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Asian Research Journal of Business ManagementIssue 1 (Vol.2)2014

Research Article

Asian Research Journal of Business Management

Credit Appraisal Procedures and Disbursement of Loans to Micro, Small and

Medium Enterprises with Special Reference to Lakshmi Vilas Bank Ltd-Chennai

Dr. R. Akila1*, Mrs. N. Padmavathy 2

*1Professor, Department of Management Studies, Jeppiaar Engineering College, Rajiv Gandhi Salai, Chennai, India2Associate Professor -Management Studies, Jeppiaar Engineering College, Rajiv Gandhi Salai, Chennai, India.

Received: 27 June 2014; Revised: 11 July 2014; Accepted: 18 July 2014

Abstract: Credit appraisal is a holistic exercise which starts from the time a prospective

borrower walks into the branch and culminates in credit delivery and monitoring with the

objective of ensuring and maintaining the quality of lending and managing credit risk within

acceptable limits. The main objective of this study is to understand the procedure of lending

loans to Micro, Small and Medium Enterprises and to comprehend the complete procedure of

lending loans to MSME, terms and conditions adopted by Lakshmi Vilas Bank. The study

also aimed to identifying the reasons for delay in repayments and non-performing asset. The

analysis is done on the basis of secondary data and the period is limited to the past five years

starting from 2009 and ending with 2013. The statistical and financial tools used to evaluatethe credit appraisal procedure and disbursement of loans to MSME are regression, correlation

(financial performance analysis), trend analysis and risk analysis. The study is totally confined

to LVB, kodambakkam branch and to identify the banks position regarding Loans disbursed,

reimbursed and non-performing asset by MSME and made suggestions to improve the

existing recovery system.

Keywords: Credit Appraisal, MSME, NPA, Lakshmi Vilas Bank.

INTRODUCTION

Credit Appraisal is a process to ascertain the risks associated with the extension of the creditfacility. It is generally carried by the financial institutions which are involved in providing

financial funding to its customers. Credit risk is a risk related to non repayment of the credit

obtained by the customer of a bank. Thus it is necessary to appraise the credibility of the

customer in order to mitigate the credit risk. Proper evaluation of the customer is performed in

order to measures the financial condition and the ability of the customer to repay back the

loan in future. Generally the credits facilities are extended against the security know as

collateral. But even though the loans are backed by the collateral, banks are normally

interested in the actual loan amount to be repaid along with the interest. Thus, the customer's

cash flows are ascertained to ensure the timely payment of principal and the interest15.

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MICRO AND SMALL ENTERPRISE

A healthy SME sector contributes prominently to the economy through creating more

employment opportunities, generating higher production volumes, increasing exports and

introducing innovation and entrepreneurship skills. According to Bashir Ahmad Fida

1

(2008),SMEs are the first step towards development in economies towards industrialization. The

dynamic role of SMEs in developing countries positions SMEs as engines through which the

growth objectives of developing countries can be achieved a role that has long been

recognised. One of the significant characteristics of a flourishing and growing economy is a

vibrant and blooming SME sector. SMEs play a pivotal role in the development of a nation.

They contribute to socioeconomic development in various ways; namely, by creating

employment for a rural and urban growing labour force and providing desirable sustainability

and innovation in the economy as a whole15,16

.

INDUSTRY PROFILE

The Indian banking industry has evolved and transformed itself from a socialist licensed raj

business to a liberalized, modernized & technology oriented white elephant of India. Banking

industry is the backbone for any economy & is the key indicator to see & analyze the level of

development of a country. The banking sector of India has an annual growth rate of 23

percent, contributing nearly 6 percent of GDP & employing nearly 7.4 million people & has

outperformed most banking indices in the world with highest total returns to shareholders at

36.76%. The Indian banks even braved the subprime crises that rocked the global financial

sector in 2008. The Indian banks ability to protect asset health through prudent lending

helped them emerge from this crisis unscathed. The Indian banking sector has a large marketstill unexplored with the Indian households being one of the highest savers in the world

accounting for 69% of India gross national saving of which only 47% is accessed by the

banks. On the other hand there are many challenges as well which the Indian banking industry

has to face in the road ahead like that of financial inclusion, deregulation of interest rates on

saving deposits, slow industrial growth, a large government deficit, increased stress on some

sectors (such as, State utilities, airlines, and microfinance) & the implementation of Basel

III13.

Nevertheless seeing the credentials of the Indian Banks one can safely conclude that the

industry might have many stumbling blocks in the 'Road Ahead' but when ever encountered

with such blocks in the past it has used them as a stepping stone & has always 'Transformed'

itself ( for the better) and 'Evolved' as a winner. In 2012-13, Indian Bank's net profit rose by

23.15 per cent to Rs 70,331 crore compared to Rs 57,109 crore in the previous year. Total

income during the year expanded by 15.53 per cent to Rs 5, 71,230 crore against Rs 4, 94,664

crore in 2009-10. Net Interest Margin of the bank improved to 2.92 per cent in FY'2011 from

2.17 per cent in the previous fiscal. As the Indian financial System is bank dominated their

wellbeing is a must for the economy of India. India currently has a total of 74, 505 ATM of

which 66.42 % are owned by public sector & 31.74% by private sector banks with a total of

227 million debit cards issued13.

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COMPANY PROFILE

The Lakshmi Vilas Bank Limited (LVB) was founded eight decades ago ( in 1926) by seven

people of Karur under the leadership of Shri V.S.N. RamalingaChettiar, mainly to cater to the

financial needs of varied customer segments. The bank was incorporated on November 03,1926 under the Indian Companies Act, 1913 and obtained the certificate to commence

business on November 10, 1926, The Bank obtained its license from RBI in June 1958 and in

August 1958 it became a Scheduled Commercial Bank. At present,with a network of 312

branches and 8 extension counters, spread over 15 states and the union territory of

Pondicherry, the Bank's focus is on customer delight, by maintaining high standards of

customer service and amidst all these new challenges, the bank is progressing admirably. LVB

has a strong and wide base in the state of Tamil Nadu, one of the progressive states in the

country, has a vibrant industrial environment. LVB has been focusing on retail banking,

corporate banking and bancassurance, is rendering high-tech services. To facilitate all the

financial services under one roof, the bank has tied up for a bancassurance pact with LifeInsurance Corporation of India for marketing life insurance products, Bajaj Allianz General

Insurance Co. Ltd for General Insurance distribution business and arrangements for

distributing the mutual fund products of 13 various reputed AMCs. The Bank believes in cost

effective service delivery powered by appropriate technology to enhance value to

customers. All our bank branches are in the state-of-the-art core banking software viz.

Flexcube14

.

RESEARCH REVIEW

Banks have credit policies that guide them in the process of awarding credit. The policy sets

the rules on who should access credit, when and why one should obtain the credit including

repayment arrangements and necessary collaterals. The method of assessment and evaluation

of risk of each prospective applicant are part of a credit control policy (Payle, 1997)9.

A firms credit policy may be lenient or stringent. In the case of a lenient policy, the firm

lends liberally even to those whose credit worthiness is questionable. This minimizes costs

and losses from bad debts but might reduce revenue earning from loans, profitability and cash

flow Simonson and Hempel (1999) 11

, Hsiu-Kwang (1969) 4

and IMF (1997) 5

observe that

sound credit policy would help improve prudential oversight of asset quality, establish a set of

minimum standards, and apply a common language and methodology (assessment of risk,pricing, documentation, securities, authorization, and ethics), for measurement and reporting

of nonperforming assets, loan classification and provisioning.

Chen and Shimerda (1981)2

review 26 articles that classify 100 financial indicators, 65 of

them financial ratios. They report that 41 financial ratios are considered important, given

citation in one more of the 26 articles. In identifying bankrupt firms: Their final model,

however, includes only seven financial indicators, namely, return on investment, debt ratio,

the current ratio, cash position, net working capital turnover, inventory turnover and accounts

receivable turnover. The bankruptcy model for industrial companies adds to these factors a

cash flow measure.

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Sun and Li (2006)12have developed a model to predict companies financial distress, testing

35 financial ratios for 135 pairs of listed companies. Their final distress prediction model

includes net profit growth rate, liabilities to tangible net assets, accounts receivable turnover,

liabilities to cash flow, liabilities to equity market value, total asset turnover and gross profit

margin. Giacomino and Mielke (1993)3propose nine cash flow ratios to evaluate a company's

performance and use than to evaluate US companies in the chemical, food and electronic

industries, calculating three-year averages per industry. The industries were chosen had the

largest number of companies among the Fortune 500. The extensive research on financial

ratios reveals their importance in many important decisions, including financing and

investment decisions.

Sathya Varathan et al (2012)10

intended to study the credit policy and credit appraisal of the

bank process Credit rating methods followed by the bank for different credit ranges are also

analyzed. The bank must bring more transparency in appraisal of the project there should be

explanation for a appraisal of the project that was sanctioned by higher authority. Banksconcerned should continuously monitor loans to identify accounts that have potential to

become non-performing. Nancy Arora et al (2013)8

research paper discussed the Credit Risk

Assessment Model of SBI Bank and check process of the commercial, financial & technical

viability of the project proposed & its funding pattern. The paper studied the movements to

reduce various risk parameters which are broadly categorized into financial risk, business risk,

industrial risk & management risk.

STATEMENT OF THE PROBLEM

A study on the credit appraisal process of capital financing to MSME special reference toLakshmi Vilas Bank Limited (LVB), Chennai. The study has been made as high amount of

loans have been lend to MSME. Also huge amount of NPA have been reported for MSME.

OBJECTIVE OF THE STUDY

To study the credit appraisal system for working capital finance to SMEs.

To understand the credit appraisal procedure followed to grant loans for MSME.

To calculate the disbursement of loans to MSME during the past five financial years.

To examine the reimbursement of loans by MSME to bank.

To explore the causes for default in returning the loans by MSME to bank and suggest

measures to reduce NPA.

To assess the total amount lend by the bank for past 5 years and assist the bank in

improving their financial performance.

SCOPE OF THE STUDY

The study aims at forecasting its future position in few aspects such as disbursement,

reimbursement and NPA of loans.

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The study is done to analyze the procedures to MSME to sanction the grant loans by LVB.

The study also aims to identify the various reasons for delay in repayment and non-

payment of loans by MSME to LVB.

The study aims at analyzing the overall profitability and NPA of the enterprises during the

period of 5 years from 2009 to 2013.

RESEARCH DESIGN

The research design followed for the study is descriptive and analytical in nature as the study

describes the existing facts and figures. The study is based on secondary data like loans to

MSMEs for the last five years. The secondary data was collected with the help of internal

banks websites, journals, magazines and manuals and through personal discussion with the

LVB Bank officials. The collected data were analysed using statistical tools like regression,

correlation, risk analysis etc.

PROCEDURE FOR ASSESSMENT OF CREDIT TO MSME UNITS

A simplified procedure has been adopted for sanction of working capital limits. 20% of the

projected and accepted annual turnover will be extended as working capital limit to MSE

units requiring aggregate fund based working capital limits up to Rs.7.5 crore. Borrower

has to bring in 5% of the accepted turnover as margin. Current Ratio of 1.25 will be

acceptable in such cases.

For MSE units requiring working capital limits above Rs.7.5 crore and up to Rs.10 crore,

the Maximum Permissible Bank Finance (MPBF) method based on Credit MonitoringArrangement (CMA) data will be followed.

For MSE units requiring working capital limits over Rs.10 crore, Cash budget system or

MPBF method, at the option of the borrower, will continue to be followed.

A combined working capital limit will be allowed against the stock and receivables without

any sub limit for CC against receivables. However, different margins will be fixed for stock

and receivables.

Lending will be based on scoring model for advances upto Rs.2 crores. Information

required for scoring model will be incorporated in the application form itself. No individual

risk rating is required in such cases.

If the bank sanction term loan solely or jointly with one or more Banks, working capital

limit will also be sanctioned solely or jointly (in the ratio of term loan) to avoid delay in

commencement of commercial production. It will also be ensured that there are no cases

where term loan has been sanctioned but sanction of working capital facilities is awaited.

The interest payable up to six months after commercial production will be included as part

of the project cost for assessment of credit requirements. Sufficient moratorium period say,

upto six months, after commencement of commercial production, will be allowed for

repayment of principal amount wherever required, to enable the unit establish itself in the

market.

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Margin Norms

No margin is required for loans up to Rs.50000/-

Minimum margin requirements for loans/credit facilities above Rs.50000/- are as under:

A. Term Loans For loans above Rs.50000/- and up to Rs.5 Lac - 10%

For loans above Rs.5 Lac - 15%

In case of Term Loans for acquiring second hand machineries, higher margin may be

stipulated on case-to-case basis.

B. Working Capital Finance

Working Capital against hypothecation of raw materials, work in Process, finished goods

etc.,

Above Rs.50000/- and up to Rs.5 Lac - 15%

Above Rs.5 Lac - 20%

Working Capital against Book Debts/Receivables

Margin to be taken as per our Banks general loan policy document, without any

concession.

C. Minimum cash margin of 10% will be prescribed in respect of non fund based limits

such as LG and LC.

D. For loans under Government sponsored schemes and Banks special credit schemes;

margin will be obtained as stipulated in the scheme even if it is different from the levels

indicated above.

E. In exceptional cases, margins lesser than indicated above can be prescribed with the

approval of the appropriate authority as per powers delegated in banks concession

policy.

Security Norms

1. No collateral security or third party guarantee is required for loans to micro and small

enterprises upto Rs.5 lacs (up to Rs.10 Lacs for loans sanctioned after May 2010). Such

loans will invariably be covered under Credit Guarantee Scheme of CGTMSE

2. Loans above Rs.5 lacs (above Rs.10 Lacs for loans sanctioned after May 2010) and upto

Rs.100 lacs (to micro and small enterprises will also be sanctioned without collateralsecurity or third party guarantee subject to following conditions:

The unit should be eligible to be covered under Credit Guarantee Scheme of CGTMSE

The bank is fully satisfied with regard to viability of project and track record of the

promoter/units.

In all other cases of credit facilities to micro and small enterprises (other than a and b)

suitable collateral security and or third party guarantee will be obtained based on risk

perception and judgment of sanctioning authority.

Even when the loan is eligible to be covered under the Guarantee cover of CGTMSE, if the

borrower prefers to bring acceptable collateral security and third party guarantee, in lieu of

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the CGTMSE Guarantee Cover, the same will be considered. All collateral free loans above

Rs.5 lacs and upto Rs.100 lacs will be brought under cover of Credit Guarantee Scheme of

CGTMSE.

3. As per General Loan Policy Document secured advances can be sanctioned by Branch

Managers upto the level of Scale IV only by taking collateral securities to a minimum

extent of 75% of the credit limits sanctioned. This will be relaxed in respect of MSE

advance and Branch Managers upto the level of Scale IV will be allowed to sanction

secured advances to MSE sector by taking collateral securities to a minimum extent of

60% of the credit limits sanctioned. Such sanctions should be supported by sound

reasoning.

4. All branch Managers can sanction collateral free loans to MSE sector with CGTMSE

Guarantee cover up to their per borrower limits.

5. The Banks calculation method for providing credit is likeTurnover method, Traditional

method, whichever is high will be taken for consideration by the bank authorities forfurther proceedings.

DATA ANALYSIS

Table 1: Disbursement Of Loans For Micro Enterprises

YEAR 2009 2010 2011 2012 2013

No OfCustomerQuarters

MicroAmount

No OfCustomer

MicroAmount

No OfCustomer

MicroAmount

No OfCustomer

MicroAmount

No OfCustomer

MicroAmount

Q1(1-3m)

7 962000 6 467000 2 42000 8 222200 20 2500000

Q2(4-6m)

2 290000 0 0 10 1517000 5 157600 8 306000

Q3

(7-9m)0 0 2 35000 3 132000 15 1621000 4 216000

Q4

(10-12m)5 536000 2 40000 5 583000 12 956099 1 50000

TOTAL 14 179700 10 542000 20 2274000 40 2956899 33 307200

During maximum disbursement of loans are made to the extent in quarter 1 about Rs

25,00,000 in year 2013, quarter 2, Rs 15,17,000 in year 2011, quarter 3, Rs 2,16,000 in year

2013, quarter 4 Rs 9,56,099 in year 2012, The minimum disbursement has taken place to the

extent of Rs 40000 in year 2010. In two years 2009 and 2010 no disbursement has been

happened.

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Table 2: Non Performing Asset By Micro Enterprises

YEAR 2009 2010 2011 2012 2013

AmountQuarters % Amount % Amount % Amount % Amount %

Q1

(1-3m)200680 20.86% 189290 40.53% 0 0.00% 132747 59.74% 1198450 47.94%

Q2

(4-6m)108457 37.40% 0 0.00% 637750 42.04% 87671 55.62% 198326 64.81%

Q3

(7-9m)0 0.00% 0 0.00% 37828 28.66% 665272 41.04% 136144 63.02%

Q4

(10-12m)305857 57.06% 19971 49.92% 291438 49.99% 710076 74.27% 39641 79.28%

TOTAL 614994 34.40% 209261 38.61% 967016 42.52% 1595766 53.97% 1572561 51.19%

The maximum potential NPA of loans in 2009 is Rs 305857 (Quarter 4) , in 2010 Rs. 189290

(quarter 1), in 2011 is Rs 637750 (quarter 2), Rs. 710076 in 2012 (quarter 4), Rs 1198450 in

2013 (quarter 1). The minimum potential NPA has taken place of Rs 37828 in 2012 for

quarter 3 and Rs 39641 in 2013 for quarter 4. During quarter 3 of 2009, quarter 2 & 3 of 2010

NPA has not recorded.

Table 3: Disbursement Of Loans Enterprises To Small Enterprises

YEAR 2009 2010 2011 2012 2013

No OfCustomerQuarters

Micro

Amount

No Of

Customer

Micro

Amount

No Of

Customer

Micro

Amount

No Of

Customer

Micro

Amount

No Of

Customer

Micro

Amount

Q1

(1-3m)1 1500000 6 467000 1 1000000 2 2000000 0 0

Q2

(4-6m)2 1150000 0 0 1 500000 1 1000000 0 0

Q3

(7-9m)0 0 2 35000 0 0 0 0 0 0

Q4

(10-12m)0 0 2 40000 0 0 1 500000 1 1000000

TOTAL 3 265000 10 542000 2 1500000 4 3500000 1 1000000

The table above depicts the loan disbursement for the small enterprises by the bank. Only few

small enterprises have taken the loan from the bank. The maximum amount has been

dispersed in the year 2012 for the Rs. 3500000, in 2013 just Rs 1000000 which is Rs 2500000

lakhs less than previous year has been dispersed to one customer.

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Table 4 : Non Performing Asset By Small Enterprises

YEAR /

Quarters

2009 2010 2011 2012 2013

Amount % Amount % Amount % Amount % Amount %Q1

(1-3m)952568 63.50% 0 0.00% 597148 59.71% 1147355 57.37% 0 0.00%

Q2

(4-6m)66028 5.74% 856660 85.67% 268544 53.21% 574329 57.43% 0 0.00%

Q3(7-9m)

0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%

Q4

(10-12m)0 0.00% 0 0.00% 0 0.00% 372346 74.47% 564764 56.48%

TOTAL1018596 38.43% 856660 85.67% 865692 57.71% 2094030 59.82% 564764 56.48%

The maximum potential NPA of loans in 2009 is Rs 952568 (Quarter 1), in 2010 Rs 856660

(quarter 2), in 2011 is Rs 597148 (quarter 1), Rs 1147355 in 2012 (quarter 1), Rs 564764 in

2013 (quarter 4). The low level of NPA recorded in the year 2009 for the quarter 2 of Rs

66028 and in the year 2013 Rs 564764.

Table 5: Risk Analysis For Micro Enterprises

YEAR LD NPA % of NPA on LD

2009 1788000 614994 34.40

2010 542000 209261 38.61

2011 2274000 967016 42.52

2012 2956899 1595766 53.97

2013 3072000 1572561 51.19

TOTAL 10632899 4959598 220.69

Source: Secondary data

AVERAGE NPA = NPA/5 =220.69/5=44.14

Average NPA for micro enterprises 44.14% i.e. the loans disbursed turn out to be non-

performing asset, which shows that the bank is at risk in collecting the loans lent to MSME.

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Table 6: Risk Analysis For Small Enterprises

YEAR LD NPA % of NPA on LD

2009 2650000 1018596 38.44

2010 1000000 856660 85.67

2011 1500000 865692 57.71

2012 3500000 2094030 59.83

2013 1000000 564764 56.48

TOTAL 9650000 5399742.00 298.12

Source: Secondary data

AVERAGE NPA = NPA/5 = 298.12/5 = 59.62

Average NPA for small enterprise is 59.62% i.e. the loans disbursed turn out to be non-

performing asset, which shows that the bank is at risk in collecting the loans lent to MSME.

FINDINGS

Disbursement of loans to Micro enterprises is maximum during 2013 and minimum during

2010. Reimbursement of loans is maximum during 2013 and minimum during 2009. Non-

performing asset of loans is maximum during 2012 and minimum during 2010. Disbursement

of loans to Small enterprises is maximum during 2012 and minimum during 2010 and 2013.

Reimbursement of loans is maximum during 2013 and minimum during 2009. Non-

performing asset of loans is maximum during 2009 and minimum during 2010.

As non-performing assets (NPA) is high due to loans not returned by Micro and Small

enterprises, the net profit (NP) of LVB is low. The loan disbursement and reimbursement for

2014 is estimated to be Rs 3518093.08 and Rs 141567.72. The non-performing asset by Micro

enterprises for 2014 is estimated to be Rs 2036525.36. The loan disbursement to Small

enterprises for 2014 is estimated to be Rs -1256039.32. The loan reimbursement to Small

enterprises for 2014 is estimated to be Rs 2759015.99. The loan non-reimbursement by Small

enterprises for 2014 is estimated to be Rs.1268304.96.

On an average 44.14%of the loans lent to Micro enterprises would turn out to be NPA. On an

average 59.62% of the loans lent to Small enterprises would turn out to be NPA. The raise inpercentage of NPA with Micro and Small enterprises clearly indicates decreasing profitability

of the bank. Therefore, it is the need of the hour to reduce NPA in order to improve the

profitability status of the bank. From Correlation and Regression analysis it is clear that there

is a least positive correlation between non-performing asset and loan disbursed of the bank,

which implies as the non-performing asset increases, loan disbursed decrease.

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SUGGESTIONS

Loans disbursement of LVB to MSME shall be done only according to the credit appraisal

procedure of the bank.

LVB may adopt zero tolerance procedure for any deviation by MSME from the rules andregulations stated in the credit appraisal procedure.

The creditability of MSME shall be appraised by the bank based on the past transactions

with the enterprises and by conducting status enquires of the borrower.

Bank may strengthen the credit collection system, so that loans lent are collected on time

from MSME.

The recovery system of banks should be improved in order to reduce the NPA percentage

and increase profitability of the bank.

CONCLUSION

This study on the Credit appraisal procedure and disbursement of loans to MSME with special

reference to Lakshmi vilas bank,kodambakkam Branch, Chennai. Credit Appraisal is a

process to ascertain the risks associated with the extension of the credit facility. It is generally

carried by the financial institutions, which are involved in providing financial funding to its

customers. Credit risk is a risk related to non-repayment of the credit obtained by the

customer of a bank. Thus it is necessary to appraise the credibility of the customer in order to

mitigate the credit risk. Proper evaluation of the customer is performed this measures the

financial condition and the ability of the customer to repay back the Loan in future. Generally

the credits facilities are extended against the security know as collateral. But even though the

Loans are backed by the collateral, banks are normally interested in the actual Loan amount to

be repaid along with the interest. Thus, the customer's cash flows are ascertained to ensure the

timely payment of principal and the interest.

REFERENCES

1. B. A. Fida, The Importance of Small and Medium Enterprises (SMEs) in Economic

Development, The Free Library. (2008). Retrieved November 23, 2011.

2. K. H. Chen and T. A. Shimerda, An empirical analysis of useful financial ratios,

Financial Management, 1981, Vol.10 (Issue 1), pp. 51-60.3. D. E. Giacomino and D. E. Mielke, Cash flows: another approach to ratio analysis,

Journal of Accountancy, 1993, Vol. 175, pp. 55-8.

4. W. Hsiu-Kwang, Bank Examiner Criticisms, Bank Loan Defaults, and Bank Loan

QualityThe Journal of Finance, 1969, Vol. 24, pp. 697-705.

5. I.M.F (International Monetary Fund), Banking Soundness and Monetary Policy in a

World of Global Capital Flows, Proceedings of the Seventh Central Banking Seminar,

Jan. 27-31, 1997, Washington D.C.

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6. N. Arora, A Gaur, Babita , Credit Appraisal Process Of SBI: A Case Study Of Branch

Of SBI In Hisar, Arth Prabhand: A Journal of Economics and Management, 2013, Vol.

2 (Issue 1), pp.10-26.

7. D. H. Payle, Bank Risk Management, Working Paper No.272, University of

California., Berkeley Research Program in Finance Working Papers.No:RPF-272. July,

1997.

8. S. Varathan et al., Credit policy and credit appraisal of Canara bank using ratio

analysis, International Multidisciplinary Research Journal, 2012, Vol. 2 (Issue 7), pp.

19-28

9. D. N. Simson and G. H. Hempel, Bank Management, text and Cases, Fifth edition,

John Wesley and Sons Inc., New York, 1999.

10. J. Sun and H. Li, Data mining method for listed companies financial distress

prediction. Knowledge-Based Systems, 2008, Vol. 21 (Issue 1), pp. 1-5.

11.

www. rbi.org.in12. www.LVB.in

13. http://www.msmedi-chennai.gov.in

14. http://www.msmeonline.tn.gov.in

15. www. smallindustryindia.com

Corresponding Author: Dr. R. Akila, 1Professor, Department of Management

Studies, Jeppiaar Engineering College, Rajiv Gandhi Salai, Chennai, India

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