The document provides an overview of nationalized and private banks in India with respect to loan processes and facilities for small and medium enterprises (SMEs). It discusses the history of banking in India and the current state of nationalized and private banks. Data is presented on SME industry breakdown, market share and capital of major nationalized and private banks, and an analysis of a questionnaire completed by SMEs regarding their preferences and experiences with various banks. The document also includes SWOT analyses of State Bank of India and ICICI Bank. It examines loan documentation requirements, interest rates, guarantees, processing times and other policies of several nationalized and private banks. Current trends in SME lending and key indicators for financing SMEs are

1. “A Comparative Study of
Nationalized & Private
Banks with Respect to Loan
Process & Facilities for
SMEs”

2. History of Indian Banking
Sector
Banking in India originated in the first decade of 18th
century
The General Bank of India coming into existence in 1786.
The first fully Indian owned bank :- Allahabad Bank :-
established in 1865.
In 1935, The Reserve Bank of India formally took on the
responsibility of regulating the Indian banking sector.
After independence in 1947, the Reserve Bank was
nationalized and given broader powers.

3. Current Scenario of Indian
Banking Sector
Banking Industry in India is going through a transitional
phase.
Private sector Banks have pioneered modern banking
facilities
The PSBs are still grappling.

4. Flow Chart of Indian Banking Sector

5. Small & Medium Enterprises
20%
12%
6%
10% 19%
8%
8%
9%
8%
Retail
Manufacturing
Professional
Services
Hospitality
Education
Travel
Real State
Logistics
Others
In small enterprise the investment
in plant and machinery is more than
Rs. 25 lakh but does not exceed Rs. 1
crores.
 In medium the investment in plant
and machinery is more than Rs.1
crore but does not exceed Rs.10
crores.
Source : Ministry of
Micro, Small & Medium
Enterprises
Year 2014

6. Market Share of Nationalized
Banks and Private Banks
SBI -19.10%
ICICI – 10.34%
PNB – 5.48%
BOI – 5.20%
HDFC – 2.91%
Axis - 2.73%
19.10%
5.20%
5.48%
10.34%
2.91%
2.73%
SBI
ICICI Bank
PNB
Bank Of
India
HDFC
Bank
Axis Bank
Fig 1.1 Market share
Source : NDTV Profit
Year 2010

7. Market Cap of Nationalized
Banks and Private Banks
17,669.64
18,431.90
34,626.56
0.00 50,000.10000,0001.0500,0002.0000,000.00
Bank of India
Canara Bank
PNB
Bank of Baroda
SBI
IndusInd Bank
Kotak Mahindra
182,145.1
7
37,497.07
Fig 1.2 Market Cap of Nationalized Banks(in Cr)
170,367.11
29,573.88
73,658.22
0.00 100,000.00 200,000.00
Axis Bank
ICICI Bank
HDFC Bank
200,816.60
92,388.98
Fig 1.3 Market Cap of Private Banks(in Cr)
Source : Money Control
Year 2012

8. Major Players of Nationalized
Banks and Private Banks
12,131.36
4,541.08
3,342.58 2,729.27
1,711.46
15,000.00
10,000.00
5,000.00
0.00
Fig 1.4 Major Players of Nationalized banks
in terms of net profit(Rs. Cr)
9430.69
8478.38
6217.67
1617.78 1502.52
10000
8000
6000
4000
2000
0
Fig 1.5 Major Players of Private banks
in terms of net profit(Rs. Cr)
Source : NDTV Profit
Year 2012

9. Current Trends
Tele Banking
Real Time Gross Settlement
(RTGS)
Electronic Funds Transfer (EFT)
Point of Sale Terminal
Automatic Teller Machine (ATM)
Electronic Clearing Service (ECS)

10. SWOT Analysis of SBI
SWOT Analysis
Strength
1. The biggest bank in the country
2. Has a separate act for itself. Thus, a special privilege.
3. Biggest branch network in the country
4. First public sector to move to CBS
Weakness
1. Huge amount of staff
2. Expected to experience high level of attrition due to
retirement of its top management
3. Still carries the image of the old Govt. sector bank
Opportunity
1. Pool in talent to replace the going top management to serve
the next generation
2. Make better use of its CRM
3. Expansion into rural areas
Threats
1. Consolidation among private banks
2. New bank licenses by RBI
3. Foreign banks that have sophisticated products

11. SWOT Analysis of ICICI Bank
Strength
1. Front runner in the Indian Private Banking Sector
2. Strong presence via its branches
3. High use of technology to make life simpler for the
customers
4.Large no. of facilities for the customers in terms of products
and services
5. Over 75,000 employees at ICICI
6. Decades of Experience in the Banking sector along with
marketing has added to the brand name
7. Presence in over 19 countries
Weakness
1. Too much competition in the banking sector affecting
employee and customer management
2. Many branches in urban areas has led to high cost
Opportunity
1. Opening more branches in the rural areas
2. Use of technology to penetrate rural markets
3. Venturing into countries like Africa where the economy is
coming up
Threats
1. Ever changing RBI policies
2. International and other Competitors
3.Inability to adapt to changing conditions due to large size

12. Analysis of Questionnaire
for SMEs

13. Years In Business
0
4
6
10
0 2 4 6 8 10 12
> 10 yrs
5-10 yrs
1-5 yrs
< 1 yr
No. of SME’s
Fig 1.1 No. of years in business
Years

14. Annual Turnover
2
6
7
5
8
7
6
5
4
3
2
1
0
20-30 Lakhs 31-50 Lakhs 51-100 Lakhs > 1 crore
Fig 1.2 Annual Turnover
No. of SME’s
Turnover

15. Preferred Banks by SMEs
50%
45%
5%
Nationalized
Private
Both
Fig 1.3 Banks Preference (%)

16. Analysis of Banks Based on Preference
SBI
37%
BOI
18%
IDBI
9%
UNION
Bank
9%
BOB
18%
Others
9%
HDFC
60.00%
AXIS
10.00%
ICICI
20.00%
Kotak
10.00%
ING Vysta
0.00%
Others
0.00%
Fig 1.5 National Banks Fig 1.6 Private Banks

17. Convenience of Interest Rates of
Banks
Yes,
72.73%
No,
Can't Say,
9.09%
18.18%
Yes 60.00%
No 30.00%
Can't Say
10.00%
Fig 1.8 Private Banks

18. Analysis of Unnecessary Charges
Applied by Banks
Yes 18.18%
No 63.64%
Can't Say
18.18%
Yes
Can't Say
10.00%
No 50.00%
40.00%
Fig 1.9 National Banks Fig 1.10 Private Banks

19. Ratings Based on Services
2
3 3
3 3
3 3
4
2 2
3
4
2
3
4
2 2
3 3
2 2
3 3
2
4
3
2
3
4
3
2
4
3
1
2 2
3
1
2 2
3
2 2
1
2
3 3
1
2
3 3
2
2 2
3 3
2 2
3
2
4
2
0
SBI
BOI
BOB
UNION
IDBI
ICICI
HDFC
AXIS
KOTAK
OTHERS
Loan Services Staff Knowledge Staff Behaviour
Speed of issuing knowledge Easy Access Abilty to address problems
Fig 1.11 Average Ratings

20. Issues in Nationalized Bank
Banks SBI BOI BOB UNION CANARA DNSB
Lack of
1 2 1 1
assistance
Security
Concern
2 1 1 1
High interest
rate
1
Limited service 1 2
Quality of
service
1
Waiting 4 2 1
Impersonality
of the service
No
disadvantage

21. Issues in Private Bank
Banks IDBI ICICI HDFC AXIS KOTAK
Lack of assistance 1
Security Concern 1 1 1
High interest rate 2 1 1
Limited service 1 1
Quality of service
Waiting 1
Impersonality of the service 1 1
No disadvantage 1 1

22. Ratings For Banks
4 4 4
3.33
3 3 3 3
2.5
2
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
SBI BOI BOB UNION
Bank
IDBI Other ICICI HDFC AXIS Kotak
Ratings
Fig 1.12 Overall Rating ( Avg )

23. Analysis of Response
Sheet for Banks

24. Why do you provide loans to
SMEs?
Great growth chances and low risk involved
To promote entrepreneurship
To bailout SMEs
Government of India guidelines

25. Documents Required
63.64%
18.18%
36.36%
81.82%
Financial Stability
Last 3 years Balance
Sheet
Project Cost
Future Balance Sheet
Fig. 1.13 Documents Required

26. What is the Interest Rate ?
14% 14%
12% 12% 12% 12% 12% 12%
11% 10%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Fig 1.14 Interest Rates
Interest Rate

27. What Guaranty do you take?
Collateral
Securities,
27.27%
Mortgage of
company,
27.27%
No Gurantee,
18.18%
Personal
gurantee of
owner, 45.45%
Collateral Securities
Mortgage of company
Personal gurantee of
owner
No Gurantee
Fig 1.15 Guarantee Preferences

28. Time for Completion of Loan
Procedure
1
15
30
9
4
21
7
18
20
18
21
0 5 10 15 20 25 30 35
ICICI
HDFC
Axis
DNSB
Canara
BOI
BOB
Yes
Union
SBI
Dena
Fig 1.16 No. of Days

29. Loan Recovery Process
Monthly Installments
Post Dated Cheques on ECS

30. What about Loan Defaulters?
Send legal notice
Hire 3rd party recovery agents
Taking possession of company assets

31. Any Special Facilities for SMEs?
Cash credit facility
Overdraft
Term Loan
Salary Accounts
Special interest Rates

32. Current Trends in Lending
w.r.t SME
SMEs continued to face the dual challenges of an uneven
recovery and bank deleveraging.
Despite monetary easing, credit availability was a
constraint for SMEs.
Credit conditions remained tighter for SMEs in relation to
large firms.
Alternative sources of finance for SMEs and entrepreneurs
were limited and volatile.
Most governments extended SME finance support
measures and adopted new instruments.

33. Analysis of Core indicators in
financing SMEs
The allocation of credit by size of firm.
Varied interest rates.
Payment delays.
Bankruptcies.

35. BIBLIOGRAPHY
Internet websites:
Statistical Tables Related to Banks in India, Reserve Bank of India, Retrieved
from http://www.rbi.org.in
Micro, Small and Medium Enterprises, Reserve Bank of India, 30 December
2013, Retrieved from http://www.rbi.org.in
Shareholding Pattern, 30 June 2013, Retrieved from MoneyControl.com.
Market share, Retrieved from http://www.profit.ndtv.com
Top Companies in India by Market Capitalization – BSE, 6th August 2014,
Retrieved from
http://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/banks-public-
sector.html

36. Indian Banking Sector, January 2013, Retrieved from http://www.ibef.org
Top Companies in India by Net Sales, August 2013, Retrieved from
http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/banks-public-sector.html
Top Companies in India by Net Sales, August 2013, Retrieved from
http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/banks-private-sector.html
http://www.moneycontrol.com/financials/icicibank/profit-loss/ICI02#ICI02
RECENT TRENDS IN INDIAN BANKING INDUSTRY, Sanjay Kumar Dhanwani, Retrieved from
http://www.abhinavjournal.com
https://www.sbi.co.in
History, ICICI bank, Retrieved from http://www.icicibank.com/aboutus/history.page
SME Segment, Loan Schemes, Retrieved from http://www.sbi.co.in/portal/web/interest-rates/
sme-segment
Loans for SME Segment, Retrieved from http://www.icicibank.com/business-banking/
business-loans/working-capital/loans-for-sme-segment.page?

37. Presenters:
Sumeet Bomblat 03
Shivkumar Chauhan 04
Shounak Dasgupta 06
Nitesh Walke 60
Tanay Mishra 29
Advait More 28
Rushabh