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Project Progress Report

Report No. 1Date: 30/6/2010

Roll No: FN103 Name of the Student: Nisha

Joseph

Project Title: Credit Management in SME & marketing strategies of SBI tofoster financing of SME

Company Name: State Bank Of India, Local Head Office, Bangalore

Faculty Guide: Prof.Sreekumar B.Pillai

General Background of the Project: SMEs form the backbone of any nation

whether developing or developed. One such problem is how the credit is

managed in SME. Finance forms the lifeline of any business & if not

available when needed will lead to various other problems. So it is significant

to understand the business environment & how credit is managed in SMEs.

The study undertaken is also important so as to ascertain the mismanagement

of credit in SME, large enterprises & economy as a whole.

Progress made so far: Personal interviews with the top officials of the bank

as well as the personnels is completed. I have collected addresses ofcustomers who have approached bank for the products to go for a consumer

perception & satisfaction survey.

Action Plan for the next fortnight: Questionnaires are to be prepared for the

customer satisfaction survey and marketing strategies of SBI has to be

analyzed.

Problems/difficulties faced, if any: Reluctance shown by other banks in

disclosing datas for the comparative study.

Signature of the student

Guides Comments:

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Signature of the Company

Guide

Industry Overview - Banking

Bank is a financial institution that borrows money from the public and lends

money to the public for productive purposes. The Indian Banking Regulation

Act of 1949 defines the term Banking Company as "Any company which

transacts banking business in India" and the term banking as "Accepting for

the purpose of lending all investment of deposits, of money from the public,repayable on demand or otherwise and withdrawal by cheque, draft or

otherwise".

The Indian banking system has passed through three distinct phases from the

time of inception. The first was being the era of character banking, where you

were recognized as a credible depositor or borrower of the system. This era

come to an end in the sixties. The second phase was the social banking.

Nowhere in the democratic developed world, was banking or the service

industry nationalized. But this was practiced in India. Those were the days

when bankers has no clue whatsoever as to how to determine the scale of

finance to industry. The third era of banking which is in existence today is

called the era of Prudential Banking. The main focus of this phase is on

prudential norms accepted internationally.The Bank of Bengal, which later

became the State Bank of India. State Bank of India with its seven associate

banks commands the largest banking resources in India.The next significant

milestone in Indian Banking happened in late 1960s when the then Indira

Gandhi government nationalized on 19th July 1949, 14 major commercial

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Indian banks followed by nationalisation of 6 more commercial Indian banks

in 1980.

The stated reason for the nationalisation was more control of credit delivery.

After this, until 1990s, the nationalised banks grew at a leisurely pace ofaround 4% also called as the Hindu growth of the Indian economy.After the

amalgamation of New Bank of India with Punjab National Bank, currently

there are 19 nationalised banks in India.In the early 1990s the then

Narasimha rao government embarked a policy of liberalization and gave

licences to a small number of private banks, which came to be known as New

generation tech-savvy banks, which included banks like ICICI and HDFC.

This move along with the rapid growth of the economy of India, kick started

the banking sector in India, which has seen rapid growth with strong

contribution from all the sectors of banks, namely Government banks, Private

Banks and Foreign banks.. The new wave ushered in a modern outlook and

tech-savvy methods of working for traditional banks.All this led to the retail

boom in India. People not just demanded more from their banks but also

received more. Currently, India has 96 scheduled commercial banks (SCBs) -

27 public sector banks (that is with the Government of India holding a stake),

31 private banks (these do not have government stake; they may be publicly

listed and traded on stock exchanges) and 38 foreign banks. They have a

combined network of over 53,000 branches and 49,000 ATMs. According to

a report by ICRA Limited, a rating agency, the public sector banks hold over

75 percent of total assets of the banking industry, with the private and foreign

banks holding 18.2% and 6.5% respectively

Company Profile - STATE BANK OF INDIA

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State Bank of India is the nation's largest and oldest bank. Tracing its roots

back some 200 years to the British East India Company (and initially

established as the Bank of Calcutta in 1806), the bank operates more than15,000 branches within India, where it also owns majority stakes in six

associate banks. State Bank of India (SBI) has more than 80 offices in nearly

35 other countries, including multiple locations in the US, Canada, and

Nigeria. The bank has other units devoted to capital markets, fund

management, factoring and commercial services, credit cards, and brokerage

services. The Reserve Bank of India owns about 60% of State Bank of India

The traditions of the past continued to be upheld even to this day as the State

Bank years itself to meet the emerging challenges of the millennium.

THE PLACE TO SHARE THE NEWS ...

SHARE THE VIEWS

Togetherness is the theme of this corporate loge of SBI where the world of

banking services meet the ever changing customers needs and establishes a

link that is like a circle, it indicates complete services towards customers. The

logo also denotes a bank that it has prepared to do anything to go to any

lengths, for customers.

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The blue pointer represent the philosophy of the bank that is always looking

for the growth and newer, more challenging, more promising direction. The

key hole indicates safety and security.

SME

Small and Medium Enterprises (SMEs) are a key factor in the economic

development and innovation. The core of the political and economic

transformation of any country is the creation of the private sector, the

development of entrepreneurship and creation of SMEs.

They are considered to be one of the principal driving forces in economic

development. SMEs stimulate private ownership and entrepreneurial skills,

they are flexible and can adapt quickly to changing market demand and

supply situations, they generate employment, help diversify economic activity

and make a significant contribution to exports and trade. SMEs also play an

important role in innovation and the high-tech business, due to their flexibility

and creativity many of them became large businesses.

SBI in SME

It is needless to stress the important role that the SME sector plays in the

overall growth and vibrancy of the Indian economy. To promote their

improved contribution and enhance the momentum of growth , the State Bank

of India with more than Rs.1,00,000 crores of SME advances will continue toplay a proactive and supportive role The numerous customized products

designed by the bank for the various customer groups in the SME sector help

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our operating and marketing functionaries offer appropriate solutions to the

SME units for their financial requirements.

Product Profile

LIABILITY PRODUCTS:

Power Pack & Power Gain Current Accounts

SBI Shakti Current Account

Sahaj Current Account

Power Jyoti Current Account

Surabhi Deposit Account

TRANSACTION PRODUCTS:

Multi City Cheques

Inter Core Transactions

B2B Payment Solutions

CREDIT PRODUCTS:

SME Smart Score

Rice Mills Plus

SME Care

SME Help

Traders Easy Loan

SBI Micro Loan for Micro Enterprises

SBI SME Collateral Free Loans

Tie up with Apollo Health and Lifestyle Ltd.

SBI Small & Micro SMILE

Artisan Credit Card

SME Credit Card

Swarojgar Credit Card

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Cyber Plus

SME Credit Plus

Stand by Line of Credit

General Purpose Term Loan for SSI Sector

NB. The highlighted products are the fast moving products of SBI for

SME sector & those are the ones on which I have undertaken the study

RESEARCH METHODOLOGY

Research Methodology

This Section includes the methodology which includes. The research

design, objectives of study, scope of study along with research

methodology and limitations of study etc.

.Objectives of the study

Research has been carried out to achieve the following objectives:

To study the performance of loan disbursement of selected credit

schemes of SBI in comparison to other selected banks.

To find the effectiveness of the schemes provided by SBI to various

SME, SSI units.

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To explore new strategies for enhancement of growth with respect to

products designed for SME sector in SBI

Data Collection Method

To fulfill the objectives of my study, I have taken both into considerations viz

primary & secondary data.

Primary data: Primary data has been collected through personal interview by

direct contact method. The method which was adopted to collect the

information is PersonalInterviewmethod.

Personal interview and discussion was made with manager and other

personnel in the organization for this purpose.

Secondary data: The data is collected from the Magazines, Annual reports,

Internet, Text books.

The various sources that were used for the collection of secondary data are

o Internal files & materials

o Websites Various sites like

www. sharekhan.com

www.indiainfoline.com

www.sbi.co.in

www.investopedia.com

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www..wikepedia.com and other site

o Information collected from customers through

questionnaires

Sample Size and Sample Design

The banks studied were:

State Bank of India

HDFC Bank

Federal Bank

Further four types of products of these selected banks are chosen

SME Smart Score

SME Credit Card

Traders Easy Loan

SME CFL

Technique of Analysis

For making analysis of collected data on the study statistical techniques of

Compound Annual Growth Rate (CAGR), mean, standard deviation and Karl

Pearsons correlation have been applied with the help of the leading SPSS

software.

Limitations of the study

Geographical scope of this study was limited to Bangalore city and

does not represent the whole of state.

Sample is not representative of organized / unorganized sector across

the nation.

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The study is only limited to three banks which may result difficulty in

the generalisation and interpretation of results

Ignorance and reluctant attitude of customers was also a major

limitation in the study. The authenticity of data collected is solely dependent on the

information provided by the respondent. Their views may be biased or

information may contain factual errors.

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