners need finance in order to invest but they want to retain control of their business and not give up valuable equity. For MSMEs the financing options are limited and private equity investors are usually interested in larger companies, while business angel investors are more active in start-ups. Furthermore, conventional bank lending is often not available for projects that could be classified as speculative. That’s where mezzanine finance comes in. Mezzanine finance is a fairly well-known type of funding, which sits between traditional bank debt and equity and it is exactly what many MSMEs need.
Funding Sme – The Challenges And Risk Within - Alternative financing sources ...Resurgent India
Securitization of Trade Credit: Trade credit is an important source of financing for MSMEs, as they sell on credit to their large customers and then wait for long periods for payment. If these receivables (trade credit) could be packaged as a securitized asset, which would essentially be a commercial paper with the credit rating of the large firm, it could help MSMEs reduce their investment in working capital and their need for finance significantly. The credit worthiness of a typical MSME would also improve, qualifying it for greater bank funding. Though the securitization process which is similar to factoring, could be more cost-effective than bank funding, factoring, and letters of credit.
Funding Sme – The Challenges And Risk Within - MSME FUNDING - NEED FOR ALTERN...Resurgent India
Finance is the lifeline of any enterprise. India has one of most extensive banking networks in the world. Despite, a considerable expansion of the banking infrastructure during the recent years, the provision of finance to grassroot level businesses, scattered across the nation, still remains an enormous challenge. Going ahead, it is also observed that Indian MSMEs have limited access to finance. Majority of the MSMEs operates on the funds of its promoters, thus limiting its growth. The limited or nonavailability of institutional finance at affordable terms is also hindering innovation in the Indian MSMEs.
Funding Sme – The Challenges And Risk Within - MSMEs CONTRIBUTION TO ECONOMY ...Resurgent India
Economy, with more than 31 million units employing more than 80 million persons. Further, productivity of the MSME sector has been improving significantly with fixed investments and employment growing consistently over the past few years. This is a direct indication of the efforts focused on this sector to integrate the workforce with technological enhancements to increase production. Fixed investments in the MSME sector between FY07 and FY12 has grown at a CAGR of 6.5 per cent and employment has grown by more than 6 per cent (y-o-y). Further, between FY07 and FY12, the sector’s total gross output grew at a CAGR of 6.3 per cent - reiterating the substantial contribution of the MSMEs to the Indian economy.
MSME Financing - Alternative Financing Instruments - Part - 14Resurgent India
Asset-based finance, which includes asset-based lending, factoring, purchase-order finance, warehouse receipts and leasing, differs from traditional debt finance, as a firm obtains funding based on the value of specific assets, rather than on its own credit standing. Working capital and term loans are thus secured by assets such as trade accounts receivable, inventory, machinery, equipment and real estate.
MSME Financing - Financing options available to MSMEs-II - Part -10Resurgent India
SME exchange
GOI and regulators have initiated several measures to address the low level of MSME financing through the capital markets. In March 2012, post issuance of SEBI guidelines, both BSE and NSE have set up institutional trading platforms in the SME segment to allow MSMEs to list and raise equity capital through venture funds, private equity and wealthy individuals, without initial public offerings.
MSME Financing - FINANCING MSME’S IN INDIA - Part - 7Resurgent India
Finance is life blood of any enterprise. But Indian MSMEs have always suffered the deficiency of this life blood, despite India having one of the most extensive banking networks in the world.
The present domestic market conditions do not provide enough opportunities for the MSME sector for raising low cost funds. To improve the flow of credit there is a need to provide low cost finance to the MSME sector, which has limited working capital and is dependent exclusively on finance from public sector banks. The cost of credit in the Indian MSME sector is higher than its international peers.
Indian Insurance Industry - Recent Industry Trends - Part - 5Resurgent India
Bancassurance means selling insurance product through banks. Banks and insurance company come up in a partnership wherein the bank sells the tied insurance company's insurance products to its clients. Globally, bancassurance has emerged as an important channel for distribution of insurance products. Various international studies have shown that a bancassurance strategy has indeed saved costs of insurance companies in the long run.
Indian Insurance Industry - Key Issues and Challenges - Part - 2Resurgent India
While a range of economic and financial reforms have helped the insurance sector grow, there remains a host of challenges which need to be addressed for harnessing the full potential of the sector:
DMIC will be an essential component of India’s future economic development. Implementation of DMIC Project requires huge investment for building up of infrastructure. It is envisaged that there will be primarily two categories of projects under the purview of state and central government agencies as:
DMIC Summit - Implementation and Institutional Framework - Part - 2Resurgent India
The effective implementation of such large and complex project, involving multiple states and agencies calls for immaculate planning and a robust administrative structure. In order to ensure that the traditional pitfalls of project implementation are overcome, it is proposed that a Project Development approach be adopted, wherein each facet of the project is rigorously developed from an engineering, financial, contractual, environmental and social perspective, along with interlinkages, on prioritization and selective basis and prior to commencement of implementation
DMIC Summit – Developing Hub for Investors - Overview & Approach - Part - 1Resurgent India
Delhi-Mumbai Industrial Corridor, from here on referred to as DMIC, is a multi-modal High Axle Load dedicated freight corridor connecting Delhi and Mumbai. It is a mega infrastructure project at USD 100 billion with technical and financial aid built in from Japan. The project is a flagship programme of Government of India with the aim of creating futuristic Industrial Cities by leveraging the "High Speed - High Capacity" connectivity backbone provided by Western Dedicated Freight Corridor (DFC).
Smart Cities - Global Case Studies - Part - 5Resurgent India
Greater Manchester is the single biggest economic area outside London with a residential population of 2.7 million. Greater Manchester is made up of 10 local authorities, of which the city of Manchester is the largest. The city of Manchester is located at the core of the Greater Manchester metropolitan area. Manchester’s core sectors are the business, finance and professional services sector which contribute ~40% to the city’s economy.
Smart Cities - Global Case Studies - Part - 4Resurgent India
Beijing, as the capital and political and cultural center of China, is a world famous ancient city and modern cosmopolis. Standing in the northwest of Beijing, Haidian District is important and famous for its science and technology, culture, education and tourism. It, consists of 22 sub -districts and 11 townships, has a total area of 426 square kilometers and a resident population of 1.5 million.
Empowering MSMEs - Benefits of Credit Rating in MSME - Part - 8Resurgent India
Approaching a credit rating agency is a good option for small and medium enterprises (SMEs) given the problems they face in seeking finance. Rating agencies assess a firm's financial viability and capability to honour business obligations, provide an insight into its sales, operational and financial composition, thereby assessing the risk element and highlights the overall health of the enterprise.
Empowering MSMEs - Skills Development of the MSME Sector - Part - 7Resurgent India
One of the thrust areas for increasing the competitiveness of MSMEs includes skills development. Skills development not only helps in improving productivity but also fosters entrepreneurship. Hence, it is imperative for the concerned governmental agencies, trade associations and MSMEs to come together and discuss on how to make training programmers relevant and attractive for MSMEs. The lack of human resources has been a long-standing problem faced by MSMEs in the country. Despite India’s large pool of human resources, the MSMEs continue to lack skilled manpower required for manufacturing, marketing, servicing, etc.
Empowering MSMEs - Policies of Financial Regulator - Part - 5Resurgent India
To ensure formal finance to priority sectors such as agriculture and MSME, Priority Sector Lending guidelines have been in place for commercial banks since 1972. Under these guidelines, domestic commercial banks are required to allocate 40 percent of the net bank credit for priority sectors (32 percent norm for foreign banks.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
An introduction to the cryptocurrency investment platform Binance Savings.Any kyc Account
Learn how to use Binance Savings to expand your bitcoin holdings. Discover how to maximize your earnings on one of the most reliable cryptocurrency exchange platforms, as well as how to earn interest on your cryptocurrency holdings and the various savings choices available.
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Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
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3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
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Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
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1. Role of Banks
Part 2
Empowering MSMEs Role of Banks & Financial
Institutions, IT, Skill Development & Rating Agencies
2. Role of Banks
Although banks have a higher risk perception of the MSME sector, they
continue to be the key players in formal financing. The higher share of bank
supply can be attributed primarily to Priority Sector Lending (PSL). PSL
guidelines require banks to allocate sizeable share of their credit portfolio to
micro and small enterprises. The existing PSL guidelines have set targets (i.e.
share of credit portfolio) for micro and small enterprises financing. The Nair
Committee Report (February 2012) on Priority Sector Lending (February 2012
has recommended that all domestic and foreign banks allocate 7 percent of
their credit portfolio solely for financing micro enterprises.
3. Role of Banks
The Nair Committee has also recommended that foreign banks should have
priority sector commitment of 40 percent of Annual Net Bank Credit (ANBC),
with a sub-target for the micro and small enterprise sector at 15 percent of
ANBC. If implemented, this policy is expected to have a significantly positive
impact on the participation of foreign banks in the MSME finance over the
medium term. With continuous policy focus on financing to micro and small
enterprises, the share of large banks in the MSME finance landscape is also
expected to grow in the future.
4. Role of Banks
NBFCs, unlike banks, are not required to comply with the PSL guidelines.
However their participation in the MSME sector is driven to a large extent by
unmet finance demand of these enterprises, and the ability of NBFCs to develop
innovative financial products and deliver finance in a cost – effective manner,
with greater flexibility and quicker turnaround times. In order to encourage
banks to increase their direct lending to the MSME sector, an RBI regulation in
April 2011 excluded loans sanctioned by banks to NBFCs for on-lending to micro
and small enterprises from priority sector targets. However, the Nair Committee
Report has recommended that commercial bank loans to NBFCs for on-lending
to specified segments may be considered for classification under priority sector,
up to a maximum of 5 percent of ANBC, subject to certain due diligence and
documentation standards.
5. Role of Banks
Although the new recommendations allow a small window for indirect
lending, there are other attractive priority sector segments (such as
microfinance) that are also vying for the same pool of funds. Hence, it is not
clear if these recommendations will specifically increase indirect financing for
the MSMEs via NBFCs.
6. Breakdown of Debt Flow by Type of
Financial Institutes (in INR Trillion)
7. Breakdown of Debt Flow by Type of
Financial Institutes (in INR Trillion)
The study estimates that commercial banks serve an estimated 8.4 million –
8.5 million MSMEs; financial institutions such as small banks, NBFCs, MFIs and
others, serve the balance MSMEs receiving formal finance. The above
estimates take into account the fact that medium and small enterprises may
have multiple banking relationships. This estimate is considerably higher than
that of the MSME Census 2007 on the number of enterprises served,
however it builds on the RBI data available on the total number of micro and
small enterprise accounts currently served, and the average credit disbursed
per enterprise (Refer Appendix A). Public banks serve the largest section, an
estimated 6.9 million MSMEs, while other banking institutions serve an
estimated 1.5 – 1.6 million units.
8. Breakdown of Debt Flow by Type of
Financial Institutes (in INR Trillion)
The reason for the variance in the banks’ share in MSME debt finance is
because of the inherent differences in: (a) knowledge of the MSME sector (b)
size of the branch network (c) internal risk management policies and (d)
operational efficiencies. These characteristics also determine the type of
enterprise banks prefer to finance, the risk segment or pricing range for
financial products, targeting mechanism and outreach strategy.
9. MSE Finance by PSBs - A decade
analysis (2000-2011)
The wonderful growth in absolute term had been registered in credit to MSE
sector by Public Sector Banks during last decade indicates that this sector has
huge business potential for banks. Credit to MSEs has increased over 8 times
from Rs.46045 Crores in 2000 to Rs.369430 Crores in 2011 but percent share
of MSE credit to net bank credit (NBC) has consecutively declined from
14.60% in 2000 to 7.80% in 2007. There was sharp increase in percent share
of MSE credit to net bank credit from 7.80% in 2007 to 11.10% in year 2008
with marginal hike to 11.30% in year 2009. This higher growth during the
above review period had mainly happened owing to change in the definition
of MSEs as per the provisions of MSMED Act.
10. MSE Finance by PSBs - A decade
analysis (2000-2011)
The investment limit of small (manufacturing) unit was raised from Rs.1.00
crore to Rs.5 crore and small (services) was added to the sector with an
investment in equipments & instruments up to Rs. 200 lacs. Also the coverage
of service enterprises were broadened by taking tertiary sector into MSE
sector such as small road and water transport operators, small business,
professional and self employed and all other service enterprises as per
definition provided under the Act. Further this ratio accelerated to 13.10% in
2010 that might be because of regulatory change of taking retail trade into
service sector. The advances to this sector further increased to 14.81% in the
year 2011. The credit acceleration in the sector had significantly noticed in
absolute growth but proportion of MSE credit in net bank credit has been
more or less at same level of 14% which was way back in year 2000 despite
widening the coverage of the MSE sector
11. MSE Finance by PSBs - A decade
analysis (2000-2011)
The wonderful growth in absolute term had been registered in credit to MSE
sector by Public Sector Banks during last decade indicates that this sector has
huge business potential for banks. Credit to MSEs has increased over 8 times
from Rs.46045 Crores in 2000 to Rs.369430 Crores in 2011 but percent share
of MSE credit to net bank credit (NBC) has consecutively declined from
14.60% in 2000 to 7.80% in 2007. There was sharp increase in percent share
of MSE credit to net bank credit from 7.80% in 2007 to 11.10% in year 2008
with marginal hike to 11.30% in year 2009. This higher growth during the
above review period had mainly happened owing to change in the definition
of MSEs as per the provisions of MSMED Act.
12. MSE Finance by PSBs - A decade
analysis (2000-2011)
The investment limit of small (manufacturing) unit was raised from Rs.1.00
crore to Rs.5 crore and small (services) was added to the sector with an
investment in equipments & instruments up to Rs. 200 lacs. Also the coverage
of service enterprises were broadened by taking tertiary sector into MSE
sector such as small road and water transport operators, small business,
professional and self employed and all other service enterprises as per
definition provided under the Act. Further this ratio accelerated to 13.10% in
2010 that might be because of regulatory change of taking retail trade into
service sector. The advances to this sector further increased to 14.81% in the
year 2011. The credit acceleration in the sector had significantly noticed in
absolute growth but proportion of MSE credit in net bank credit has been
more or less at same level of 14% which was way back in year 2000 despite
widening the coverage of the MSE sector.
13. MSE Finance by PSBs - A decade
analysis (2000-2011)
It reveals that real growth in finance to MSE sector is not adequate in the light
of significant contribution of the sector in economy such as employment,
manufacturing and export of the country. Low share of MSE credit does not
only hamper equitable growth of economy but also fails the banks to fulfil
their social commitment to the growing society. Banks should therefore,
come out with a strategy to improve the percent share of MSE credit to their
net bank credit which is stagnant between 13-14% since a long period.
14. Finance to Micro Enterprises: 5
Years analysis (2007-2011)
The latest 4th all India Census of MSME sector has revealed that of the total
working enterprises, 95.05% belong to micro enterprises, 4.74% to small
enterprises and balance 0.21% are medium enterprises. Also it is observed
that 45.38% enterprises are operating in rural areas. Though MSE sector,
micro in particular, is of great importance in respect to generating
employment and contributing inclusive growth of the economy, this segment
of industry is deeply credit constrained. Analysis of finance to Micro
Enterprises by banking industry revealed some of the important findings
mentioned below.
15. Finance to Micro Enterprises: 5
Years analysis (2007-2011)
• Absolute credit surged by 124% (CAGR -31%) : Outstanding credit to the
sector by all scheduled commercial banks (SCBs) had surged by 124% from
Rs.213539 crores in year 2008 to Rs. 478527 crores in year 2011 (Table-22).
• Enhancement of existing limits contributed higher growth - Target fresh
credit: Y-o-Y growth during review period is showing uneven trend, however,
it was 19.94% in year 2009 which further grew by 41.44% in year 2010 and
the growth rate was declined to 32.08% in year 2011. The abnormal
acceleration in year 2010 might be occurred owing to the inclusion of retail
trade in service sector and thereafter, normal growth was observed in year
2011.
16. Finance to Micro Enterprises: 5
Years analysis (2007-2011)
• Sector responds faster - Annual growth rate higher than industry rate :
Banks in India are mandated to register at least 20% YoY growth in credit to
Micro & Small enterprises and 10% annual growth in number of micro
enterprises accounts which is now recommended to grow at least by 15% in
terms of number of account every year. Public sector banks have registered
higher growth rate as compared to the stipulated norms of 20% such as 26.64
% in 2009, 44.36 % in 2010 and 33.70% in 2011. The growth rate of private
sector banks was negative (-0.54%) in year 2009 which further geared up to
38.94% in year 2010 and then declined to 35.93% in year 2011 which shows
compliance of lending norms in terms of growth rate. However, foreign banks
grew their advances by 16.62% & 17.07% in year 2009 & 2010 respectively
but had negative growth (-0.78%) in year 2011 which require corrective
measures by foreign banks to adhere to the norms for growth of credit to
MSE sector.
17. Finance to Micro Enterprises: 5
Years analysis (2007-2011)
93% Financial Exclusion - Key to 12th Plan theme of inclusive growth
• It is observed that 92.77% MSME beneficiaries have no finance, 5.18% avail
finance from institutional sources and 2.05% through non-institutional
sources. It is an indicator for the banks that they need to focus on SMEs to
achieve national agenda of financial inclusion because exclusion over 92% of
MSME units is indeed a matter of concern in the history of independence for
over 64 years and about 43 years of banks nationalization in our country. Also
the study validates the observation that MSMEs are undoubtedly like big
bazar group to be tapped by formal credit delivery channel because 93% of
MSMEs still rely on self finance. So this sector will be key to realize theme of
inclusive growth of 12th Plan.
18. THANK YOU
Email: jyoti.gadia@resurgentindia.com Call Us: +91 124 4754550
www.resurgentindia.com
Read full report on: http://blog.resurgentindia.com/empowering-msmes-role-of-banks-
financial-institutions-it-skill-development-rating-agencies/