Msme financial institution14 112013

1. MSME
– FINANCIAL INSTITUTIONS
POLICY PERSPECTIVES

2. MSMED DEFINITIONS
TYPE INVESTMENT IN PLANT & MACHINERY
Manufacturing Service Enterpise
MICRO Upto Rs. 25L Upto Rs.10L
SMALL Rs.25L -upto Rs.5 crore Rs.10L – upto Rs.2 crore
MEDIUM Rs.5 crore –upto Rs.10 crore Rs.2 crore –upto.Rs.5 crore

3. INDIA AND MSME ADVANTAGE
Demographic dividend
- 15-55 years of age population 56.9%
(as per Census 2011)
Consumer Credit Market growing @ 40% p.a.
Part of Statutory guidance on Priority Sector stipulated by
Government

4. - BANKS AND MSMEs---credit policy
 For Public Sector Banks
- 40% of Net Bank Credit (NBC)
- Min. 10% MSME
For Private Sector Banks
- 32% of NBC
- Min. 10% MSME

5. BANKS AND MSMEs-credit policy
Any short fall to be deposited in Small Enterprise Development
Fund (SEDF) of SIDBI.
Min. 20% year on year growth of MSMEs by 2015
Min. new 5 MSMEs to be covered by urban/semi – urban
branches.
Simplified uniform application forms upto Rs.5 lakhs for all
banks in the country.
 Setting up of specialized MSME branches and Central
Processing Cells for other branches.

6. BANKS AND PROMOTIONAL SERVICES
Technical Consultancy
- Techno – Economic feasibility studies
- Project preparation / validation
Entrepreneurship Development Programs
1. Sector / Activity Specific
- Electronics Services/Food Processing/Handicrafts
2. Target Group
- Campus Students
- Women
- VRS Employees
- Housewives

7. BANK CREDIT FOR MSMEs.
Time Standards
Proposals Sanction Period
Upto Rs. 2 lakhs 2 weeks
Upto Rs.5 lakhs 4 weeks
More than Rs.5 lakhs 6 weeks
Credit Rating and Uniform Appraisal

8. MSME – APPRAISAL REQUIREMENTS FINANCING
 Promoters Profile
- Qualifications / Experience
Techno Economic Viability
- Potential Market
Technology / Regulatory Standards / Product Uniqueness
Cost of Project and Funding
Financial Appraisal Indicators
- Debt Equity Ratio
- Debt Service Coverage Ratio (DSCR)
- Break Even Analysis

9. Special Appraisal Relaxations for MSMEs
Competitive Interest Rates – Rebate for women
Interest Subvention (Subsidy)
Credit Scoring Models–Interest / Security Concessions
- Simplified upto Rs.25 lakhs
Collateral Free Loans upto Rs.1 crore under Credit Guarantee
Trust for Micro and Small Enterprises.
L.U.Credit.Card. – Sanction valid for 3 years upto Rs.10 lakhs and
in special cases upto Rs.25 lakhs.
Fair Practices Code

10. Schemes & Products for MSME Financing
Capital Expenditure
1. General purpose Term Loan
- Upto Rs.2.50 crore
- Capital expenditure including R & D / Technology
up gradation of project cost
2. Deferred Payment Guarantee
- Against bills raised by manufacturer
3. Letter of Credit
- Import of machinery – Guarantee against
bills raised

11. Cont.
4. Vehicle Loans for enterprises
Car Loans for promoters
5. Construction Equipment Loan
- Loaders / Excavators / Cranes / etc.
 Government Schemes through SIDBI / NABARD
- 15% credit linked capital subsidy scheme towards
cost of project.
- Max. loan is Rs.1 crore

12. SERVICES SECTOR
Rice Mills / Dall Mills / Cotton Ginning Mills
Automobile Dealer Finance
Restaurants
Hospitals
Professionals
- Doctors / Engineers / Contractors / Commission
Agents
Education Institutions
Road and Water Transport Operators

13. WORKING CAPITAL FINANCE FOR MSMES
Appraisal upto Rs. 5 crore
1. Operating Cycle Estimates
OR
20% of Anticipated Turnover
Whichever is higher
2. Composite Loan Facility
- Term Loan + Working Capital
3. Open Cash Credit / Overdraft
4. Mortgage Loans for Composite Purpose

14. CREDIT GUARANTEE SCHEME (CGT SME) / GoI
Eligibility : Banks and other Financial Institutions
Category Max. extent of Guarantee
Upto Rs. 5 lakhs Above Rs.5L – 50L Above 50L – 100L
MICROENT 85% of AID
(Max. of Rs.4.25L)
75% of AID
(Max. of
Rs.37.50L)
Rs.37.50L + 50% of
above Rs.50L loan
(Max. Rs.62.50)
Women Entrepreneur Northeast Special Package
ALL OTHER SME 75%
(Max. 37.50 L)
Rs.37.50L + 50% of
above Rs.50L loan
(Max. Rs.62.50)

15. SMALL INDUSTRIES DEVELOPMENT BANK
OF INDIA (SIDBI) AND MSME
Direct Finance
- New / Existing units
Bills Finance
- Expansion / Modernization / Technology /
Diversification
Refinance
- Upto Rs.20 cr cost of project to Banks

16. SIDBI
International Finance (USD / Euro / Rs.)
- Preshipment – 180 days, margin 10-25%
- Postshipment – Bill financing
- Foreign Currency Loans
Energy Saving Projects
- 7 yrs loans
- Rs. 10L and above
Risk Capital
- Venture Capital

17. SIDBI
Women Enterprise Product Marketing (Marketing
Fund)
- Service providers incldg.
Supporting services
- internet, market intelligence,
advertising, market research, warehousing,
common testing centres

18. MARKETING ASSISTANCE
SIDBI
Vendor Development Scheme
- Under MOU with large corporates & MNCs and
Term Loans & Bill Financing
SME IT Loans
- Computerization – Hardware / Software
OTHERS
Technology Up gradation
Acquisition of ISO Certification

19. NSIC (National Small Industry Corporation)
- Market Development
Scheme
 Participation in International Exhibitions
- Reimbursement of 25% to 85% of air fare by
economy class.
- 25% to 75% rental for space.
- Max. Rs.1.25L per unit
Other Schemes
- Acquiring machinery & equipment upto Rs.5L
- Consortium marketing and securing bulk orders
- Financing 90 days raw material through bulk
purchase
- NSIC functioning as a leading export house
providing facilities
- Conducting exhibitions / trade fairs

20. EXIM BANK
 Pre-Shipment and Post –Shipment Credit
(FX & INR)
- Supplier credit through Indian exporter
(with recourse to exporter)
- Buyers’ credit - direct to overseas buyer without
recourse to exporter

21. EXIM BANK
NON-FUND BASED
Line of Credit (to Importers)
- Including Agricultural Commodities and Processed
Foods
 Guarantee on behalf of Exporters
Finance for Export – Oriented Companies
1. Project Finance
- Modernization / Expansion
2. Overseas Investment Finance
(For Joint Ventures / Wholly Owned Subsidiaries)
- Term Loans with Corporate Guarantee of Indian
Companies
- Equity Participation

22. EXIM BANK
SPECIAL PROGRAMS
Export Marketing Finance (for forward linkages)
 - Market Research
 - Participation in International Fairs
 - Quality Certification
 - Prospective Buyer visits to India
 - Preoperative Expenditure for overseas offices
Export Product Development
 Term Loan for product adaptation / Pilot Plants Product / Process
Development

23. EXIM BANK
EXPORT VENDOR DEVELOPMENT PROGRAM
Term loans, Export trading houses, Backward linkages for
production of export goods.
R & D FOR EXPORT PROMOTION