A

PROJECT REPORT

ON

FINANCING UNDER CGTMSE- STRATEGIES ADOPTED BY PNB AND BOI

SUGGEGTIONS FOR BOB

PREPARE FOR

BANK OF BARODA, BORIVALI (EAST)

MASTER OF MANAGEMENT STUDIES (MMS)

UNIVERSITY OF MUMBAI

SUBMITTED TO

SINHGAD INSTITUTE OF BUSINESS MANAGEMENT

CHANDIVALI

UNDER THE GUIDANCE OF

Mr. SUBHAS GARG – CHIEF MANAGER /

Mr. VISHALDONKALWAR – CREDIT OFFICER

SUBMITTED BY

(PRAVIN S. MALUSARE)

(BATCH 2012-14 & ROLL NO.98)

(SPECIALISATION:-FINANCE)

1

CERTIFICATE

This is to certify that PRAVIN SHANKAR MALUSARE has successfully completed

the project work as a part of academic fulfillment of Masters of Management Studies

(M.M.S.) Semester II examination.

Name : Prof. Sreelatha Guntupalli

Signature:

Date : _________________

DIRECTOR

SIBM

2

DECLARATION

I, Pravin S. Malusare of Master of Management Studies (Semester) of Sinhgad Institute

of Business Management (SIBM), hereby declare that I have successfully completed this

Project on Financing under CGTMSE – strategies adopted by PNB and BOI suggestions

for BOB in the academic year 2012 - 2014.

The information incorporated in this project is true and original to the best of my

knowledge.

_____________________________

Signature

3

ACKNOWLEDGEMENT

I am very glad to have the vocational training in Bank of Baroda. I am very thankful to

Mr. S. S. Mundra (Chairman & Managing Director) and Mr. Jayant Rao (Asst. General

Manager, Greater Mumbai Zone), Mr. Ashok K. Bajaj (Asst. General Manager, MMNR)

& Mr. Subhas Garg (Chief Manager, Borivali East Branch) who have granted me the

permission for doing summer training in The Bank of Baroda.

I am also very grateful to Mr. Subhas Garg who is a chief manager of SME’s

management department of Boriwali (E) branch, who has guided me through out my

training period. With all the necessities being fulfilled by the department and I am again

thankful to all the employees of finance and HR, Credit department who had given me

support for the work to be done during training.

Last but not least I am also grateful to my Institute Sinhgad Institute Of Business

Management(SIBM) and Director Mrs. Meera Vijay and My Project Head Mrs.

Sreelatha Guntupalli and also all the faculty members who had inspired me for doing the

summer training.

Thanking You,

Yours faithfully,

(PRAVIN S. MALUSARE)

4

TABLE OF CONTENTS

Sr.No. TOPIC Pg. No.

1 EXECUTIVE SUMMARY 06

2 OBJECTIVES OF PROJECT 07

3 RESEARCH METHODOLOGY 08-09

4 INTRODUCTION OF THE TOPIC (CGTMSE) 10

4.1 ROLE OF MSMEs 11-12

4.2 CREDIT FACILITIES ELIGIBLE UNDER

THE SCHEME

13

4.3 CREDIT FACILITIES NOT ELIGIBLE

UNDER THE SCHEME

14

4.4 GUARANTEE FEE & ANNUAL SERVICE

FEE

15

4.5 EXTENT OF THE GUARANTEE 16

5 REVIEW OF LITERATURE 17

6 BANK OF BARODA 18 - 24

7 PUNJAB NATIONAL BANK 25 – 29

8 BANK OF INDIA 30 – 33

9 CONCLUSION 34

10 SUGGESTIONS 35

11 BIBLOGRAPHY 36

5

1. EXECUTIVE SUMMARY

(Key Strengths)

Bank of Baroda is a 104 years old State-owned Bank with modern &

contemporary personality, offering banking products and services to Large

industrial, SME, retail & agricultural customers across the country.

Uninterrupted Record in Profit-making and Dividend Payment.

Overseas Business Operations extend across 24 countries through 100 Offices.

Strong Domestic Presence through 4, 276 Branches.

Provides Financial Services to around 50.86 million Customers Globally.

Robust Technology Platform with 100% CBS in Indian Branches.

First PSB to receive Corporate Governance Rating (CGR-2).

Pioneer in many Customer-Centric Initiatives.

A well-accepted & recognized Brand in Indian banking industry.

Relatively Strong Presence in Progressive States likes Maharashtra.

6

2. OBJECTIVES OF PROJECT:

To study and understand the concept of CGTMSE

To analyze the CGTMSE Scheme

To understand the effect of CGTMSE on banks profit

To understand the corrective measures taken by bank for CGTMSE

To analyze the CGTMSE of Bank of Baroda and get a insight on its performance

7

3. RESEARCH METHODOLOGY:

Study is all about the research & analysis of credit services offered to small and medium

enterprises Study is being made for the purpose of analysis of credit services and relief to

the borrowers by the bank that the future growth of the bank by providing better services

by bank can earns more profit. Study will be carried out at Mumbai. Secondary data is

required for analysis of report. Period of the study is limited to 45 days.

The method adopted to carry out this report was based on both the primary and secondary

sources.

Primary sources:

Interaction with the Credit Officer and Chief Manager.

Personal interaction with the customers visiting to the bank.

Secondary sources:

Manuals of the bank.

Websites

Journals

Circulars

Annual Report

8

BENEFITS FROM THE STUDY:

It helps me to know more about CGTMSE Scheme and the situation of CGTMSE in

bank.

It helps me to know the strategies adopted by banks to increase the CGTMSE customer

and to understand the CGTMSE provisions norms in bank.

ANALYSIS AND REPORT WRITING:

Here I have done CGTMSE scheme analysis in PNB and BOI and used various data for

analysis purpose. And also I have written report on it.

9

4. INTRODUCTION OF THE TOPIC

CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL

ENTERPRISES (CGTMSE)

The scheme was originally launched from August 1, 2000 known as Credit Guarantee

Fund Scheme for Small Industries (CGFSI) covering eligible credit facilities from June 1,

2000. Subsequent to the enactment of MSMED Act-2006 the Trust was renamed as

Credit Guarantee Fund Trust for Micro and Small Enterprises and scheme as Credit

Guarantee Scheme for Micro and Small Enterprises.

MSE as defined in MSMED Act 2006

10

4.1 Role of Micro, Small and Medium Enterprises (MSMEs)

The role of micro, small and medium enterprises (MSMEs) in the economic and social

development of our country is well established. The MSME sector is a nursery of

entrepreneurship, often driven by individual creativity and innovation. Thus, MSMEs are

important for the national objectives of growth with equity and inclusion. The MSME

sector contributes about 9 per cent of the country's GDP, 45 per cent of the manufactured

output and 40 per cent of its exports. The overall growth in the MSME sector has been

much higher than in the large industries over the last five years.

 

Although Indian MSMEs are a bed rock for innovation and despite being a diverse and

heterogeneous group they face some common challenges with regard to access to

institutional credit, collateral requirements, equity capital, etc. It was against this

background that the Credit Guarantee Fund Trust for Micro and Small Enterprises

(CGTMSE) was established with the objective of guaranteeing collateral and third party

guarantee free credit facilities so as to enable enhanced flow of credit to the MSE sector

in India.

 

Over the past 12 years, CGTMSE has been ably serving India's MSEs through the Credit

Guarantee Scheme by providing guarantee cover to collateral and third party guarantee

free credit facilities sanctioned by Member Lending Institutions (MLIs) to eligible MSEs.

CGTMSE has extended guarantees for loans aggregating to over Rs.38,000crore covering

approximately. CGTMSE is well placed to meet the challenges of the future.

  

It is heartening to note that the positive impact that CGTMSE has had on credit flow to

the MSE Sector has been recognized by the Government and the credit guarantee

framework in the country is poised for expansion with the announcement of setting up of

Credit Guarantee Funds for housing, educational loans and skill development by the

Hon'ble Finance Minister during the budget speech in Parliament.

 

11

I take this opportunity to thank the Government of India, Reserve Bank of India, Small

Industries Development Bank of India, all Member Lending Institutions, MSE

Entrepreneurs and other national and international partner agencies for their support and

co-operation. I am sure that with the active support of all stakeholders, CGTMSE would

continue to excel by achieving higher performance parameters. I would also like to

compliment team CGTMSE for their hard work and dedication.

12

4.2 CREDIT FACILITIES ELIGIBLE UNDER THE SCHEME:

The Trust shall cover credit facilities (Fund based and/or Non fund based) extended by

Member Lending Institution(s) to a single eligible borrower in the Micro and Small

Enterprises sector for credit facility not exceeding Rs.100 lakh by way of term loan

and/or working capital facilities on or after entering into an agreement with the Trust,

without any collateral security and\or third party guarantees provided that the lending

institution applies for guarantee cover in respect of credit proposals sanctioned in the

quarter April-June, July-September, October-December and January-March prior to

expiry of the following quarter viz. July-September, October-December, January-March

and April-June respectively. Provided further that, as on the material date:

The dues to the lending institution have not become bad or doubtful of recovery;

and / or

The business or activity of the borrower for which the credit facility was granted

has not ceased; and / or

The credit facility has not wholly or partly been utilized for adjustment of any

debts deemed bad or doubtful of recovery, without obtaining a prior consent in

this regard from the Trust.

For Example,

XYZ & Co. has been sanctioned the cash credit limit of Rs.5.00 lacs on 15.04.2012.The

application for the guarantee cover should be submitted by next quarter i.e. July to Sept.

quarter online latest by 30.09.2012. Credit facilities extended by more than one bank

and/or financial institution jointly and/or separately to eligible borrower up to a

maximum up to Rs.100 lakh per borrower subject to ceiling amount of individual MLI or

such amount as may be specified by the Trust.

13

4.3 CREDIT FACILITIES NOT ELIGIBLE UNDER THE SCHEME:

Any credit facility in respect of which risks are additionally covered under a

scheme operated / administered by Deposit Insurance and Credit Guarantee

Corporation or the Reserve Bank of India, to the extent they are so covered.

Any credit facility in respect of which risks are additionally covered by

Government or by any general insurer or any other person or association of

persons carrying on the business of insurance, guarantee or indemnity, to the

extent they are so covered.

Any credit facility, which does not conform to, or is in any way inconsistent with,

the provisions of any law, or with any directives or instructions issued by the

Central Government or the Reserve Bank of India, which may, for the time being,

be in force.

Any credit facility granted to any borrower, who has availed himself of any other

credit facility covered under this scheme or under the schemes mentioned in

clause (i), (ii) and (iii) above, and where the lending institution has invoked the

guarantee provided by the Trust or under the schemes mentioned in clause (i), (ii)

and (iii) above, but has not repaid

any portion of the amount due to the Trust or under the schemes mentioned in

clause (i), (ii) and (iii) above, as the case may be, by reason of any default on the

part of the borrower in respect of that credit facility.

Any credit facility which has been sanctioned by the lending institution against

collateral security and / or third party guarantee.

Any credit facility which has been sanctioned by the lending institution with interest rate

more than 3% over the Prime Lending Rate (PLR) of the lending institution.(Branches to

link this corresponding to Base Rate).

14

4.4 GUARANTEE FEE AND ANNUAL SERVICE FEE

Credit

Facility

Annual Guarantee Fee

(AGF) [% p.a]

Women, Micro

Enterprises

and units in

North East

Region (incl. Sikkim)

Others

Upto Rs.5 Lakh 0.75 1.00

Above Rs. 5 Lakh

and upto Rs.100

Lakh

0.85 1.00

of sanctioned credit facility shall be paid upfront to the Trust by the institution

availing of the guarantee cover within such period as may be specified by the

Trust.

In the event of non-payment fee by the MLI within such period or any other

specified date, the guarantee under the scheme shall not be available to the

lending institution unless the Trust agrees for continuance of guarantee and

the lending institution pays penal interest on the fee due and unpaid, with effect

from the due date, at four per cent over Bank Rate, per annum, or at such

rates specified by the Trust from time to time, for the period of delay.

15

4.5 EXTENT OF THE GUARANTEE

The Trust shall provide guarantee as under:

Category Maximum extent of Guarantee where credit facility is

Micro Enterprises Up to Rs.5 lakh Above Rs.5

lakh up to

Rs.50 lakh

Above Rs.50 lakh up

to

Rs.100 lakh

85% of the

amount in

default subject

to a maximum

of Rs.4.25 lakh

75% /

Rs.37.50 lakh

Rs.37.50 lakh plus

50% of amount in

default above Rs.50

lakh subject to overall

ceiling of Rs.62.50

lakh

Women entrepreneurs/

Units located in North

East Region (incl.

Sikkim) other than

credit facility up to

Rs.5 lakh to micro

enterprises

80% of the amount in default

subject to a maximum of Rs.40

lakh

Rs.40 lakh plus 50%

of

amount in default

above Rs.50 lakh

subject to overall

ceiling of Rs.65 lakh

All other category of

borrowers

75% /

Rs.37.50 lakh

Rs.37.50 lakh plus

50% of amount in

default above Rs.50

lakh subject to overall

ceiling of Rs.62.50

lakh

All proposals for sanction of guarantee approvals for credit facilities are to be rated as per

the extant guidelines wherever required and should be acceptable to Bank.

16

5. REVIEW OF LITERATURE

BRAHMANANDAM, G, N., RAI, H.L., DAKSHINA MURTHY, “Financing Small

Scale Sector”. The Role of Banks” INDIAN BANKING TODAY AND TOMORROW,

The above article was prepared on the role of banks in financing the SMEs in the year.

At those times the Indian banking was not all interested in financing the SMEs, because

of their credit worthiness. Later due to changes in the industrial policy of India, the

commercial banks come forward made immense help to the growth of SMEs. This article

was written before the economic reforms taken place. Here is a gap for more analysis

about the role of the banks in the post economic reforms. BRAHMANANDAM, G, N.,

RAI, H.L., DAKSHINA MURTHY, has focused on role of banks in financing SMEs. He

also focused on how economic reforms have changed the bank role in extending credit to

SMEs. They also focused on the credit facilities available to the SMEs in the wake of

MSME act 2006.

17

6. BANK OF BARODA

Bank Of Baroda, is a Body Corporate (Nationalized Bank) constituted under The

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, with its Head

Office at Mandvi, Baroda and Corporate Office at Mumbai.

Present day Bank of Baroda is the successor of the erstwhile "The Bank of Baroda

Limited", founded in 1908 in a small town - Baroda - by the great visionary the late

Maharaja of Baroda - Sir Sayajirao Gaekwad-III. From its humble beginnings, the Bank

has grown, over the years, to emerge as an Indian Financial Powerhouse, with a network

of over 4,043 branches in India across the length and breadth of the country and 96

overseas branches/foreign offices in 25 countries across 5 continents serving a Global

customer base of over 45 million.

In tune with times and in response to the emerging market requirements, the Bank has set

up specialized branches dedicated to specific Customer segments. Bank has also set-up

specialized Retail, Corporate and SME Loan factories across the country which work on

assembly line principle to reduce turnaround time for sanction of retail and corporate

loans

18

Type Public company

Traded as BSE: 532134

Industry Banking, Financial services

Founded 1908

Founder(s) Maharaja Sayajirao Gaekwad

Headquarters Vadodara, India

Area served Worldwide

Key peopleS S Mundra

(Chairman & MD)

Products

Credit cards, consumer banking,

corporate banking, finance and

insurance, investment banking,

mortgage loans, private banking,

private equity, wealth management

Revenue . 4032.74 (In Crores)

Net income .13452.08 (In Crores)

Total assets . 127861.71 (In Crores)

Board Of Directors

19

Chairman & Managing Director S S Mundra 

Director(Shareholders) Maulin Arvind Vaishnav 

Company Secretary Vinay A Shah 

Director(PartTime NonOfficial) Satya Dev Tripathi 

Director (Officer Employee) V B Chavan 

Nominee (RBI) Sudarshan Sen 

Director (Workmen Employee) Vinil Kumar Saxena 

Director(Shareholders)Surendra Singh Bhandari 

Rajib Sekhar Sahoo 

Executive Director

P Srinivas 

Sudhir Kumar Jain 

Ranjan Dhawan 

Nominee (Govt) Alok Nigam 

The Position as on 31st March 2013 was as under: -

Balance Sheet Size Rs. 547135.44

Total Deposits Rs. 13452.08

Net Advances Rs. 328185.76

Investments Rs. 121393.72

Net NPA 0.54%

NATURE

20

The nature of the business that decide the company belongs to which industry and it helps

the many stakeholders and parties like government, NGO, etc, to decide the parameter

and other concerned issue binding to the organization, for e.g. environmental protection,

tax rate, incentives, and rules and regulations. The Bank of Baroda belongs to the service

sector, which provides various types of financial solution related to banking industry. As

Indian economy is emerging as a major services provider in the world, which can be seen

by it’s contribution in GDP of India which is closed to 55%.

VISION

It has been a long and eventful journey of almost a century across 25 countries. Starting

in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate

Centre in Mumbai, is a saga of vision, enterprise, financial prudence and corporate

governance.

It is a story scripted in corporate wisdom and social pride. It is a story crafted in private

capital, princely patronage and state ownership. It is a story of ordinary bankers and their

extraordinary contribution in the ascent of Bank of Baroda to the formidable heights of

corporate glory. It is a story that needs to be shared with all those millions of people -

customers, stakeholders, employees & the public at large - who in ample measure, have

contributed to the making of an institution.

MISSION

“To be a top ranking National Bank of International Standards committed to augmenting

stake holders' value through concern, care and competence”

BANK OF BARODA - Micro, Small & Medium Enterprises Sector

21

The Micro, Small and Medium Enterprises in Manufacturing and service sector

are defined as under in MSMED ACT, 2006

Particulars Investment in Plant & Machineries

in case of Manufacturing

Enterprises

Investment in Equipment in

case  of Service Sector

Enterprises

Micro

Enterprises

Up to Rs. 25/- lacs Up to Rs.10/- lacs

Small

Enterprises

Above Rs. 25/- lacs and up to Rs.500/-

lacs

Above Rs.10/- lacs and upto

Rs.200/- lacs

Medium

Enterprises

Above Rs.500/- lacs and up to

Rs.1000/- lacs

Above Rs.200/- lacs and up to

Rs.500/- lacs

The micro and small (service) enterprises shall include small road & water transport

operators, small business, professional & self-employed persons, retail trade i.e. advances

granted to retail traders dealing in essential commodities (fair price shops), consumer co-

operative stores and advances granted to private retail traders with credit limits not

exceeding Rs. 200/- lakh and all other service enterprises, as per the definition under

MSMED Act.

Our bank has for internal purposes given focused attention to finance all Commercial

enterprises i.e. enterprises which may be outside the purview of regulatory definition of

SME but having turnover up to Rs 150.00 crores  and new infrastructure and real estate

projects where the project cost is up to Rs. 50/- crores  by treating them as part of SME

segment.

SME PRODUCTS Name of the Product/Scheme

22

Sr. No.

1. Baroda Laghu Udhyami Credit Card

2. Baroda Artisan Credit Card

3. Loans under KVIC Margin Money Scheme – since merged with

PMRY Scheme and re-named as PMEGP Scheme

4. Collateral free loans under Credit Guarantee Fund Trust Scheme

5. Composite Loans to SSI units

6. Loans under Technology Upgradation Fund Scheme for Textile Units

7. Loans under Credit Linked Capital Subsidy Scheme for Technology

Upgradation of Small Enterprises

8. Loans under National Equity Fund Scheme

9. Scheme for financing Energy Efficiency Projects

10. SME Short Term Loans

11. SME Medium Term Loans

12. Baroda SME Gold Card

13. Baroda Overdraft against Land and Building

14. Baroda Vidyasthali Loan

15. Baroda SME Loan Pack

16. Baroda Arogyadham Loan

17. Scheme for financing existing borrowers under SME Segment for

purchase of new vehicles.

23

BOB have been established in almost all-major sectors in the Indian industry

such as:

Drugs & Pharmaceuticals

Auto components, Auto Ancillary units

Food and Agro based industries

Textile machineries

Dyes & intermediates

Engineering equipments

Chemicals

Defence equipments manufacturing Units

BANK OF BARODA CGTMSE PERFORMANCE AS ON 2013

Number of Proposal Received – 28679

Sanction Proposal Total Amount - Rs. 233042.00 (In Rs. Lakh)

Bank of Baroda , Borivali East Branch CGTMSE Performance F.Y.12-13,

Number of Proposal Received – 9

Number of Proposal Sanction – 6

Amount of Proposal Received – Rs.9.40 (In Crore)

Amount of Proposal Sanction – Rs. 2.40 (In Crore)

24

7. PUNJAB NATIONAL BANK

Punjab National Bank (PNB) is an Indian financial services company based in New

Delhi, India. PNB is the third largest bank in India in terms of asset size. It was founded

in 1894 as a private banking company by Lala Lajpat Rai and is currently the second

largest state-owned commercial bank in India ahead of Bank of Baroda with about 5000

branches across 764 cities. It serves over 37 million customers. The bank has been ranked

248th biggest bank in the world by the Bankers' Almanac. The bank's total assets for

financial year 2007 was about US$60 billion. PNB has a banking subsidiary in the UK, as

well as branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty,

Dubai, Oslo, and Shanghai.

Bank has been a frontrunner in the industry so far as the initiatives for Financial Inclusion

is concerned. With its policy of inclusive growth and the mission “Banking for

Unbanked”, it is a matter of pride for the Bank that it has been able to cover all its 4588

villages allotted under the Swabhiman Campaign of Government of India through

Business Correspondents. Further, the Bank has also adopted 118 villages across country.

Under FI plan, the Bank has engaged Technical Service Providers (TSPs) and the

corporate Business Correspondents (BCs) for providing banking services in villages

using ICT based BC model. The village level BC agents are using Hand Held Terminals/

POS machines & smartcards. Bank has extensively used technology to reach out to those

which have remained away from formal banking set up.

25

Type Public

Traded asBSE: 532461

NSE: PNB

Industry Banking, Financial services

Founded 1895

Founder(s) Lala Lajpat Rai

Headquarters New Delhi, India

Key people K R Kamath (Chairman & MD)

Products

Credit cards, consumer banking,

corporate banking, finance and

insurance, investment banking,

mortgage loans, private banking,

private equity, wealth management

Revenue . 47476715/-

Net income . 42159227/-

Total assets . 4788770363/-

Owner(s) Government of India

Employees 62,127

PUNJAB NATIONAL BANK - Micro, Small & Medium Enterprises :

26

Bank has well defined policy for lending to Micro, Small & Medium Enterprises

(MSMEs) with built-in concessions and incentives. The operative part of the MSME

policy for the year 2013 is as under:

The Bank shall continue to lay emphasis on financing Micro, Small & Medium

Enterprises and our existing MSME credit portfolio shall be enlarged with special

focus on lending to Micro Enterprises.

Following recommendations of High Level Task Force constituted by Hon’ble

Prime Minister on Micro, Small & Medium Enterprises (MSME) Sector will be

implemented:

- Achievement of 20% year on year growth in credit to Micro and Small

enterprises.

- The share of Micro Enterprises in Micro & Small Enterprises lending be increased

to 60% by accelerating lending to Micro Enterprises.

- 10% annual growth in number of accounts of advances to Micro Enterprises.

The Bank envisages MSEs credit growth through financial inclusion by way of

collateral free and without third party guarantee lending by leveraging CGTMSE. As

per RBI mandatory guidelines, loans upto Rs.10 lakh to Micro and Small Enterprises,

which are eligible for coverage under Credit Guarantee Scheme of CGTMSE, are to be

considered on merits without accepting any collateral security / third party guarantee

and all such cases must be got covered under guarantee scheme of CGTMSE. Further,

as per Banks guidelines, MSE proposals up to Rs.100 lakh, which are eligible under

Credit Guarantee Scheme of CGTMSE, are to be sanctioned by the competent

authority without taking any collateral security/third party guarantee.

PNB is committed to Financial Inclusion and the Credit Guarantee Scheme (CGS)

offered excellent opportunity for youngsters and first generation entrepreneurs to set up

their own units without collateral security.

27

PNB providing better customer care and transparency in services, Bank has adopted the

Code of Bank's Commitment to Micro and Small Enterprises prescribed by the Banking

Codes and Standards Board of India, Mumbai.

Bank has identified MSME focus branches in addition to already existing Specialized

MSME branches. As on date there are 523 such branches (59 specialized SME branches

& 464 MSME focus branches).

Apart from extending 1.00% concessions on chargeable Interest Rate to Micro

Enterprises for loans up to Rs.25 lakh, higher Loaning Powers have been vested

to Branch Managers for directly disposing proposals at Branch Level for financing

micro enterprises under CGTMSE.

SME PRODUCTS

Sr. No.

Name of the Product/Scheme

1. Sarthak Udyami - Scheme for financing Micro and Small Enterprises

2. PNB Pragati Udyami - Scheme for financing Industry related

Services / Business Enterprises

3. PNB Kushal Udyami

4. PNB Garrage Yogana

5. Loans for setting up Industrial Estates

6. PNB Vikas Udyami - Scheme for Loans acquisition of ISO - 9000

Series Certification

7. SME Sahayog Scheme

8. PNB Artisan Credit Card - Scheme to provide hassle free financial

support to Artisan

9. PNB Laghu Udyami Credit Card - A simplified Loan Delivery

Mechanism

10. Scheme for Advances to Small Road Transport Operators

11. Scheme for Advances to Owner-Drivers of Taxi Cars, Three Wheeler,

Station Wagons, Tempos, Etc.

28

PNB have been established in almost all-major sectors in the Indian industry

such as:

Textile Industry - Technology Upgradation Fund Scheme (TUFS)

Food Processing Industry

Leather Industry – Integrated Development of Leather Sector (IDLS)

Coir industry

Cement Industries

Iron & Steel

Chemicals Industries

Paper Industries

Construction

Infrastructure

Village & Cottage Industries

PUNJAB NATIONAL BANK CGTMSE PERFORMANCE AS ON 2013

Number of Proposal Received - 96406

Sanction Proposal Total Amount - Rs. 442014.93 (In Lakh)

29

8. BANK OF INDIA

Bank of India (BoI) is an Indian state-owned commercial bank with headquarters in

Mumbai, Maharashtra. Government-owned since nationalisation in 1969, It is India's 4th

largest PSU bank, after State Bank of India, Punjab National Bank and Bank of Baroda. It

has 4187 branches as on 21 April 2012, including 52 branches outside India, and about

1679 ATMs. BoI is a founder member of SWIFT (Society for Worldwide Inter Bank

Financial Telecommunications), which facilitates provision of cost-effective financial

processing and communication services. The Bank completed its first one hundred years

of operations on 7 September 2006.

Type Public company (BSE: BOI)

Industry Financial services

Founded 7 September 1906

Headquarters Mumbai, Maharashtra, India

Key people Vijayalakshmi R Iyer (CMD)

Products

Commercial Banking

Retail Banking

Private Banking

Asset Management

Mortgages

Credit Cards

Revenue 243,935.0 million

Operating income 53,842.3 million

Net income 24,887.1 million

BANK OF INDIA - Micro, Small & Medium Enterprises (MSME):

30

All advances to segments viz. Micro, Small and Medium Enterprises in the

Manufacturing sector irrespective of sanctioned limits, (including advances

against TDRs/Govt. Securities etc for business purposes to these categories of

Borrowers), and

Advances to Services Sectors such as Retail Traders, Professional & Self-

Employed, Small Business Enterprises, and Small Road/Water Transport

Operators and other enterprises engaged in providing/rendering of services,

conforming to the above investment criteria and enjoying borrowing/non-

borrowing facilities with the Bank (including advances against TDRs/Govt.

Securities etc for business purposes to these categories of Borrowers).

Those enterprises exceeding the investment ceilings would be categorized as

Large Enterprises and be outside the purview of MSME.

The sanctioned limits would no longer be the criteria determining the status as

micro or small or medium enterprises in these cases.

As per RBI guidelines, advances made to micro & small enterprises would be

categorized as Priority sector advances whereas lending by banks to medium

enterprises will not be included for the purpose of reckoning of advances under

the priority sector

Bank inform about salient features including benefits available and charges

payable and terms of Credit Guarantee Scheme of CREDIT GUARANTEE

FUND TRUST FOR MICRO AND SMALL ENTERPRISES which is extended

31

by eligible banks and is popularly known as CGTMSE guarantee scheme for

MSEs and which is available at present to new as well as existing Micro and

Small Enterprises including Service Enterprises with a maximum credit cap of `

100 lakh (Rupees One hundred lakh) per borrower, excluding retail trade,

educational institutions, training institutes and Self Help Groups (SHGs) as per

the said Scheme.

Where a loan is eligible to be covered under any subsidy scheme in force, we will

explain to you the features of such scheme and any requirement you will need to

fulfill.

We will endeavour to conduct programmes to enhance knowledge on financial

management of prospective borrowers.

We shall endeavour to organize meetings of MSE borrowers at periodic intervals

as a regular channel for exchange of ideas and suggestions.

SME PRODUCTS

Sr. No.

Name of the Product/Scheme

1. Star Laghu Udyami Samekit Loan

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2. Star SME Liquid Plus

3. Star SME Auto Express

4. Star SME Contractor Credit Line

5. Star SME Education Plus

6. Star MSE Term/Demand Loan

7. Kisan Credit Card

8. BOI Shatabdi Krishi Vikas Card

9. Kisan Samadhan Card

10. Star Bhumiheen Kisan Card

11. Star Bhumiheen Kisan Card

BOB have been established in almost all-major sectors in the Indian industry

such as:

Textile Industry

Technology Service Industry

IT and IT-enabled services

Bio-tech and footwear services

Auto & Engineering

Printing & Packaging

Pharmaceuticals, Medical & Healthcare

Food Processing

Infrastructure

BANK OF INDIA CGTMSE PERFORMANCE AS ON 2013

Number of Proposal Received - 103778

Sanction Proposal Total Amount - Rs. 641376.64 (In Lakh)

9. CONCLUSION

33

My project report mainly involved the opportunity, credit facilities to Under CGTMSE

Scheme by the bank. The main purpose of the analysis is to know that how bank is

providing loan to CGTMSEs.

We know that today SMEs are growing and profitable sectors for banks in terms of

money investment. And BOB system of loan sanctioning is quite good. But it is very true,

in terms of the paper work that most of the SMEs are enable to submit proper documents

for approval of loan. It is also found that after sanctioning the credit facilities bank has

maximum no. of paper works, which is creating problems for SMEs to maintain all of

them.

It also found that some CGTMSE Scheme borrowers are not educated, so they are not

aware about the benefits of this scheme. Due to this they are not eligible for the

financing, and lack of finance they cannot grow.

Now a days credit guaranty scheme institutions have floated to support banks to assume

risk unhesitatingly in financing SMEs. And also more appropriate CGTMSE have been

developed to help SMEs to have easy credit with less cost and collaterals.

CGTMSE scheme is a successful in the banking industries because CGTMSE scheme for

Widening of credit portfolio, Better management of risk, Faster recovery of dues,

Enhancement of profitability and also borrowers get the benefit.

10. SUGGESTIONS

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The borrowing should be made cheaper by lowering the rate of interest on lending of

banks, which help the SMEs for coping with the high risk and costs to compete with their

competitors.

Bank should also provide consultancy services and professional guidance at the time of

setting up for considering the long term and short term financial requirements of a small

unit for lending purpose.

Bank has to increase their credit limit and also decrease the installment amount.

CGTMSE Scheme are big source of revenue for banks, so bank should encourage also

the unregistered units by providing more facilities like less paper work.

The best way to encourage lending to SMEs CGTMSEs scheme is to improve the ability

of existing institution to construct profitable and efficient lending programs.

Building awareness among small business people about the financial sources offering by

bank. Especially in the case of CGTMSEs is must. So there is mutual benefits are

possible.

While granting the loans the bank does not adhere with the margin.

The process followed by the bank in sanctioning the loan is cumbersome

(unmanageable), hence it is suggested to make the process easier in sanctioning the credit

facilities to the SMEs.

11. BIBLIOGRAPHY

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A. Web Site:

www.bankofbaroda.co.in

http://www.cgtsi.org.in/schemes.aspx

http://www.cgtsi.org.in/about_us.aspx

http://www.iob.in/uploads/CEDocuments/loanpolicydocumentrevised.pdf

http://www.smallenterpriseindia.com/index.php?

option=com_content&view=article&id=939:sme-marketing-cost-effective-

strategies&catid=82:featureone

http://www.bankofbaroda.co.in/fin/fin_directorreport.asp

http://www.centralbankofindia.co.in/upload/obc/MainMenuEnglishLevel-

2_FAQ_CGTMSE.pdf

www.pnbindia.com

https://www.pnbindia.in/en/ui/ssi-schemes.aspx

www.bankofindia.co.in

http://www.slideshare.net/superalisha07/sme-credits

www.thehindubusinessline.com

B. Articals

Business Standard

The Times of India

Money Control

CGTMSE circular, Bank data, CGTMSE Proposal, Listen Customer and Credit officer

conversation, Visit to Punjab National Bank Goregaon East Branch, etc.

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