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    CHAPTER 1

    AN INTRODUCTION

    SMEs stands for small medium enterprises (alsoknown in some countries as Town and village

    enterprises-TVEs) .The Basel Committee considers

    the full form of SMEs as small and medium sized

    entity and the acronym SME has turned out to be a

    worldwide champion for the cause of development

    of entrepreneurship in the underdeveloped and

    developed countries .The SME sector contains an

    element of welfare for the masses . For example,

    the Bangladesh Gramin Bank recently provided

    each indentified beggar with a mobile phone to start

    a way side PCO , and earn his or her living .

    Small and medium enterprises have acquired

    enormous importance in contemporary world

    finance . SMEs have a unique contribution in

    providing employment to skilled unskilled people.

    Quality goods and services are made available at

    cheaper rates generally by SMEs.

    SMES form the lifeblood of any vibrant economy. In

    an emerging economy like India, SMES have a

    significant socio-economy role as they are

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    estimated to employ more than 42 million people in

    the country.

    India has nearly 13 million SMEs, which account for

    almost 50 percent of the country total exports.

    In fact, the SMEs sector plays a dual role since the

    output produced by SMEs is not only about final

    consumption, but also a source of capital goods in

    the form of input to heavy industries .Thesignificance of SMEs in the Indian economy is

    growing. The output of SMEs is not only increasing,

    but the productivity in terms of per unit is also

    growing at a higher rate.

    SME DEFINED

    There is no standards Universal definition of small

    and medium enterprises.

    In June 2004, The Basel Committee stated in the

    BASEL ACCORD.

    SME borrows are defined as those with annual

    sales of less than rupees 250 crores.

    SMEs are usually defined as companies with up to

    250 employees.

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    SME may be defined as any business enterprises

    that involves processing

    Manufacturing and servicing operation, or only

    trading activities, with an annual turnover (sales)

    gross income up to 50 crores.

    Features of SMEs

    1.SMEs are mostly promoted and run by individual

    as sole proprietary concern ,or by a group of

    individual as partnership concern sometimes as

    Private Limited Companies , or any other form of

    organization .SMES as Public Limited Companies

    are rarely seen.

    2. An SME is a business that is predominantly

    dependent upon technical managerial enterprise of

    promoter owner skilled personal are also employed

    wherever necessary.

    3. SMEs mostly operate on a regional basis , more

    in rural semi-urban centres and depending upon

    size and nature of their goods services they often

    have a national presence.

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    4. Capital funds of SMEs are generally small

    compared to external funds in the form of loans

    advances .Hence ,their debt-equity is larger than

    conventional 2:1 ratio.

    5. At present ,many Indian SMEs do not have a

    compatible technological base.

    6. Products service of SME are generally cheaper

    as compared to those from large sized ones ,primarily due to lower business overheads.

    7. SMEs are better equipped to render personalized

    attention and care to their customers.

    8. SMEs having backward forward linkages with

    large corporate in matter of purchase sale are in a

    position to show better business performance.

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    ABOUT THE REPORT

    1. Title of the study.

    The present study is titled A PROJECT REPORT

    ON FINANCE PROVIDEDBY BANKS TO SMEs-A

    CASE STUDY on IDBI BANK

    2.Objectives of study

    The following are the objectives of the study.

    a. objective of the study is to have an in depth

    study about SMEs Sector in India.

    b. To study about the finance schemes of banks

    to small and medium enterprises.

    c. To study about the problem faced by the small

    and medium enterprises.

    3. Data and Methodology.

    For the purpose of the study both primary and

    secondary data were used. The primary data

    collected from the bank visit interviewing staff

    etc. The secondary data collected from books,

    magazines, and journals and newspapers .

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    4. Limitation of the study

    The present study has all the limitation of case

    study method.

    5. Presentation of studies

    The present study is arranged as follows:

    CHAPTER 1- Chapter 1 an introduction gives an

    Introduction to the title and to the

    report.

    CHAPTER 2 - Chapter 2 deals with profile of

    IDBI Bank.

    CHAPTER 3 - Chapter 3 give theoretical view of

    the title.

    CHAPTER 4 - The topic under the study is

    given in Chapter 4.

    CHAPTER 5- chapter 5 summarizes the results

    of the study.

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    CHAPTER 2

    IDBI BANK A PROFILE

    The Industrial Development Bank of India Limited,

    now more popularly known as IDBI Bank, was

    established as a wholly-owned subsidiary of

    Reserve Bank of India. The foundation of the bank

    was laid down under an Act of Parliament, in July

    1964. The main aim behind the setting up of IDBIwas to provide credit and other facilities for the

    Indian industry, which was still in the initial stages of

    growth and development. In February 1976, the

    ownership of IDBI was transferred to Government of

    India.

    After the transfer of its ownership, IDBI became the

    main institution, through which the institutes

    engaged in financing, promoting and developing

    industry were to be coordinated. In January 1992,

    IDBI accessed domestic retail debt market for the

    first time, with innovative Deep Discount Bonds, and

    registered path-breaking success. The following

    year, it set up the IDBI Capital Market Services Ltd.,

    as its wholly-owned subsidiary, to offer a broad

    range of financial services, including Bond Trading,

    Equity Broking, Client Asset Management.

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    In September 1994, in response to RBI's policy of

    opening up domestic banking sector to private

    participation, IDBI set up IDBI Bank Ltd., in

    association with SIDBI. In July 1995, public issue of

    the bank was taken out, after which the

    Government's shareholding came down (though it

    still retains majority of the shareholding in the bank).

    In September 2003, IDBI took over Tata HomeFinance Ltd, renamed IDBI Home finance Limited,

    thus diversifying its business domain and entering

    the arena of retail finance sector.

    The year 2005 witnessed the merger of IDBI Bank

    with the Industrial Development Bank of India Ltd.

    The new entity continued to its development finance

    role, while providing an array of wholesale and retail

    banking products (and does so till date). The

    following year, IDBI Bank acquired United Western

    Bank (which, at that time, had 230 branches spread

    over 47 districts, in 9 states). In the financial year of

    2008, IDBI Bank had a net income of Rs 9415.9

    crores and total assets of Rs 120,601crores.

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    Business Summary

    The genesis of "Industrial Development Bank ofIndia Limited" (IDBI Ltd) can be traced to the

    establishment of The Industrial Development

    Bank of India (IDBI), its predecessor entity, in

    1964, by an Act of Parliament to provide credit

    and other facilities for the development of Indian

    industry.

    IDBI Ltd entered commercial banking with the

    incorporation of IDBI Bank Ltd as a its

    subsidiary. On April 2, 2005, IDBI Bank Ltd was

    merged into IDBI Ltd as per the scheme of

    amalgamation sanctioned by RBI.

    The merger seeks to consolidate business

    across the value chain and provide economies

    of scale to the merged entity, enabling it to offer

    an array of customer friendly services to its

    existing and prospective clients, both within the

    geographical boundaries of India and, in due

    course, abroad.

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    IDBI was the First Bank to introduce:

    ATM Next -Online information on the ATM like

    Cricket scores, movie listings

    First ATM network with Audio instructions

    Easy Fill-'The online mobile refilling service

    ATM locator on MMS mobile

    E-Tax collections system-First in India

    Cart to Card-First in Asia Pacific

    PROBLEMS FACED BY IDBI AFTER

    LIBERALIZATION

    Net profit dropped.

    Decline in sanction and disbursements.

    Lack of proper leadership.

    IDBIs NPA increased rapidly.

    Improper business practices.

    ICRA downgraded IDBIs rating in 2001.

    Failed to retain its top-rated customers.

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    Achievements

    IT Team of the Year(2007) Award of IBA5

    Best IT Security Practices Award of NASSCOM

    Best CTO Award of Cyber Media

    Won two special awards, for Best Payments

    Initiative and Outstanding Achiever of the Year

    (2007)

    New Business Initiatives

    o IDBI completed the reorganization of its business

    into separate verticals focused on SME, Agri-

    business, Personal Banking, Mid Corporate, Large

    Corporate and Infrastructure.

    o Bank will also open branches in Singapore, Dubai

    and Shanghai, with either the Dubai or Singapore

    branch opening likely by the end of March.

    o Steps initiated for mortgage guarantee business.

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    o Took another initiative in reaching out to the smaller

    clients by introducing facility of online application for

    educational loan.

    o Bank introduced a new product for encashment/sale

    of Foreign Currency by NRI Clients and

    encashment of Travelers Cheques by Bank.

    SUBSIDIARY COMPANY OF

    IDBI BANK

    IDBI Capital Market Services Limited

    IDBI Capital Market Services Ltd. (head quartered

    in Mumbai), is a leading provider of financial

    services and is a 100% subsidiary of IDBI Bank

    Ltd. The company was set up in 1993 with the

    objective of catering to specific financial

    requirements of financial institutions, banks, mutual

    funds and corporate houses. The company

    provides a complete range of financial products

    and services that includes:

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    Stock Broking-Institutional and Retail

    Derivatives Trading

    Distribution of Mutual Funds

    Investment Banking

    PF/Pension Fund Management

    Retail Marketing of Bonds and IPOs

    Depository Services

    IDBI Home Finance Limited

    IDBI Home finance Ltd. is 100% subsidiary of IDBI

    Bank Ltd. acquired the entire shareholding of Tata

    Finance Ltd. in Tata Home finance Ltd. in

    September 2003. The name of the company was

    changed to IDBI Home finance Ltd. Over the

    years, the company has taken steps to enhance its

    retail reach, strengthen brand image, improve

    asset quality, thereby achieving business growth.

    IDBI Intech Limited

    IDBI Intech Ltd. is a wholly owned subsidiary of

    IDBI Bank Ltd. IDBI has set up IDBI Intech Ltd.

    (INTECH) in March 2000 to tap the opportunities

    arising from the IT sector. INTECH capitalizes on

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    the banking business knowledge acquired over the

    years supplemented with experience in

    Implementation & Management of state-of-the-art.

    IDBI Gilts ltd

    IDBI Gilts Ltd. was set up as a wholly owned

    subsidiary of IDBI Bank Ltd. to undertake Primary

    Dealership [PD] Business. In accordance with RBI

    guidelines, the PD business of IDBI Capital Market

    Services Ltd. [ICMS] has been de-linked and

    transferred to IDBI Gilts Ltd. The company was

    incorporated in December 2006 and became

    operational from July 24, 2007. The company's

    business ambit includes Bond trading, underwriting

    in auctions of primary issuance of Government

    dated securities and treasury bills. In addition, IDBI

    Gilts also plans to be a major player in the interest

    rate and credit derivative market.

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    CHAPTER 3

    THEORITICAL VIEW

    Micro, small and medium enterprises (MSME)

    sector has been recognized as an engine of growth

    all over the world. The sector is characterized by

    low investment requirement, operational flexibility,

    location wise mobility, and import substitution. In

    India, the Micro, Small and Medium Enterprises

    Development (MSMED) Act, 2006 is the first single

    comprehensive legislation covering all the three

    segments. In accordance with the Act, these

    enterprises are classified in two:- (i) manufacturing

    enterprises engaged in the manufacture or

    production of goods pertaining to any industry

    specified in the first schedule to the Industries(Development and regulation) Act, 1951. These are

    defined in terms of investment in plant and

    machinery; (ii) service enterprises engaged in

    providing or rendering of services and are defined in

    terms of investment in equipment.

    India has a vibrant micro and small enterprise

    sector that plays an important role in sustaining the

    economic growth, by contributing around 39 per

    cent to the manufacturing output and 34 per cent to

    the exports in 2004-05. It is the second largest

    http://business.gov.in/outerwin.htm?id=http://www.indiacode.nic.in/rspaging.asp?tfnm=200627http://business.gov.in/outerwin.htm?id=http://www.indiacode.nic.in/rspaging.asp?tfnm=200627http://business.gov.in/outerwin.htm?id=http://www.indiacode.nic.in/rspaging.asp?tfnm=200627http://business.gov.in/outerwin.htm?id=http://www.indiacode.nic.in/rspaging.asp?tfnm=200627http://business.gov.in/outerwin.htm?id=http://www.indiacode.nic.in/rspaging.asp?tfnm=200627
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    employer of human resources after agriculture,

    providing employment to around 29.5 million people

    (2005-06) in the rural and urban areas of the

    country. Their significance in terms of fostering new

    entrepreneurship is well-recognized. This is

    because, most entrepreneurs start their business

    from a small unit which provides them an

    opportunity to harness their skills and talents, to

    experiment, to innovate and transform their ideas

    into goods and services and finally nurture it into alarger unit.

    IMPORTANCE OF SMALL AND MEDIUM

    ENTERPRISES

    Large scale generation of wage employment is

    possible with the growth of SMEs in on economy.

    The pattern of contribution of GDP in any economy

    will show that the SME sector is a dominant

    contributor to the well being of a country.

    SME projects do not generally involve large

    financial resources , but at the same time the sector

    is growth driver in an economy.

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    THE time lag between conception of an SMEs

    project and commencement of business is not

    substantial.

    SME cluster take care of the 4Cs ,as per the

    Ganguly Committee Report ,Customer focus, Cost

    Control , cross sale and containing Risk.

    When compared to similar products and service of

    large sized units, SME products and service are

    competitive and customer friendly in terms of cost,

    without compromising quality.

    BENEFITS IN FINANCING SMEs

    Benefits in financing SMEs from the view point of

    the national economy. The benefits arising from

    higher order focus of SME financing may be broadly

    states as follows.

    1. Increasing the contribution of the SME sector in the

    GDP of the country.

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    2. Entrepreneurial interest would be encouraged and

    growth in number of SMEs may be possible.

    3. New products and services would be increasingly

    available for consumers.

    4. Competitiveness in business will increase.

    ACTIVITIES OF SMEs

    The SME sector may concern itself with a

    commercial activity permissible under law .Hence,

    any type of manufacturing, processing or industrial

    activity or trading or allied operation , may be the

    domain of the SME sector. However, the followingactivities may be encouraged for the SME sector:

    1. Village and cottage industries.

    2. Computer software development and computer

    service.

    3. Data conversion /Data processing service.

    4. Medical/Legal transcription activities.

    5. Website design and development.

    6. Call centers .

    7. Content development and animation.

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    8. Video film making.

    9. Tailoring.

    10. Studio.

    11. Cable TV network

    12.Laundry and dry cleaning.

    In India , as there is no specific policy of reservation or

    preferential treatment for a particular type of activity for

    SMEs, they stand on an equal footing with large sized

    business units .However , the items listed above areconsidered more suitable for SMEs having regard the

    following factors:

    1. Involvement of lesser amount of financial resources.

    2. Lower gestation period.

    3. Wide scope of marketing.

    LEGAL CONSTITUTION FOR SMEs

    Under the general Law/principles of Equity, any

    individual or group of individual , may form an

    acceptable form of organization to undertake the

    business of an SME, provided they have attained

    the age of majority .Whenever specific rules of

    constitution exist the same should be complied with.

    Any particular form of constitution by itself does not

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    confer special benefits for an SME . The choice of a

    constitution

    (whether partnership or private limited etc)by agroup of individual depends upon their resources

    level , business perception , convenience of

    management and coverage of business operation ,

    etc.

    SMEs in India are generally constitute in any of the

    following forms:

    Sole Proprietary concern.

    Partnership concern

    Limited company

    Hindu Undivided Family

    It is also possible to run SMEs as Public Trust.

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    UTILITY OF CREDIT RATING FOR

    SMEs

    Credit rating is an important tool for the

    assessment of any credit account, as well as for

    under taking post disbursement monitoring and

    follow-up . In this respect, the Basel Committee

    considers that credit rating facilitates the monitoring

    of credit risk . The system in each bank should be

    integrated into the institutions overall analysis of

    credit risk and capital adequacy . The system

    should be strong enough to support the

    identification and measurement of risk from credit

    exposures.

    In the context of an SMEs , the utility of a credit

    rating may be viewed from the following aspects;

    1. Evaluation of the borrower in totality

    2. Transaction level analysis, credit pricing and tenure.

    3. Activity-wise , sector wise portfolio study, keeping in

    view a macro level position.

    4. Fixation of outer limit for taking up , maintaining an

    exposure that arises out of risk rating.

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    5. Monitoring of existing exposures , and deciding

    exist strategies in appropriate cases.

    6. Allocation of risk capital (economic capital) in cases

    of poorgraded accounts.

    7. A voidance of an overconcentration of exposure in

    specific risk grades.

    In short ,the credit rating mechanism for SME

    enables :

    Bifurcation of accounts into graded risk attributes.

    Pricing of credit based on risk grade.

    Focusing higher order attention on monitoring

    poorly graded accounts.

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    Credit RatingGrades

    Grade no. Nature ofgrade

    Definition of the Grade

    1. AAA Highest Safety

    2. AA Very High Safety

    3. AA- High Safety

    4. A+ Adequate Safety

    5. A- Moderate Safety

    6. BBB Marginal Safety

    7. BB+ Low Safety or RiskProne

    8. BB- Substandard or High

    probability of Default

    9. BB Doubtful or Very HighProbability of Default

    10. B Loss or HighestProbability of Default

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    PROBLEMS OF SMEs

    1.Low capital base for and inadequate availability of

    institutional funds.

    2.Low technology base and inability to move up to

    the current technological system owing , mainly to

    lack of funds required for technology up gradation.

    3. Poor quality of products/service as compared to

    those provided by large sized units due , mainly to

    absence/inadequacy of quality control assessment.

    4.Weak/ineffective management unable to copewith contemporary business requirements.

    5.Proportionately higher amount of Non- Performing

    Advance (NPA)of banks/financial institution in SME

    sector creates risk aversion in lending.

    6. Economic efficiency is limited affecting their

    products / services in competition with large sized

    units.

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    Nursing of SMEs

    Nursing of borrowal accounts involves taking care of

    sick accounts so as o improve the position from the

    angle of safety of loans advances of lender over a

    period of time. Therefore both the borrower and the

    bank(in case of bank lending) would be interested in

    adopting a structured nursing programme , in view

    of the following .

    1.From the borrowers side, it provides opportunity

    for designing a final restructuring ,with a roadmap

    for settling the final commitments in an acceptance

    ,with a roadmap for settling the final commitments in

    an acceptable manner. Wherever considered

    justified, the finance charges (rate of interest/service

    charges 0 may be reduced by the financing bank,

    thereby providing necessary relief. Also through the

    window of the nursing arrangement , the borrower

    may be allowed respiratory finance on concessional

    terms.

    2. From the financing banks side also , it may be

    useful in case where the ultimate viability of the

    business of the borrower has been satisfied . This

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    will enable the bank , in the course of time, to

    recover the amount lent to be lent under a nursing

    arrangement. In case a nursing arrangement is not

    entertained, the only other alternative available to a

    bank is to crystallize the securities , if any, and file a

    law suit for recovery . Such an extreme course of

    action would be undertaken when a bank is

    convinced that no nursing persuasion would be of

    any avail.

    WHEN AN SME IS CONSIDERED

    SICK

    An SME is considered sick , if :

    a)The account remain SUB-STANDARD formore than six months.

    b)50% of the net worth (i.e. capital + reserves) is

    eroded due to accumulated losses.

    c)the borrower has been in the business

    (commercial production in the case of

    manufacturing unit) for at least two years.

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    It is observed from the above that of the two

    minimum identification criteria, being in business

    commercial production is a compulsory criterion ,

    while either the account has to remain sub

    standard for six months, OR erosion in net worth,

    are criteria of which one must be applicable so that

    the account may be classified as sick.

    WARNING SIGNALS OF

    INCIPIENT SICKNESS

    Prevention is better than cure, as the age old

    saying goes. This spirit is applicable in SME

    financing also. Hence , if warning signals are

    spotted at a nascent stage in financing an SME , the

    appropriate remedial measures can be initiated

    promptly , thereby prevention the units from actually

    becoming sick.

    While the Regulatory Authority have not laid down

    any specific warning signals (as this is not possible)

    the following features generally indicate the incipient

    sickness of accounts:

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    Default delayed payment of installments and/or

    interest in borrowal accounts like term loan ,cash

    credit ,overdraft etc.

    Cash credit overdraft facilities are supposed to be

    drawn up to a maximum of the sanctioned limit

    ,barring exceptional situation. In case there is

    continuous excess drawing in such accounts and/orthe value of securities does not cover the

    outstanding balance , as per terms and condition for

    the facilities , this a warning signals.

    Frequent return of cheques due to financial

    reasons.

    Frequent return of bills drawn on various parties.

    Invocation of guarantees by the beneficiaries ,

    issued on behalf of SME.

    Frequent complaints from suppliers of material of

    the SME about non payment of there bills.

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    Large inventory build-up as compared to the volume

    of business.

    Allowing trade credit to its buyers for a very long

    period, say , over 6 months or so (this is also

    subject to the nature of the business)

    Non submission /delayed submission of Balance

    sheet (and profit/loss accounts).

    GENERAL FACTORS RESPONSIBLE

    FOR ACCOUNTS BECOMING SICK

    Reasons for sickness of each SME account need tobe studied separately and appropriate remedial

    steps taken. However , the following general factors

    are found responsible for sickness in SME

    accounts:

    INTERNAL FACTORS:

    Diversion of fund, especially for associated sister

    concerns with without any interest.

    Business failure (product, marketing , etc.)

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    Strained labour relations, leading to frequent

    disruption of work.

    Recurrent technical problem without any

    permanent solution.

    Product obsolescence.

    EXTERNAL FACTORS:

    Recession / severe deceleration.

    Non-payment of customer of concerned SME.

    Input/ power shortage.

    Accidents and natural calamities (many SMEs

    reportedly suffered in a massive way in the major

    earthquake in Gujarat on 26.1.2000)

    Change in government policies on excise duty/

    import duty/ pollution control orders.

    WHEN FINANCIAL NURSING

    SHOULD BE TAKEN UP

    A financial nursing programme for an SME accounts

    may be prepared on the following basis:

    The unit/business is considered potentially viable.

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    Thus, it must be satisfied that the borrower would

    be in a position to service its repayment obligation

    after implementation the relief package under the

    nursing programme , spread over a period not

    exceeding 5 years.

    The repayment period for restructured past debts

    should not exceed 7 years.

    No concession / relief should be extend after a

    period of 5 years from the of commencement of

    nursing programme.

    HOW FINANCIAL NURSING IS

    GENERALLY UNDERTAKEN

    Once an SME is identified as POTENTIALLY

    VIABLE, financial nursing is to be drawn up in such

    way that the unit turns out and starts normal

    functioning as soon as possible, with regardto meeting its financial commitments. The aforesaid

    financial nursing takes the form of providing various

    RELIFES AND CONCESSIONS which are generally

    as follows:

    Penal interest, if any, charged in borrowel accountis to be waived, from the date of the unit incurring

    cash losses.

    Rate of interest for existing Term Loan and workingcapital accounts may be reduced where justified,

    subject to a maximum reduction of 3 % p.a.

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    Interest rate on fresh working capital amount maybe charged at 1.5% p.a. less than the normal rate

    for such accounts.

    Fund for startup expenses, including payments topressing creditors, may be provided after dueassessment with an interest rate charged at 1.5%

    p.a. less than the normal rate for such accounts.

    Promoters should contribute fresh funds towards arehabilitation package, which should generally be a

    minimum of additional Term Loan requirement

    under the rehabilitation package.

    The above is only an indicative list. In actual

    cases, reliefs concessions would be worked out

    depending on the economics of rehabilitation

    scheme.

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    1. SULAB VYAPAR LOAN

    ELIGIBLE SEGMENT

    Traders and Services Sector.

    FACILITY

    Fund based: Overdraft, cash credit, term

    loan. Bill discounting. Non fund based: Bank

    guarantee and letter of credit.

    LOAN AMOUNT

    Minimum: Rs. 5 lakhs maximum Rs. 500 Lakhs.

    TENOR

    TL: up to 5years.

    SECURITY

    a. Hypothecation of stock and book debts and assets

    financed by bank.

    b. Personal guarantee of the borrower.

    c. Collateral Security up to 110% of the

    loan amount.

    PROCESSING CHARGES

    Up to 1%of loan amount.

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    2.DEALER FINANCE

    ELIGIBLE SEGMENT

    Distribution chain partners comprising

    dealer, stockists, Distributors etc.

    FACILITY

    Overdraft, Cash credit, Term loan, other working

    facility.

    PURPOSE

    a.Over draft/Cash credit working capital /

    meeting temporary mismatch of fund.

    b.Other working capital facilities on case to

    case basis.

    c. TL: Acquisition of fixed assets, renovation of

    premises, retiring of high cost debt etc.

    LOAN AMOUNT

    Minimum Rs. 10 lakhs maximum 500 lakhs.

    TENOR

    1 year to 3 years.

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    SECURITY

    a. exclusive charge on all assets of the borrowers.

    b. Personal guarantee of the borrowers.

    c. Collateral security as deemed necessary.

    PROCESSING CHARGES

    1% of Loan amount.

    3. PREFERRED CUSTOMER SCHEME

    ELIGIBLE SEGMENT

    All Entities in SSI segment as cover under

    MSMED Act 2006 having a satisfactory

    relationship with either IDBI bank or SIDBI.

    FACILITY

    General Purpose Overdraft/ Short term loan limit

    to be utilized as desired by the client.

    PURPOSE

    a. Non project specific expenses like adding/

    Replacement of machinery, Balancing

    Equipment renovation/ addition to factory

    building/ fixtures, computer/ software, WC

    margin needs, Marketing related expenses,

    setting a franchise, brand building, Deposits for

    contract, temporary shortage of working capital

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    b. Initially investment in new projects where full

    project/ schemes as not been crystallized

    could also be covered under the schemes

    e.g. buying new industrial land or shade for

    expansion etc.

    c. Expenditure incurred 3 months before

    issue of offer letter by the bank could

    also be considered.

    LOAN AMOUNT

    a. Up to Rs. 200Lakhs for customer of IDBI

    Bank.

    b. Up to 100Lakhs for customer of SIDBI.

    TENOR

    a. Overdraft- 12 months

    b. Short term loan 12 months for equal

    repayment and no moratorium.

    SECURITY

    Extension of existing security and personal

    guarantee.

    PROCESSING CHARGES

    Up to 1.00% of loan amount service tax etc.

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    4.LEADING AGAINEST THE SECURITY OF

    FUTURE CREDIT CARD RECEIVABLES.

    ELIGIBLE SEGMENT

    a. Reputed Restaurants

    b. Hotels

    c. Large Petrol pumps

    d. Hospital

    FACILITY

    Overdraft ,Term loan given to retail merchant

    establishment that accept credit/debit card.

    PURPOSE

    a. OD: Temporary mismatch of funds .

    b. TL: Acquisition of fixed asset , renovation of

    premises, retiring of high cost debt , etc.

    LOAN AMOUNT

    a. minimum Rs 50Lakhs

    b. Maximum Rs 500Lakhs

    TENOR

    a. OD up to 1 year.

    b. TL up to 3 years.

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    PROCESSING CHARGES

    Up to 1% of loan amount + service charges as

    applicable.

    SECURITY

    a. Hypothecation of future card receivables.

    b. In addition, Bank may require charge on other

    current asset / fixed asset for appropriate

    value depending upon case to case basis.

    c. Personal Guarantee of the borrower.

    5. WORKING CAPITAL FINANCING SOFTWARE

    DEVELOPMENT ENTITIES

    ELIGIBLE SEGMENT

    The entity must be engaged in export of

    Software /software service to acceptable

    countries.

    FACILITY

    a. Overdraft limit

    b. Loan Equivalent Ratio (LER) for booking of

    Forward Contracts against underlying

    transaction.

    PURPOSE

    Working Capital Finance.

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    LOAN AMOUNT

    Minimum Rs 25 lakhs and Maximum Rs 200

    lakhs.

    TENOR

    12 months

    PROCESSING CHARGES

    Up to 1.00% of loan amount.

    6.FINANCE TO MEDICAL PRACTITIONERS

    ELIGIBLE SEGMENT

    Promoters should have minimum MBBS/ BAMS/

    BDS/ BHMS.

    FACILITY

    Term Loan, Working Capital

    PURPOSE

    The scheme is exclusively for financing to

    Doctor/medical practitioners to undertake all

    activities related to medical profession.

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    LOAN AMOUNT

    a.Minimum :Rs 50,000

    b.Maximum :Rs 2 crores

    TENOR

    a. Not exceeding 7 years

    b. No prepayment penalty for loan upto Rs 5

    lakhs.

    PROCESSING CHARGES

    Processing fee up to 1% will be charged with a

    minimum of Rs 500.

    SECURITY

    a. Term loan :Exclusive charges on assets

    financed and to be registered with ROC in

    case of limited companies.

    b. Working capital : Exclusive charges on all the

    current assets.

    c. Personal guarantee of the promoter director

    (in case of limited companies)

    MARGINE

    1. Term loan:

    a. 25%for new assets

    b. 35% for old assets

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    2. Overdraft:

    a. 25%on stock

    b. 40% on book debts

    7. LOANS TO SMALL ROAD WATER TRANSPORT

    OPERATORS (SRWTOs)

    ELIGIBLE SEGMENT

    a. All SRWTOs

    b. All goods/passenger transport vehicles including

    light commercial vehicle , auto rickshaws, motor-

    buses and lorries are eligible . Small refrigerated

    vans , bulk carriers for carrying petroleum/edible oil.

    c.Water transport units such as small boats,

    launches, etc. are also covered.

    FACILITY

    a. Term loan

    b. Cash credit/overdraft

    c. Bank Guarantee

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    PURPOSE

    a. New Asset finance

    b. Working capital

    c. Take over of existing loans.

    TENOR

    a. OD/CC/BG-Not exceeding 1 year

    b. TL for new asset finance-not exceeding 5 year

    c. Prepayment, if any , may be allowed without any

    prepayment penalty.

    PROCESSING CHARGES

    a. 0.50%p.a.of loan amount.

    SECURITY

    a. Exclusive charges on assets financed and to be

    registered with RTO and ROC as applicable.

    b. Personal guarantees of the promoter directors in

    case of limited companies.

    c.3rd party guarantees

    MARGINE

    a. Depending upon the nature of facilities.

    b.

    8. VENDOR FINANCING PROGRAM

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    PRE- SALE FUNDING

    Target segment

    MICRO SMALL AND MEDIUM Enterprises as per

    definition gives in MSMED Act 2006

    Nature-overdraft/CC and NFC LC for purchase PF

    material

    ELIGIBLITY CRITERIA

    Vendor of existing corporate relationships of IDBIBank.

    PURPOSE

    Fund the manufacturing cycle

    TENOR

    one year

    REPAYMENT SCHEDULE

    From bill/Invoice Discounting

    PROCESSING FEES

    Up to 1%of loan sanctioned

    COLLATERAL

    a. second charge on the fixed assets of the vendor

    on reciprocal basis with the term lenders.

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    b. Personal Guarantee of directors/partners/sole

    proprietor.

    POST

    SALE FUNDING

    TARGET SEGMENT

    Micro small and medium given in MSMEDAct2006.

    NATURE OF LOAN

    Bill discounting / financing against invoice.

    ELIGIBILITY CRITERIA

    Vendor of existing corporate relationship of IDBI

    Bank.

    PURPOSE

    Fund the receivable cycle.

    TENOR

    180 days maximum

    REPAYMENT SCHEDULE

    By OEM on due date.

    PROCESSING FEES

    Up to 1 % of loan sanctioned.

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    COLLATERAL

    Personal Guarantee of directors/partners/sole

    proprietor.