final copy samiullah
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ACKNOWLEDGEMENT
I am greatly thankful to the almighty Allah, with the grace of whom my ProjeWork completedsuccessfully. Every work involves the contribution of lots of people but it is neasy to mention
each and everybodys name but through this acknowledgement I have tried thank all thosepeople who have directly or indirectly helped me in completion of my projec
I wish to avail this opportunity to express my profound pleasure and immengratitude to thosewho helped me during the preparation of this project, without whose supporproject wouldnot see the light of the day.
It is my first and foremost duty to express my profound sense of gratitude t
Riaz Ahmad Mir(Sr.Executive Manager, Zonal Office J&K Bank North Kashmir) for providing aopportunity toundertake summer training in their esteem organization.
I owe my deep debt of gratitude to my other Staff members of Zonal OfficeTJammu & KashmirBank LTD Srinagar for providing me guidance, information and valuablesuggestion from time totime as well as encouragement during completion of my project work
I would be failing in my duty if I dont mention the cooperation extended to Mr Bateshwar(Lecturer) ofSASIIT&RMohali and my guide and without whose constantguidance, propermotivation and undivided attention. I wouldnt have completed the mammo
task.
I am beholden to My Parents & My Brothers & Friends, whose blessing andaffection have alwaysbeen a source of inspiration for me and whose touch have enlightened my hand stiulated me while
I was preparing this Project report
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I am also thankful to Mr. Javid ah.Bhat (Owner/Manager of sports syndicatemanufacturing cricket bats located in Industrial estate area at Amargrah SopKashmir for sharing with me, his immenseexperience & dealings with the JK bank.
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SASIIT&R
MOHALI PUNJAB
SUMMER TRAINING PROJECT TITLED
FINANCING SMALL SCALE INDUSTRIES AND CUSTOME
SATISFACTION WITH THIS REGARD
BY
The Jammu & Kashmir Bank LTD.
Under Supervision of :
MR. BATESHWARSubmitted By:
SAMIULLAH BHAT
MBA-3RD
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CONTENTS
SASIIT&R MOHALI
S.no. Topic Page . no.1. COMPANY PROFILE 02
2. HISTORY OF THE ORGANISATION 05
3. BOARD OF DIRECTORS 06
4. ACHEIVMENTS OF THE BANK 12
5. INTRODUCTION OF THE STUDY 22
6. RESEARCH METHODOLOGY 23
7. OBJECTIVES OF THE RESEARCH 25
8. INTRODUCTION OF THE SMALL SCALEINDUSTRIES
26
9. RBI GUIDELINES TO BANKS FOR FINANCING
SSIs
29
10. JK BANK FINANCING FOR SSIs 37
11. CODE OF BANKS COMMITMENT TOMICRO & SMALL ENTERPRISES
42
12. BANKS STEPS TOWARDS THE IMPROVEMENTOF SMEs
56
13. ANALYSIS & INTERPRETATION 58
14. FINDINGS 66
15. SUGGESTIONS & RECOMMENDATIONS 68
16. LIMITATIONS OF THE STUDY 7017. QUESTIONNAIRE 71
18. BIBLIOGRAPHY 75
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COMPANY PROFILE
The Jammu and Kashmir Bank has become ahousehold name not only in this part of the country but is a well known banking institute all over
the country. In a span of about seven decades this bank has grown from a small regional bank
into a premiere banking institute of the country. The Jammu and Kashmir Bank Ltd.
Incorporated on October 1st, 1938 commenced business on July 4th, 1939. From a small
beginning the bank has grown to become a giant with a wide network of branches spread over
the length and breadth of India. It was declared as A Class Bank by RBI in 1976. The bank is
regulated by Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI) as
well, as the bank is listed both on National Stock Exchange (NSE) and Bombay Stock Exchange
(BSE). Till 1998 the bank was a state owned bank till it came with its Initial Public Offering in
the same year. Although the state owns 53% capital it is still a private sector bank. The bank has
an uninterrupted profitability and dividends for the last four decades. The bank has been rated
P1+ by Standard and Poor-CRISIL connoting highest degree of safety. The bank is only one of
its kind as the only private sector bank designated as an agent of RBI for banking. It also collects
taxes pertaining to Central Board of Direct Taxes in Jammu and Kashmir. Jammu and Kashmir
bank is also the sole banker and lender of last resort to the Government of J & K. The bank has
strength of 558 branches, the latest being opened at Kunzer in North Kashmir on 11 th April 23,
2008. The bank has recently passed the magic figure of being a billion dollar company.The
Jammu and Kashmir Bank Ltd. is the first state owned bank of the country and 53% of the equity
is held by the Govt. of J&K. The bank has a unique distinction of being banker to the J&K State
Govt. and has also been appointed by RBI as its agency in J&K, responsible for carrying general
banking business of the Central Government and collection of taxes pertaining to the Central
board of Direct Taxes.
The landmark achievements in the diversification of the Banks functions include the
sponsoring of the two Regional Rural Banks , permission for dealing in the foreign exchange,
holding the lead bank responsibilities in eight of the fourteen districts in J&K, Governorship of
State Level Export Promotion Committee (SLEPC). The bank is the only one in non-nationalized
sector, having been entrusted With such assignments and has come up to the expectations of RBI
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and other agencies, like CBDT.The bank has been swift in responding to the need for technology
adaptations in meeting its commitment to customers and offers the best of services and a wide
range of products. The bank has been forerunner in responding to the need for technology up-
gradation in meeting its commitment to the customer to offer the best of services and wide range
of products. The bank is investing in a big way in information technology.
Nearly 400 branches have been either or partly computerized covering 90% of the total
business of the bank. The bank has already installed around 180 ATMs at vital installations of
the country. The ATM share interconnected and thus provided the customer convenience and 24
hour banking facilities. Bank has also introduced Global Access Card in collaboration with
Master Card International recently, thus increasing the acceptability of card to all maestro
locations throughout the globe. Bank has also commissioned Anywhere Banking facilities ataround 103 branches through the country. The bank has already made available the EFT and E-
mail facilities at all of its computerized branches and also Tele-banking facilities at most of these
branches. The bank has launched Internet Banking with wide appreciation. The bank holds the
distinction of being only bank in providing these services in the state of Jammu & Kashmir. The
bank is the fastest growing bank in India with a network of more than 577 branches spread
across the country offering world class banking products and services to the masses. Today bank
has a status of value driven Organization and is always working towards building trust with
Shareholders, employees, customers, borrowers, regulators and other diverse Stakeholders, for
which it has adopted a strategy directed to developing a sound foundation of relationship and
trusted aimed at achieving excellence, which of course, comes from the womb of good Corporate
Governance. Jammu and Kashmir Bank considers good Corporate Governance as the sine quo
non of a good banking system and has adopted a policy based on all the four pillars of good
Governance- transparency, disclosures, accountability, and value, enabling it to practice
trusteeship, transparency, fairness and control, leading to stakeholders delight, enhanced
shareholder value and ethical corporate citizenship. It also ensures that bank is managed by an
independent and highly qualified board following best globally accepted practices, transparent
disclosures and empowerment of shareholders, besides also ensuring that shareholder
shareholders aspirations and societal expectations are met, following principles of managements
executive freedom to drive the bank forward without undue restraints but within the framework
of effective accountability. The excellence achieved by the bank in its operations stemming from
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the roots of voluntarily good Governance has not gone unrecognized and bank has recently
bagged three very prestigious awards for following fair business practices and commitment to
social obligation.Bank has touched business turnover of US$10 Billion by which the impact on
the economy of Jammu & Kashmir State that has gross domestic product of US$ 6 billion is
enormous. Bank is in a strong position to meet the challenges of the future wherein due to
liberization the foreign banks will be able to freely expand their branch network as well as
acquire Indian Banks after March 2009. Banks strategy pressed ahead with the customer-,
innovative methods to optimize business processes consolidate IT systems and simplify customer
services, while complying with regulatory norms and enhancing security. By delivering on these
banks will continue to generate significant cash flow, and that will allow it to radically change
business and invest in the future. Bank is doing this by focusing on customers need and throughinvests in new distribution channels. Bank will also continue to improve cost efficiency, by
radically developing business and by embracing e-commerce. To do this, bank will explore new
business opportunities, invest heavily in new markets and also improve business infrastructure
and processing efficiency.Bank will continue to improve operational efficiency, building on
success to date, the bank will not hesitate to reinvest these savings in new propositions, new
initiatives and new business especially if they allow bank to exploit profitable growth
opportunities .Bank is confident to continue to be a winner.
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HISTORY OF THE ORGANISATION
Till 1920-30, traditional money lenders performed entire banking in the State of Jammuand Kashmir too, at exorbitant rates. At the same time, some banks functioned but at a very
limited scale, such as Punjab National Bank, Grindlays Bank, and Imperial Bank of India. The
role of these banks was reduced to the acceptance of deposits, as they not grant loans and
advances to the people of the State owing to the statutory limitations. Under this scenario, banks
could not ameliorate the financial and social position of the State. To overcome this critical
situation the then Maharaja of State conceived an idea of setting up of a State Bank in the State.
After prolonged exercises and deliberations the assignment for establishment of The Jammu
and Kashmir Bank Limited was given to the late Sir Sorabji N.Pochkhanwala, the then
Managing Director of the Central Bank of India. Mr. Pochkhanwala formulated a scheme on 24-
09-1930,suggesting establishment of a semi State bank of India with participation in capital by
State and the public under the control of State Government. Thus, the bank was formally
incorporated on 1st of October 1938 and commences its business from 4th of July 1939 at its
Registered Office, Residency Road, Srinagar, Kashmir.The Jammu and Kashmir Bank Limited
has been the first of its nature and composition as a State owned bank in the country. The State
Government besides contributing half of the issued capital also appointed it as its bankers for
general banking and treasury business. In its formative years, the Bank had to encounter several
serious problems, particularly around the time of independence, when out of its total of 10branches two branches of Muzaffarabad and Mirpur fell to the other side of Line of Control (now
Pakistan Administrated Kashmir) along with cash and other assets in 1947. However, the State
Government came to its rescue with the assistance of Rs.6 lakhs to meet the claims. However,
the Bank steadily overcame its difficulties and kept growing. Following the extension of Central
laws to the State of Jammu and Kashmir the bank was defined as a Government Company as per
the provisions of Indian Companies Act 1956. The bank had its first full time Chairman in 1971,
following the social central measures in banks. The year 1971 was a turning point for the Bank
on conferment of scheduled bank status and witnessed remarkable progress in all the vital fields
of operations. Reserve Bank of India (RBI) declared the bank as A class bank. In recognition
of dominant role and exalted performance. RBI appointed the bank as its agent for performing
the general banking business of the Central Government especially in maintaining currency chest
and collection of taxes.
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BOARD OF DIRECTORS
Mr. Mushtaq Ahmed and Mr. Abdul Rauf Fazili, Executive Directors of the Bank retiredfrom the services of the Bank with effect from 29th Feb. 2008 and 30th April 2008 respectively
on attaining the age of superannuation. Mr. Umar Khurshid Tramboo, Director resigned from
Directorship of the Bank w.e.f 3rd June, 2008. Directors place on record their deep sense of
appreciation for the valuable services rendered by Mr. Mushtaq Ahmad, Mr. Abdul Rauf Fazili
and Mr. Umar Khurshid Tramboo during their tenure as directors of the Bank.
Pursuant to the approval accorded by the Reserve Bank of India, Mr.Ashok Kumar
Mehta and Mr. Abdul Majid Mir were appointed as Executive Directors on the Banks Board
w.e.f. 1st May, 2008. With a view to broad base the Board, eminent personalities - Mr.
Mayashanker Verma and Mr. G P Gupta were re-appointed as additional Directors of the Bank
w.e.f. 9th June 2008. The Bank has immensely benefited from their rich and varied experience.
Mr. B. L. Dogra Director retires by rotation at the ensuing Annual General Meeting in
accordance with Article 78 of the Articles of Association of the Bank and Provisions of the
Companies Act, 1956 and being eligible, offer himself for reappointment.
Name of the Board of Directors1. Mushtaq Ahmad Chairman & CEO2. M S Verma Director3. G P Gupta Director4. B B Vyas, IAS Director5. Ashok Kumar Mehta Executive Director6. Abdul Majid Mir Executive Director7. B L Dogra Director
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Description of CEO:
StatementValued shareholders and distinguished guests, On behalf of the J&K Bank fraternity, it is
my privilege to welcome you to the 69th Annual General Body meeting of the Bank. It is a sheercoincidence that exactly today, I complete two years as Chairman and Chief Executive. It hasbeen a very satisfying and enriching experience for me to work at the Bank. In the last two years,the Bank has registered a 140 per cent increase in profits. We have seen a 108 per cent increase inthe rate of return on your equity, thereby showing a vast improvement in the Banks efficiency to
generate profits from every invested rupee.
Our predecessors have handed down a national brand to us. It is for us to now contributeour bit and make it a global brand. To build a global brand we need to do two things go globalphysically and second, more importantly, have a unique business model, product offering andservice standards, all of which are globally recognized .
We have taken initial steps to achieve the first. As of today, after the state government, oursecond largest shareholders are Foreign Institutional Investors, with a combined stake of almost36 per cent. Some of the biggest names in the world figure in the sixty plus funds that haveinvested in the Bank. The list is truly international, with funds from USA, Europe, Singapore,
Japan, Sweden, Mexico and Spain, having investments valued at more than $300 million in theBank .
As a next step in this direction, it is our plan this year to raise money abroad. We will offerGlobal Depository Receipts and list the Bank in international capital markets. This will be alandmark in our illustrious history. .
To do this we have to work out processes, products and procedures that are unique to theJ&K Bank. It has to be the J&K Bank way of doing business. Within our industry and closerhome, the Bangladesh Grameen Bank and Bank Danamon have become global names. We dontwant to replicate their business model but we do want to emulate their uniqueness of doing
business.
I can say with some satisfaction that we have already embarked on this journey. Itpromises to be a hard but eventful one. For the last two years we have been on a voyage of self-discovery of the institutional self of J&K Bank. Let me quote to you from the originalmemorandum drafted in 1930 by Sir S N Pochkhanawalla, Managing Director of the Central Bankof India, who was commissioned by His Highness Maharaja Hari Singh to work out a scheme forsetting up what is now known as J&K Bank: In my opinion the Bank should be an organ of
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public interest and not an instrument for . We have changed the business model and made itrelevant to the people of the state. But that was the easier part. Now we have to change ourattitude and mind-set.
The most important change is to move away from trying to govern to trying to serve. Ourvalues tend to emphasize rigid hierarchies and power structures, when we should be focusing onegalitarianism and individual worth. We have to eschew the common top-down hierarchical style,and instead emphasize collaboration, trust, empathy and the ethical use of power. The traditionalautocratic and hierarchical modes of functioning have to yield to a newer model of collaboration.We have, in the years gone by, spoken much about our achievements and ourselves;now we must,as an organisation, lead the campaign to listen; listen to our customers and our constituents.
Our mission is to empower the people of J&K. Within the framework of this approach, wecannot now conceive strategies for the Bank, which have little or no connection with the people ofJ&K. In the past we have tried to maximize profits without directly linking it to the impact on the
welfare of the society as a whole. What we need to do now is to combine the sensibility of thesocial enterprise with the form of a for-profit business.
Our overriding mission as a corporation is to use our core competency to serve andempower the people of the state in general, and entrepreneurs in particular, rather than servingthem as an afterthought
Within the empowerment framework, the Bank is starting a program, EntrepreneuringPeace by funding, and collaborating with entrepreneurs starting private, for-profit ventures.Innovate, collaborate and incorporate is the motive of this initiative. The Entrepreneuring Peaceinitiative will serve as an operational framework that sets the context for each individual to
contribute to the process of peaceful development within his own area of work. This will besustainable because it increases his stake in the system. With our programs and your participation,we will not just empower and rebuild our community, but will also build a socio-financialmovement.
In making these changes possible, I want to thank, first and foremost, the stategovernment. While there is absolutely no intrusion, there has been tremendous cooperationextended by the government to the Bank in facilitating its plans new or old. I can say withcomplete confidence, that J&K Bank is a great example of public-private cooperation where thebest of both worlds is combined. For this, I have to complement the sagacity of the stategovernment.
Chairman's Profile Name and Age (Years) Haseeb A. Drabu (47)
Designation Nature of duties Chairman & CEO
Remuneration Rs 28,08,000
Qualification M & D.Phil EconomicsExperience (years) 17 yearsLast employment Economic Advisor to Govt, of J&K
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ACHIEVEMENTS OF THE BANK
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CAPITAL & RESERVES
The Bank was incorporated with the authorized capital of two lakh shares of Rs. 25/- each
amounting to Rs. 50.00 lacs. The first value issue comprised 80,000 shares amounting to Rs. 20.00 lac
A total number of 62716 shares of the value of Rs. 15, 67,900 were authorized and Rs. 7.65 lacs paid u
as on 30.06.1940. The authorized capital was subsequently reduced to nearly 1 lacs shares amounting t
Rs. 30.00 lacs in 1958 and later enhanced to 4 lacs shares in 1992 and 80 lacs shares in 1993 amount t
Rs. 10.00 crores and Rs. 20.00 crores respectively. The issued capital of Rs. 28.00 lacs shares amount t
Rs. 7.00 crores stands subscribed and paid up as on March 31, 1997.
In order to further strengthen its capital base and related ratios, Bank floated its maiden publi
issue in March 1998, which received overwhelmed response and was subscribed by 2 times. Ti
March 2005, the share capital stood at 48.49 crores.The Banks net worth as at 31st March 2009 was R
2308.92 crores comprising of paid up capital of Rs 48.49 crores, share warrants of Rs28.10 crores an
reserves of Rs 2232.34 crores. An amount of Rs 272.09 crores was transferred to reserves from thprofits earned during FY08.PROFIT
Except for the first year of business, when Bank suffered a loss of Rs. 0.07 lacs as o30.06.1941, the Bank has a consistent track record of growth and profitability. In just the second year o
commencement of business, it recorded an impressive profit of Rs. 0.48 lacs and wiped out the losses o
previous year. With excellent fund management, the profits of the Bank jumped from Rs.177 lacs i
1990 to Rs. 1251 lacs in March 1994 after providing for all statutory and mandatory provisions. Durin
the last eleven years the net profit of the Bank have increased at impressive rate and were recorded aRs. 176.84 crore in 2005-06 and Rs. 276.49 crore for the year 2006-07 registering an impressive growth
of 55.The Bank posted a net profit of Rs 360.00 crores for the year, which is 31.15% higher than R
274.49 crores in the previous year. The operating profits were up by over 17% at Rs.651.84 Crores a
the end of March 2008 as compared to previous year.
INCOMEThe Bank continued to register an impressive year-on-year improvement in earning
During the year, the total income has increased by 30.10% to Rs 2679.24 crores from Rs 2059.54 crorein the previous year.
NET INTEREST INCOME / OTHER INCOME
During the year our Net Interest Income increased to Rs 810.44 registering a growth of 5.55%
The other income of the Bank has incraged by 04.80 crores, thereby regarding a healthing growth o53%. Other income earned by the bank during this fiscal is Rs 245.01 crores. as against 160.21 crorefor the previous year.
SASIIT&R MOHALIVISION
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To catalyse economic transformation and capitalize on growth. Our vision is to engender
and catalyse economic transformation of Jammu and Kashmir and capitalize from the
growth induced financial prosperity thus engineered. The bank aspires to make Jammu
and Kashmir the most prosperous state in the country, by helping create a new financial
architecture for the J&K economy, at the center of which will be the J&K Bank.
To provide the people of J&K international quality financial service and solutions and to
be a super-specialist bank in the rest of the country.
INTRODUCTION OF THE STUDY
Executive Summary :
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MISSIO
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The project was done to know the compatibility between J&K bank & SSIs regarding financing
of SSIs.
The project was done to know the present expectations of SSIs from J&K bank .
The project was done to know the current arrangements/ schemes made by the bank to help
SSIs
RESEARCH METHODOLOGY
TOOLS FOR CONDUCTING STUDY1. Primary Data
Questionnaires
Direct interaction with SSI unit employees
Structural observation
Projective Techniques
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2. Secondary data
Company broachers
Pamphlets
Internet
Research Instrument:
A structured interview type of questionnaire was used containing the following mix of questions.
Close end questions
a. Dichotomous type
b. Multiple choices
Close-end questions specify all possible answers and provide answers that are easier to interpretand tabulate. They can be grasped quickly and answered rapidly requiring the minimum possible
time of the respondents.
Open end questions : Open-end questions allow respondents to answer in their own
words and often reveal more about how people think. They were used to determine reasons for
prior chances or to obtain suggestions.
Research Design
A research design is the detailed blue print used to guide a research study towards its objectives.
It helps to collect, measure and analysis of data.
Type Of Research
The study undertaken is ofExploratory Researchin nature.
Exploratory research studies are those which are concerned with new hypothesis.
Nature Of Research
The study undertaken is of Quantitative in nature.
It is structured, standardized, question based interviews.
Type Of Question
The type of questions asked during the study are Straight forward and limited
probing.
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Type Of Questionnaire
The type of questionnaire used during the study is Structured and Formalized.
Type Of Analysis: The type of analysis carried out during the study is
Statistical Analysis.
Sampling Plan:
1. Population:
The populations interviewed in the research are employers (also employees) of SSIs
b) Sample Size:
Owing to the constraints of time & budget, the sample size was restricted to 60Industrialists of SSIs
c) Sample Extent:
The sample extent is limited to Baramulla city.
f) Sample Duration:
The sample duration was betweenJune 13 and 20TH AUG 2011
g) Sampling Technique:
The sampling technique wasSimple Random sampling.
i) Statistical Tool Used for Data Analysis
Pi-chart Bar-char Mean
Objectives of the Research:
Primary objectives:
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1. To know how J&K bank finances for SSIs.
2. To know the level of satisfaction of SSIs holders with J&K bank regarding the
financial help
provided by the bank.
3. To find out the present requirements of financing products by SSIs.
Secondary objectives:
1. To know what does SSI means.
2. To know about RBI guidelines to bank's regarding financing SSIs.
3. To know about the awareness of employers of SSIs regarding financing
products of the bank.
INTRODUCTION TO SMALL SCALE INDUSTRIES
SMALL SCALE INDUSTRIES
Small scale industrial units are those engaged in the manufacture, processing or
preservation of goods and whose investment in plant and machinery (original cost) does not
exceed Rs. 1 crore. (except in respect of certain specified items under hosiery, hand tools, drugs
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and pharmaceuticals, stationery items and sports goods where this investment limit has been
enhanced to Rs.5.00 crore. However loan to SSI sector will be categorized under priority sector.)
Subject to the condition that the unit is not owned, controlled or subsidiary of any
other industrial undertaking)
Explanation: For the purpose of this note:- the expression "controlled by any other
industrial undertaking" means as under:-
i. where two or more industrial undertakings are set up by the same person as a
proprietor, each of such industrial undertakings shall be considered to be controlled by
the other industrial undetaking or undertakings,
ii. where two or more industrial undertakings are set up as partnership firms under
the Indian Partnership Act, 1932 (1 of 1932) and one or more partners are common
partner or partners in such firms, each such undertaking shall be considered to becontrolled by other undertaking or undertakings,
iii. where industrial undertakings are set up by companies under the Companies Act,
1956 (1 of 1956), an industrial undertaking shall be considered to be controlled by other
industrial undertaking if:-
a. the equity holding by other industrial undertaking in it exceeds twenty four
percent of its total equity; or
b. the management control of an undertaking is passed on to the other industrial
undertaking by way of the Managing Director of the first mentioned undertaking being
also the Managing Director or Director in the other industrial undertaking or the majority
of Directors on the Board of the first mentioned undertaking being the equity holders inthe other industrial undertaking in terms of the provisions of the following items (a) and
(b) of sub-clause (iv);
(iv) the extent of equity participation by other industrial undertaking or undertakings in the
undertaking as per sub-clause (iii) above shall be worked out as follows:-
a. the equity participation by other industrial undertaking shall include both foreign
and domestic equity;
b. equity participation by other industrial undertaking shall mean total equity held in
an industrial undertaking by other industrial undertaking or undertakings, whether small
scale or otherwise, put together as well as the equity held by persons who are Directors
in any other industrial undertaking or undertakings even if the person concerned is a
Director in other Industrial Undertaking or Undertakings;
c. equity held by a person, having special technical qualification and experience,
appointed as a Director in a small scale industrial undertaking, to the extent of
qualification shares, if so provided in the Articles of Association, shall not be counted in
computing the equity held by other industrial undertaking or undertakings even if the
person concerned is a Director in other industrial undertakings or undertakings;
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(v) where an industrial undertaking is a subsidiary of, or is owned or controlled by, any other
industrial undertaking or undertakings in terms of sub-clauses (i); (ii); or (iii) and if the total
investment in fixed assets in plant and machinery of the first mentioned industrial undertaking
and the other industrial undertaking or undertakings clubbed together exceeds the limit of
investment specified in paragraphs (1) or (2) of this notification as the case may be, none of these
industrial undertakings shall be considered to be a small scale or ancillary industrial undertaking.
Tiny Enterprises:
The status of Tiny Enterprises is given to all small scale units whose investment in
plant & machinery is upto Rs. 25 lakhs, irrespective of the location of the unit.
Ancillary Industrial undertaking:
An industrial undertaking which is engaged or is proposed to be engageg in the
manufacture or production of parts , components , sub-assemblies , tooling or intermediates , orthe rendering of services is termed as Ancillary industrial undertaking. The Ancillary industrial
undertaking has to supply or render or propose to supply or render not less than 50% of
production or services , as the case may be , to one or more other industrial undertakings. The
investment in plant and machinery , whether held on ownership terms or on lease or on hire
purchase, should not exceed Rs10 million .
Small Scale Service & Business Enterprises (SSSBEs):
Industry related service and business enterprises with investment upto Rs. 10 lakhs infixed assets, excluding land and building will be given benefits of small scale sector. Forcomputation of value of fixed assets, the original price paid by the original owner will beconsidered irrespective of the price paid by subsequent owners.
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SASIIT&R MOHALI
Small Scale Industries may sound small but actually plays a very important part in theoverall growth of an economy. Small Scale Industries can be characterized by the unique featureof labor intensiveness. The total number of people employed in this industry has been calculated
to be near about one crore and ninety lakhs in India, the main proponents of Small scaleindustries.
The importance of this industry increases manifold due to the immense employment generatingpotential. The countries which are characterized by acute unemployment problem especially putemphasis on the model ofSmall Scale Industries. It has been observed that India along with thecountries in the Indian continent have gone long strides in this field.
In calculating the value of plant and machinery, thefollowing shall be excluded, namely:- (i) the cost of equipments such astools, jigs, dies moulds and spare parts for maintenance and the cost of consumable stores; (ii)
the cost of installation of plant and machinery; (iii) the cost of research and developmentequipment and pollution control equipment; (iv) the cost of generation sets and extra transformerinstalled by the undertaking as per the regulations of the State Electricity Board; (v) the bankcharges and service charges paid to the National Small Industries Corporation or the State SmallIndustries Corporation; (vi) the cost involved in procurement or installation of cables, wiring,bus bars, electrical control panels(not those mounted on individual machines), oil circuitbreakers or miniature circuit breakers which are necessarily to be used for providing electricalpower to the plant and machinery or for safety measures; (vii) the cost of gas producers plants'(viii) transportation charges(excluding of sales-tax and excise) for indigenous machinery
Advantages associated with Small Scale Industries
This industry is especially specialized in the production of consumer commodities. Small scale industries can be characterized with the special feature of adopting the laborintensive approach for commodity production. As these industries lack capital, so they utilizethe labor power for the production of goods. The main advantage of such a process lies in theabsorption of the surplus amount of labor in the economy who were not being absorbed by thelarge and capital intensive industries. This, in turn, helps the system in scaling down the extentof unemployment as well as poverty.
It has been empirically proved all over the world that Small Scale Industries are adept indistributing national income in more efficient and equitable manner among the various
participants in the process of good production than their medium or larger counterparts. Small Scale Industries help the economy in promoting balanced development ofindustries across all the regions of the economy. This industry helps the various sections of the society to hone their skills required forentrepreneurship. Small Scale Industries act as an essential medium for the efficient utilization of the skillsas well as resources available locally.
Small Scale Industries enjoy a lot of help and encouragement from the government through protecting these industries from the direct competition of the large scale ones, provision ofsubsidies in the form of capital,lenient tax structure for this industry and many more
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RBI Guidelines To Banks For Financing SSIs
Brief introduction on Priority Sector Lending:
At a meeting of the National Credit Council held in July 1968, it was emphasised that
commercial banks should increase their involvement in the financing of priority sectors, viz.,
agriculture and small scale industries. The description of the priority sectors was later formalised
in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to
advances to the Priority Sectors constituted by the Reserve Bank in May 1971. On the basis of
this report, the Reserve Bank prescribed a modified return for reporting priority sector advances
and certain guidelines were issued in this connection indicating the scope of the items to be
included under the various categories of priority sector. Although initially there was no specific
target fixed in respect of priority sector lending, in November 1974 the banks were advised toraise the share of these sectors in their aggregate advances to the level of 33 1/3 per cent by
March 1979.The need for primary (urban) co-operative bank (UCBs) for providing credit to
priority sectors had been examined by the Standing Advisory Committee for UCBs constituted
by Reserve Bank in May 1983. The recommendations of the committee were accepted by
Reserve Bank and accordingly the targets for lending to priority sector and weaker sections by
the UCBs were stipulated. 2. On the basis of the recommendations made in September 2005 by
the Internal Working Group (Chairman: Shri C. S. Murthy), set up in Reserve Bank to examine,
review and recommend changes, if any, in the existing policy on priority sector lending including
the segments constituting the priority sector, targets and sub-targets, etc. and the
comments/suggestions received thereon from banks, financial institutions, public and the Indian
Banks Association (IBA), it has been decided to include only those sectors as part of the priority
sector, that impact large sections of the population, the weaker sections and the sectors which are
employment-intensive such as agriculture, and tiny and small enterprises. Accordingly, the broad
categories of priority sector for UCBs will be as under:
Under a scheme to be drawn up by the RBI, banks will be encouraged to establish
mechanisms for better co-ordination between their branches and branches of SIDBI which are
located in 50 clusters that have been identified by the Ministry of Small Scale Industries,
Government of India. Under the scheme of strategic alliance (i) the existing branches of SIDBIredesignated as 'Small Enterprises Financial Centres' (SEFC) will take up co-financing of term
loan requirements of SSI units along with the bank branches and the working capital
requirements of these units will be met by the banks; (ii) the expertise of the SIDBI in appraisal
of credit requirements of SSI units will be leveraged by the branches of commercial banks, by
payment of a nominal fee; (iii) SIDBI will provide other expert services to help the banks in
simplifying the application forms, documentation and disbursement procedures, etc.; and (iv) the
working of the scheme may be monitored and modified to suit the local conditions by the State
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Level Bankers Committee (SLBC) and, depending on the experience, the coverage of the
scheme may be extended to more clusters. The services of SEFCs will be available for tiny
industrial units also.
I. CATEGORIES OF PRIORITY SECTOR
(I) Agriculture (Direct and Indirect finance): Direct finance to agriculture shall include
short, medium and long term loans given for agriculture and allied activities (dairy, fishery,
piggery, poultry, bee-keeping, etc.)directly to individual farmers without limit for taking up
agriculture/allied activities. Direct finance may be limited to regular members and not to nominal
members or to agencies like primary agriculture credit societies (PACS), primary land
development banks etc. Indirect finance to agriculture shall include loans given for
agriculture and allied activities as specified in Section I appended.
(ii)Small Enterprises (Direct and Indirect Finance): Direct finance to small enterprises
shall include all loans given to micro and small (manufacturing) enterprises engaged in
manufacture/ production, processing or preservation of goods, and micro and small (service)
enterprises engaged in providing or rendering of services, and whose investment in plant and
machinery and equipment (original cost excluding land and building and such items as
mentioned therein) respectively, does not exceed the amounts specified in Section I, appended.
The micro and small (service) enterprises shall include small road & water transport operators,
small business, professional & self-employed persons, and all other service enterprises, as per
the definition given in Section I appended.
Indirect finance to small enterprises shall include finance to any person providing inputs to or
marketing the output of artisans, village and cottage industries, handlooms and to cooperatives of
producers in this sector.
(iii) Retail Trade shall include retail traders/private retail traders dealing in essential
commodities (fair price shops) as per the definition given in Section I appended.
(iv) Micro Credit: Provision of credit and other financial services and products of amounts not
exceeding Rs. 50,000 per borrower or the maximum permissible limit on unsecured advances
whichever is lower.
(v) Education loans: Education loans include loans and advances granted to only individuals
for educational purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad,
and do not include those granted to institutions;
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(vi) Housing loans: Loans up to Rs. 20 lakh to individuals for purchase/construction of
dwelling unit per family, (excluding loans granted by banks to their own employees)and loans
given for repairs to the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-
urban areas and up to Rs. 2 lakh in urban and metropolitan areas
.
* Family for this purpose means and includes the spouse of the member and the children,
parents, brothers and sisters of the member who are dependent on such member, but shall not
include legally separated spouse. .
II OTHER IMPORTANT FEATURES OF GUIDELINES
The targets under priority sector lending would be linked to Adjusted Bank Credit
(ABC) (total loans and advance plus investments made by UCBs in non-SLR bonds) or CreditEquivalent amount of Off-Balance Sheet Exposures (OBE), whichever is higher, as on March 31
of the previous year. Existing investments, as on the date of this circular, made by banks in non
SLR bonds held in HTM category will not be taken into account for calculation of ABC.
However, fresh investments by banks in non-SLR bonds will be taken into account for the
purpose. For the purpose of calculation of credit equivalent of off-balance sheet exposures,
banks may use current exposure method. Inter-bank exposures will not be taken into account for
the purpose of priority sector lending targets/sub-targets.
III.TARGETS/SUB-TARGETS
(i) The targets and sub-targets set under priority sector lending for UCBs are furnished below:
Targets and sub-targets set
under priority sector lending
Total Priority
Sector advances
60 per cent of Adjusted Bank Credit (ABC) or creditequivalent amount of Off-Balance Sheet Exposure,whichever is higher.
Agriculture
Advances
No target.
Small Enterpriseadvances
Advances to small enterprises sector will be reckoned incomputing performance under the overall priority sectortarget of 60 per cent of ABC or credit equivalent amount ofOff-Balance Sheet Exposure, whichever is higher.
Micro
enterprises
within Small
Enterprises
(i) 40 per cent of total advances to small enterprises sectorshould go to micro (manufacturing) enterprises havinginvestment in plant and machinery up to Rs 5 lakh andmicro (service) enterprises having investment in equipment
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sector up to Rs.2lakh;
ii) 20 per cent of total advances to small enterprises sectorshould go to micro (manufacturing) enterprises with
investment in plant and machinery above Rs 5 lakh and upto Rs. 25 lakh, and micro (service) enterprises withinvestment in equipment above Rs. 2 lakh and up to Rs. 10lakh. (Thus, 60 per cent of small enterprises advancesshould go to the micro enterprises).
Advances to
weaker sections
Of the stipulated target for priority sector advances, at least25% (or 15% of the ABC or credit equivalent amount ofOff-Balance Sheet Exposure, whichever is higher) shouldbe given to weaker sections.
Advances to
Minorities.
Within the overall target for priority sector lending and thesub- target of 25 per cent for the weaker sections, sufficient
care may be taken to ensure that the minority communitiesalso receive an equitable portion of the credit.
Salary Earners' Banks: The stipulation regarding priority sector lending is not applicable to
the Salary Earners' Banks.
Credit Flow to Minorities: UCBs should initiate steps to enhance/ augment flow of credit
under priority sector to artisans and craftsmen as also to vegetable vendors, cart pullers, cobblers,
etc. belonging to minority communities. The minority communities notified in this regard are
Sikhs, Muslims, Christians, Zoroastrians and Buddhists. Within the overall target for priority
sector lending and the sub- target of 25 per cent for the weaker sections, sufficient care may betaken to ensure that the minority communities also receive an equitable portion of the credit.
IV. REPORTING /MONITORING UNDER PRIORITY SECTOR:
UCBs should take effective steps to achieve the above recommended targets and monitor
the priority sector lending, keeping in view the quantitative as well as qualitative aspects. In
order to ensure that due emphasis is given to lending under priority sector, it is considered
desirable that the performance is reviewed periodically. For this purpose, apart from the usual
reviews, which the banks are periodically undertaking, specific reviews by the Board of
Directors of the respective banks may be made on half-yearly basis. Accordingly, amemorandum may be submitted to the Board of Directors at half-yearly intervals i.e. as on
September 30 and March 31 of each year giving a detailed critical account of the performance of
the bank during the period showing increase/decrease over the previous half-year (Statement I).
Further, annual review of the performance under priority sector advances as on March 31 may
also be placed before the Board.
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A copy of the annual review as on March 31 may be forwarded to the concernedRegional Office of the Reserve Bank with the Board's observations, indicating the stepstaken/proposed to be taken for improving the bank's performance. The report should reach theRegional Office within a month from the end of the period to which it relates.
The banks should submit a half yearly statement as on March 31/ September 30 within 15days of the close of the relevant half year, showing the progress made in deployment of credit toMinority communities, to the concerned Regional Office of this department under whosejurisdiction they function, in the given format.
In order to facilitate compilation of the relative figures, banks may maintain a register toindicate all the items of priority sector advances and also another register for weaker sectionadvances showing particulars, with separate folios to each activity so that the total of advances topriority sector and weaker sections under each activity and to each type of beneficiary may beavailable at any given point of time. The proforma of these registers may be on the lines of the
annual return to be submitted to RBI.
THE DETAILED GUIDELINES IN THIS REGARD ARE GIVEN AS
UNDER.
Small ENTERPRISES
DIRECT FINANCE
1 Direct Finance in the small enterprises sector will include credit to:
1.1 Manufacturing Enterprises
(a) Small(manufacturing) Enterprises
Enterprises engaged in the manufacture/production, processing or preservation of goods andwhose investment in plant and machinery [original cost excluding land and building and theitems specified by the Ministry of Small Scale Industries vide its notification no. S.O. 1722 (E)
dated October 5, 2006]does not exceed Rs. 5 crore.(b) Micro (manufacturing) Enterprises
Enterprises engaged in the manufacture/production, processing or preservation of goods andwhose investment in plant and machinery [original cost excluding land and building and suchitems as in 2.1.1 (a)]does not exceed Rs. 25 lakh, irrespective of the location of the unit.
1.2 Service Enterprises
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(a) Small (service) Enterprises
Enterprises engaged in providing/rendering of services and whose investment in equipment
(original cost excluding land and building and furniture, fittings and other items not directlyrelated to the service rendered or as may be notified under the MSMED Act, 2006) does notexceed Rs. 2 crore.
(b) Micro (service) Enterprises
Enterprises engaged in providing/rendering of services and whose investment in equipment[original cost excluding land and building and furniture, fittings and such items as in 2.1.2 (a)]does not exceed Rs. 10 lakh.
(c) The small and micro (service) enterprises shall include small road & water transportoperators, small business, professional & self-employed persons, and all other service enterprises.
1.3 Khadi and Village Industries Sector (KVI)All advances granted to units in the KVI sector, irrespective of their size of operations, locationand amount of original investment in plant and machinery. Such advances will be eligible forconsideration under the sub-target (60 per cent) of the small enterprises segment within thepriority sector.
INDIRECT FINANCE
2 Indirect finance to the small (manufacturing as well as service) enterprises
sector will include credit to:2.1 Persons involved in assisting the
decentralized sector in the supply of inputs to
and marketing of outputs of artisans, villageand cottage industries.
2.2 Existing investments as on March 31, 2007,made by banks in special bonds issued by NABARD with the objective of financingexclusively non-farm sector may be classifiedas indirect finance to Small Enterprises sectortill the date of maturity of such bonds orMarch 31, 2010, whichever is earlier.Investments in such special bonds madesubsequent to March 31, 2007 will, however,
not be eligible for such classification.2.3 Loans granted by scheduled UCBs to
NBFCs for on-lending to small and microenterprises (manufacturing as well asservice).
I ndirect finance in the small-scale industrial sector include:
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Indirect finance to SSI includes the following important items:
i. Financing of agencies involved in assisting the decentralised sector in the supply of
inputs and marketing of outputs of artisans, village and cottage industries.
ii. Finance extended to Government sponsored Corporation/organisations providing funds tothe weaker sections in the priority sector.
iii. Advances to handloom co-operatives.
iv. Term finance/loans in the form of lines of credit made available to State Industrial
Development Corporation/State Financial Corporations for financing SSIs.
v. Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills
vi. Subscription to bonds floated by SIDBI, SFCS, SIDCS and NSIC exclusively for
financing SSI units.
vii. Subscription to bonds issued by NABARD with the objective of financing exclusively
non-farm sector.
viii. Financing of NBFCS or other intermediaries for on-lending to the tiny sector.
ix. Deposits placed with SIDBI by Foreign Banks in fulfilment of shortfall in attaining
priority sector targets.
x. Bank finance to HUDCO either as a line of credit or by way of investment in special
bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc. under tiny
sector may be treated as indirect lending to SSI (Tiny) Sector.
Type of investments made by banks are reckoned under priority sector:
Investments made by the banks in special bonds issued by the specified institutions could bereckoned as part of priority sector advances, subject to the following conditions:
i. State Financial Corporations (SFCs)/State Industrial Development Corporations
(SIDCs)
Subscription to bonds exclusively floated by SFCs & SIDCs for financing SSIunits will be eligible for inclusion under priority sector as indirect finance to SSI.
ii. Rural Electrification Corporation (REC)
Subscription to special bonds issued by REC exclusively for financing pump-setenergisation programme in rural and semi-urban areas and the System ImprovementProgramme under its Special Projects Agriculture (SI-SPA) will be eligible for inclusionunder priority sector lending as indirect finance to agriculture.
iii))NABARD : Subscription to bonds issued by NABARD with the objective offinancing exclusively agriculture/allied activities and the non-farm sector will be eligible
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for inclusion under the priority sector as indirect finance to agriculture/ SSI, as the casemay be.
iii. Small Industries Development Bank of India (SIDBI)
Subscriptions to bonds exclusively floated by SIDBI for financing of SSI unitswill be eligible for inclusion under priority sector as indirect finance to SSIs.
iv. The National Small Industries Corporation Ltd. (NSIC)
Subscription to bonds issued by NSIC exclusively for financing of SSI units will
be eligible for inclusion under priority sector as indirect finance to SSIs.
National Housing Bank (NHB)
Subscription to bonds issued by NHB exclusively for financing of housing,irrespective of the loan size per dwelling unit, will be eligible for inclusion under prioritysector advances as indirect housing finance.
v. Housing & Urban Development Corporation (HUDCO)
a. Subscription to bonds issued by HUDCO exclusively for financing ofhousing, irrespective of the loan size per dwelling unit, will be eligible forinclusion under priority sector advances as indirect housing finance.b. Investment in special bonds issued by HUDCO for on-lending to artisans,handloom weavers, etc. under tiny sector will be classified as indirect lending to
SSI (Tiny) sector.
Actions taken in the case of non-achievement of priority sector lending target
by a bank :
i. Domestic scheduled commercial banks having shortfall in lending to priority sector /
agriculture are allocated amounts for contribution to the Rural Infrastructure
Development Fund (RIDF) established in NABARD. Details regarding operationalisation
of the RIDF such as the amounts to be deposited by banks, interest rates on deposits,
period of deposits etc., are decided every year after announcement in the Union Budget
about setting up of RIDF.
ii. In the case of foreign banks operating in India which fail to achieve the priority sector
lending target or sub-targets, an amount equivalent to the shortfall is required to be
deposited with SIDBI for one year at the interest rate of 8 percent per annum.
Rate of interest for loans under priority sector :
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As per the current interest rate policy, in the case of loans upto Rs 2 lakh, the interest rate shouldnot exceed the prime lending rate (PLR) of the bank, while in the case of loans above Rs 2 lakh,banks are free to determine the interest rate
J&K Bank Financing For SSI
Guidelines for financing of Small & Medium Enterprises (SMEs)
The small-scale industries produce about 8000 products, contribute 40% of the industrial
output and offer the largest employment after agriculture. The sector presents an opportunity to
the nation to harness local competitive advantages for achieving global dominance. In
recognition of these aspects Govt. of India has decided to give greater technological, investment
and marketing support to small-scale industry. A comprehensive legislation, which would enable
the paradigm shift from small-scale industry to small and medium enterprises is under
consideration of Parliament. The Honble Finance Minister Government of India has announced
certain measures in the Parliament on August 10, 2005 for stepping up of credit to small and
medium enterprises. Accordingly the Reserve Bank of India has issued detailed guidelines to the
banks for increasing finance, debt restructuring mechanism and one time settlement (OTS) for
the SME sector. Up till now there was no definition of Medium Enterprises. In order to segregate
the small and medium enterprises the Reserve Bank of India has come out with a definition of
Medium Enterprises till enactment of Small and Medium Enterprises Development bill. As per
the definition given by RBI, the units with investment in plant and machinery in excess of SSI
limit and upto Rs.10.00 crore shall be treated as Medium Enterprises (ME). Till out come of
parliamentary bill definition of SSI will remain unchanged. At present, a small-scale industrial
unit is an industrial undertaking in which investment in plant and machinery does not exceed
Rs.1.00 crore except in respect of certain specified items under hosiery, hand tools, drugs and
pharmaceuticals, stationery items and sports goods where this investment limit has beenenhanced to Rs.5.00 crore. However loan to SSI sector will be categorized under priority sector.
In order to increase the outreach of formal credit to SME sector, RBI has issued policy package
for financing, debt restructuring and one time settlement in respect of SMEs. RBI has advised the
Banks as under:
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1. To initiate necessary steps to rationalize the cost of loans to SME sector by adopting a
transparent rating system with cost of credit being linked to the credit rating of
enterprise. SIDBI has developed a Credit Appraisal and Rating Tool as well as a Risk
Assessment Model and a comprehensive rating model for risk assessment of proposals
for SMEs. The banks have been advised to consider to take advantage of these models as
appropriate and reduce their transaction costs.
National Small Industries Corporation has recently introduced credit rating scheme for
encouraging SME units to get themselves credit rated by reputed agencies. Banks may consider
these rating models for rating the SME borrowers.
2. To make concerted efforts to provide credit cover on an average to at least 5 new
small/medium enterprises at each of their semi urban/ urban branches per year.
3. To formulate a comprehensive and more liberal policy with the approval of their Board of
Directors in respect of loans to SME sector.
4. To consider cluster based approach for financing SMEs as it offers possibilities of reduction
in transaction cost, mitigation of risks and also provide an appropriate scale for improvement in
infrastructure.
PROCESSING OF APPLICATIONS:
Viability:The borrowers should invariably provide a detailed project report prepared by a reputed
project Consultant covering all aspects of its viability. The borrower should provide all the
necessary details and required information regarding the proposal.
Issue of Acknowledgement of Loan Applications:Branches should give acknowledgement for loan applications received from the Borrowers.
Disposal of Applications:
All loan applications received under SME Sector shall be disposed Off by the branches
within a maximum period of 4 weeks provided the loan applications are complete in all respects.
In case the proposal of the borrower does not fall within the competence of branch, the branch
should send one advance copy of the proposal to the sanctioning authority followed by final copy
with recommendations from the branch.
Proposal received register:
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A register should be maintained at branch wherein the date of receipt,
sanction/rejection/disbursement with reasons therefore etc., should be recorded. The register
should be made available to all inspecting agencies.
i) Rejection of applications for fresh limits/enhancement of existing limits should
not be done without the approval of the next higher authority.ii) Sanction of reduced limits should be reported to the next higher authority immediately
with full details for review and confirmation.
Security:
Branches should not insist for any tangible collateral security for limits upto Rs 5.00 lacs.
For limits beyond Rs 5.00 lacs branches may obtain adequate tangible collateral security.
Debt Equity ratio:
Debt equity ratio of 2:1 is desirable. However in well-managed SME units ratio of 3:1
can be considered on merits.
Rate of Interest:
Sector Rate of Interest
Agriculture &
Allied activities
1% below the rate prescribed for each RatingGrade
SMEs 0.50% below the rate prescribed for each Rating
GradeLoans and Advances W.E.F. 01.08.2008
PRIME LENDING RATE (PLR) 12.75% W.E.F. 01.05.2009
13.
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B.
Interest rate structure for loans and advances withaggregate limits up to Rs.20.00 lacs and those underSpecial Schemes.
Rate of Interest (% p.a.)w. e. f.01.05.2010
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Disbursement:
The borrower shall provide an implementation schedule before hand and all the
disbursement of term loans shall be made as per the progress of implementation. As far as
possible the payments shall be made directly to the suppliers/contractors. In respect of working
capital loans, the branches shall first ensure completion/commissioning of unit. \
TYPES OF LOANS:
1)Term loans :
The bank loan to the industry , with a fixed maturity and often featuring amortization ofprincipal.
2) Working capital loans:
The bank provides loan whose purpose is to finance everyday operations of a company.
SASIIT&R MOHALI
01. Micro & Small Enterprises (Manufacturing)
a) Up to Rs.0.50 lacs XXX
b) Above Rs.0.50 lacs & upto Rs.2.00 lacs XXX
c) Up to Rs.2.00 lacs PLR- 2.00
d) Above Rs.2.00 lacs & up to Rs.5.00 lacs PLR- 1.50
e) Above Rs.5.00 lacs & uptoRs.20.00 lacs PLR- 1.00
Loans under Craft Development Scheme
a) Up to Rs.0.25 lacs XXXb) Above Rs.0.25 lacs & up to Rs.0.50 lacs XXX
c) Up to Rs.0.50 lacs 10.00
d) Above Rs.0.50 lacs & up to Rs.1.00 lacs 11.00
02. Other Micro and Small Services Sector
a) Up to Rs.0.50 lacs XXX
b) Above Rs.0.50 lacs & up to Rs.2.00 lacs XXXc) Up to Rs.2.00 lacs PLR- 2.00
d) Above Rs.2.00 lacs & up to Rs.5.00 lacs PLR-1.50
e) Above Rs.5.00 lacs & uptoRs.20.00 lacs PLR-1.00
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Our _____________ Banks ,We______________Bank ,You
____________SMEs
1.1 Objectives Of The Code
The Code has been developed to
a.Give a positive thrust to the MSE sector by providing easy access to
efficient banking services.
b. Promote good and fair banking practices by setting minimum standards in dealing with you.
c. Increase transparency so that you can have a better understanding of what you can reasonably
expect of the services.
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1 1.1 Objectives Of The Code
2 Key Commitments
2.1 Our Key Commitments To You
3 Information
3.1 If You Want To Become Our Customer
3.2 Interest Rates
3.4 Terms And Conditions
4 Privacy And Confidentiality
5 Lending
5.1 Application
5.2 Credit Assessment
5.3 Post Disbursement
5.4 Nursing Sick MSEs And Debt Restructuring
6 Collection of Dues
11 Advertising, Marketing And Sales
12 Monitoring
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d. Improve our understanding of your business through effective communication.
e. Encourage market forces, through competition, to achieve higher operating standards.
f. Promote a fair and cordial relationship between you and us and also ensure timely and quick
response to your banking needs.
g. Foster confidence in the banking system.
2. KEY COMMITMENTS
2.1 Our Key Commitments To You
2.1.1 To Act Fairly And Reasonably In All Our Dealings With You By
a. Providing minimum banking facilities of receipt and payment of cash/cheques at the bankscounter.
b. Providing speedy and efficient credit and service delivery.
c. Meeting the commitments and standards in this Code, for the products and services we offer,
and in the procedures and practices our staff follow.
d. Making sure our products and services meet relevant laws and regulations in letter and spirit.
e. Ensuring that our dealings with you rest on ethical principles of integrity and transparency.
f. Operating secure and reliable banking and payment and settlement systems.
g. Considering cases of financial difficulty sympathetically
2.1.2 To Help You Understand How Our Financial Products And Services
Work By
a. Giving you information about them in any one or more of the following languages: Hindi,
English or the appropriate local language.
b. Ensuring that our advertising and promotional literature is clear.
c. Ensuring that you are given clear information about our products and services, the terms and
conditions and the interest rates/service charges, which apply to them.
d. Ensuring that there is no mis-selling of our products.e. Giving you information on what are the facilities provided to you and how you can avail
of these.what are their financial implications and whom you can contact for addressing your
queries.
2.1.3 To Help You Use Your Account Or Service By
a. Providing you regular appropriate updates.
b. Keeping you informed about changes in the interest rates, charges or terms and conditions.
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e. Tell you what information we need from you to prove your identity and address, for us to
comply with legal, regulatory and internal policy requirements.
3.2 Interest Rates
We will inform you of the change in interest rates on our products within seven days of the
decision by
a. Writing to you.
b. Notice at the branch.
c. Placing on website.
3.3 Terms And Conditions
a. When you become a customer or avail of a product/ service for the first time, we will advise
you the relevant terms and conditions for the service you have asked us to provide.
b. All terms and conditions will be fair and will set out respective rights especially with regard
to nomination facility, wherever applicable and liabilities and obligations clearly and as far as
possible in plain and simple language.
Changes to Terms and Conditions
a. When you become a customer, you can get information of changes to terms and conditions
through any of the following channels
i) Account statements
ii) ATMs
iii) Written communication
iv) Notice Board at each branch
v) Email/ website/ SMS
b. If we have made any change without notice we will notify the change within 30 days. If such
change
is to your disadvantage, you may within 60 days and without notice close your account or
switchit without having to pay any extra charges or interest.
c. If we have made a major change or a lot of minor changes in any one year, we will, on requestgive you a copy of the new terms and conditions or a summary of the changes.
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4. PRIVACY AND CONFIDENTIALITY
We will treat all your personal and business information as private and confidential [even
when you are no longer a customer], and shall be guided by the following principles and policies.
We will not reveal information or data relating to your accounts, whether provided by you or
otherwise, to anyone, including other companies/entities in our group, other than in the following
exceptional cases :
a. If we have to give the information by law.
b. If there is a duty towards the public to reveal the information.
c. If our interests require us to give the information (for example, to prevent fraud) but we will
not use this as a reason for giving information about you or your accounts [including your
name and address] to anyone else, including other companies in our group, for marketing
purposes.
d. If you ask us to reveal the information, or if we have your permission.
e. If we are asked to give a bankers reference about you, we will need your written permission
before we give it.
We will explain to you the extent of your rights under the existing legal framework for
accessing the personal records that we hold about you.
We will not use your personal and business information for marketing purposes by anyone
including ourselves unless you specifically authorize us to do so.
5.LENDING
Our loan policy dealing with your application for loan or any financial assistance will be
reflective of the objectives and spirit of the national policy and the regulatory prescription. We
shall place the policy relating to Micro and Small Enterprises on our website and also make it
available to you at the branch for perusal. On request we will make available a copy at a nominal
charge. We will endeavour to provide facilities through a Single Window Mechanism.
5.1 Application
We will
a. Make available, free of cost, simple standardized, easy to understand, application form for
loans.
b. Provide you with a checklist (compliant with legal and regulatory requirements) along with
the loan application form to enable you to submit the application complete in all respects. If
required, we will assist you in filling up your loan application form.
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c. At the time of making available application form also provide you information about the
interest rates applicable, and the fees/charges, if any, payable for processing, pre-payment
options and charges, if any, and any other matter which affects your interest, so that a
meaningful comparison with those of other banks can be made and informed decision can be
taken by you.
d. Acknowledge in writing the receipt of your loan application.
e. Normally collect all particulars required for processing the application for credit facility at the
time of application. In case we need any additional information, we will contact you within
seven working days from receipt of application.
f. Endeavour to enable you to know online the status of your application.
g. Not charge any processing fee for loans up to Rs.5 lakh if the loan is not sanctioned.
h. Dispose of your application for a credit limit or enhancement in existing credit limit up to Rs
2 lakh within two weeks; and for credit limit up to Rs 5 lakh within 4 weeks from the date of
receipt provided your application is complete in all respects and is accompanied by documents asper check list provided and dispose of loan applications for amounts exceeding Rs 5 lakh,
within a reasonable time frame.
J&K Bank - SME SMART SCORE LOAN APPLICATIONFORM
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SASIIT&R MOHALI
K Bank - SME SMART SCORE LOAN APPLICATION
AN IS APPLICABLE FOR SSI UNITS 10 LACS TO 50 ADE AND SERVICES 10 LACS TO 25 LACS
lds marked with * are mandatoryWhether the chief promoter / Chief executive is between 18 and 65 yea
age *
General
Nearest SME Center *
Name of the Company /
Constitution *
Brief details of sting/proposed activity
Office Address
Addr
City *
State
Pin *
PHONO. *
Factory Address Same as office address.
Address
City
State
Pin
PHONE NO.
Email *
Gender of the keymoter *
LOAN APPLIED FOR
Term Loan * (Rs in Lacs)
Working Capital
* (Rs in Lacs)Total Loan
quired * (Rs in Lacs)
Purpose of the
RSONAL DETAILS OF THE CHIEF PROMOTER / CHIEF EXECUTIVE
me * PHONENO. *
sidentialdress *
MOBILENO.
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APPLICATION FOR CASH CREDIT/ TERM LOAN UNDER SMECREDIT CARD
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SASIIT&R MOHALI
APPLICATION FOR CASH CREDIT/ TERM LOAN UNDER SME CREDIT CARD(Loans upt
Rs. 10 lacs only)
Fields marked with * are mandatory
1Name of
the Unit *
Names ofthe keypromoters/partners/
Directors *
Category ofUnit
Constitution
Business
Address *
City * Pin Code *
State *Telephone
*
2PERSONAL DETAILS OF THE KEY PERSON
Name of the KeyPromoter
Age incompleted
years *years
Owning a
House *
AcademicQualificatio
n *
SpouseEmployment Details
Whether ITAssesseeunder
Incometax *
PAN NO
TakenLife Insurance
Policy *
Whetherbelongs to
Gender *
3BUSINESS DETAILS
Descriptionof
Activity *
PROJECT DETAILS IF TERM LOAN IS REQUIRED
Details ofCost of
Project
Cost of ItemMeans of
Finance
Amount
LandRs lacs
Promoter'sEquity
Rsacs
BuildingRs lacs
Bank Loan Rsacs
MachineryRs lacs
Loan fromFriends &Relatives
Rsacs
OthersRs lacs
Others Rs
acs
Total Total Rs
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5.2 Credit Assessment
a. We will
i) Verify the details mentioned by you in your application by contacting you through our staff /
agencies appointed by us for this purpose at your business address/ residence.
ii) Before lending you any money, or increasing youroverdraft or borrowing limit/s,assess
whether you will be able to repay it. We shall carry out proper assessment of your loan
application by carrying out detailed due diligence and appraisal.
iii) Satisfy ourselves about the reasonableness of the projections made by you.
b. This assessment may include looking at the following :
i) Information you give us, including the purpose of borrowing.
ii) Your business plan.iii) Your businesss cash flow, profitability and existing financial commitments
supplemented, if necessary, by account statements.
iv) Your personal financial commitments.
v) How you have handled your finances in the past.
vi) Information we get from credit reference agencies.
vii) Ratings assigned by reputed credit rating agencies, if any.
viii) Information from others, such as other lenders /creditors.
ix) Market reports.
x) Any security provided.
c. We will
i) Not insist on collateral for credit limits upto Rs 5 lakh.
ii) Consider providing collateral free credit limits upto Rs 25 lakh if we are satisfied about
your track record and financial position being good and sound.
iii) Provide micro and small enterprises (manufacturing) working capital limits computed on
the basis of a minimum of 20 per cent of your projected annual turnover.
iv) Consider your request for suitable enhancement in the working capital limits in cases
where the output exceeds the projections or where the initial assessment of working
capital is found inadequate and you have provided necessary evidence.
d. Guarantees
If you want us to accept a guarantee or other security from someone else for your liabilities, we
will ask you for your permission to give confidential information about your finances to them or
to their legal adviser. We will also
i) Encourage them to take independent legal advice to make sure that they understand their
commitment and the possible consequences of their decision (where appropriate, the documents
we ask them to sign will contain this recommendation as a clear and obvious notice).
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ii) Tell them that by giving the guarantee or other security they may become liable as well
as you.
5.3 Post Disbursement
We will
a. Assure that we refrain from interference into your business affairs except on what is in terms
of sanction of loan, loan agreement or when new information comes to banks knowledge.
b. Endeavour to be constructive in our monitoring process and sympathetically deal with
genuine difficulties that you may face in your dealings with us.
c. Obtain following information from you on an ongoing basis
i) A comparison of the forecasts in your business plan with the actual results.
ii) Progress on important aspects of your business plan.
iii) Annual accounts such as Balance Sheet and Profit and Loss Account and other
supporting documents.iv) Age-wise break up of your creditors and debtors and the amounts involved.
d. Allow drawals against your limits as per usual safeguards.
e. If your circumstances change, talk to you about any new information we will need from you.
f. Convey our consent or otherwise within two weeks of receipt of a request for transfer of the
borrowal account, either from you or from the bank / financial institution that proposes to take
over the account.
g. Release all securities on receiving repayment of loan immediately and in any case not later
than one week subject to any legitimate right or lien for any other claim we may have against
you.
h. Give notice in case we exercise such right of set off, with full particulars of our remainingclaims against you as also of the documents under which we are entitled to retain the
securities till the relevant claim is settled/ paid by you.
i. Effect pledges/deliveries on the same day of receiving your request.
j. Grant you increase in the drawing power within 24 hours of lodgment of security.
k. Inform you of debits to your account arising out of interest application, fees and charges.
l. Monitor the progress made by you through any or more of the following modes
i) Scrutinising periodic statements of stocks you hold.
ii) Watching the transactions in your account with us.
iii) Visits by either our staff or authorised representative to your premises for verification of
the stocks and/or assets financed.
iv) Obtain wherever necessary market reports on how your business is going on.
5.4 Nursing Sick MSEs And Debt Restructuring
We will consider a nursing/ debt restructuring programme in case your borrowal account remainssubstandard for over six months, or your unit is considered to be sick.
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For examining your request for rehabilitation /debt restructuring we will
a. First see whether you are viable/potentially viable.
b. If you are found to be viable/potentially viable initiate corrective action for your revival.
c. In case your unit is potentially viable and is under consortium / multiple banking arrangement,and if we have maximum share of outstanding, work out the restructuring package.
6. COLLECTION OF DUES:
Whenever we give loans, we will explain to you the repayment process by way of
amount, tenure and periodicity of repayment. However if you do not adhere to repayment
schedule, a defined process in accordance with the laws of the land will be followed for recovery
of dues which will be given to you at the time of sanction of loan. The process will involve
reminding you by sending you notice or by making personal visits and/or repossession of
security, if any. In case of default, we may refer the case to the recovery agent. We will inform
you that recovery proceedings have been initiated. On initiating recovery proceedings we will
also tell you that in case you have a complaint to make in this regard you may contact our
helpline number. We will investigate your complaints about unfair practices by our recovery
agents. Our collection policy is built on courtesy, fair treatment and persuasion. We believe in
fostering customer confidence and long-term relationship.
We will provide you with all the information regarding dues and will endeavor to give
sufficient notice for payment of dues. Our staff deputed for collection of dues or/and security
repossession will identify himself/herself. Any person authorised to represent us for thesepurposes will dentify himself/herself and also display the authority letter issued by us.
All the members of the staff or any person authorised to represent our bank in collection
or/and security repossession would be subjected to due diligence and they would follow the
guidelines set out below :
a. You would be contacted ordinarily at the place of business/occupation and if unavailable at the
place of your business/ occupation at the place of your residence or in the absence of any
specified place at the place of your authorised representatives choice.
b. Identity and authority to represent would be made known to you at the first instance.
c. Your privacy and dignity would be respected.
d. Interaction with you would be in a civil manner.
e. Normally our representatives will contact you between 0700 hrs and 1900 hrs, unless the
special circumstances of your business or occupation require otherwise.
f. Your requests to avoid calls at a particular time or at a particular place would be honored as
far as possible.
g. Time and number of calls and contents of conversation would be documented.
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h. All assistance would be given to resolve disputes or differences regarding dues in a mutually
acceptable and in an orderly manner.
i. During visits to your place for dues collection, decency and decorum would be maintained.
j. Inappropriate occasions such as bereavement in the family or such other calamitous occasions
would be avoided for making calls/visits to collect dues.
7. ADVERTISING, MARKETING AND SALES
a. We will make sure that all advertising and promotional material is clear.
b. In any advertising in any media and promotional literature that draws attention to a banking
service or product and includes a reference to an interest rate, we will also indicate whether other
fees and charges will apply and that full details of the relevant terms and conditions are available
on request.
c. If we avail of the services of third parties for providing support services, we will require that
such third parties handle your personal and business information (if any available to such third
parties) with the same degree of confidentiality and security as we would.
d. We may, from time to time, communicate to you new features of our products availed by you.
Information about our other products or promotional offers in respect of our products/services,
will be conveyed to you only if you have given your consent to receive such information/ service
either by mail or by registering for the same on our website or on our phone banking/customer
service number.
e. We have prescribed a code of conduct for our Direct Selling Agencies (DSAs) whose services
we may avail to market our products/ services which amongst other matters requires them to
identify themselves when they approach you for selling our products personally or throughphone.
f. In the event of receipt of any complaint from you that our representative/courier or DSA has
engaged in any improper conduct or acted in violation of this Code, we shall take appropriate
steps to investigate and to handle the complaint and to make good the loss.
1. MONITORING
2. We have a 'Nodal Officer' to ensure compliance of the Code. Our internal auditing
procedures make sure we meet the Code. Our Nodal officer is :
General Manager( I&V)Corporate HeadquartersM.A.Road Sinagar 190001Tel.No.0194-2481947
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BANKS STEPS TOWARDS THE IMPROVEMENT OF SMEs
FCIK hails J&K banks rate cut
Srinagar, May 07: The Federation
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