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SME unding ! Studyof an "ndian
Entrepreneur
Group # 05 TYBMS
G.N Khalsa college
1/27/2012
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Group Members:
1.Purna Kaur Arora 02
2.Tejal Kaur Arora 04
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INTRODUCTION TO SME’S
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Small and Medium Enterprises (SMEs) have played a significant role
world over in the economic development of various countries. Over a
period of time, it has been proved that SMEs are dynamic, innovative
and most importantly, the employer of first resort to millions of peoplein the country. The sector is a breeding ground for entrepreneurship.
The importance of SME sector is well-recognized world over owing to
its significant contribution in achieving various socio-economic
objectives, such as employment generation, contribution to national
output and exports, fostering new entrepreneurship and to provide
depth to the industrial base of the economy. Small and medium-sized
enterprises (SMEs) are the backbone of all economies and are a keysource of economic growth, dynamism and flexibility in advanced
industrialized countries, as well as in emerging and developing
economies. SMEs constitute the dominant form of business
organization, accounting for over 95% and up to 99% of enterprises
depending on the country. They are responsible for between 60-70%
net job creations in Developing countries. Small businesses are
particularly important for bringing innovative products or techniques
to the market. Microsoft may be a software giant today, but it started
off in typical SME fashion, as a dream developed by a young student
with the help of family and friends. Only when Bill Gates and his
colleagues had a saleable product were they able to take it to the
marketplace and look for investment from more traditional sources.
SMEs are vital for economic growth and development in both
industrialized and developing countries, by playing a key role in
creating new jobs. Financing is necessary to help them set up and
expand their operations, develop new products, and invest in new staff
or production facilities. Many small businesses start out as an idea
from one or two people, who invest their own money and probably turn
to family and friends for financial help in return for a share in the
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business. But if they are successful, there comes a time for all
developing SMEs when they need new investment to expand or
innovate further. That is where they often run into problems, because
they find it much harder than larger businesses to obtain financingfrom banks, capital markets or other suppliers of credit.
COMMON CHARACTERISTICS OF SMES:
(a)Born out of individual initiatives & skills
SME startups tend to evolve along a single entrepreneur or a small
group of entrepreneurs; in many cases; leveraging n a skill set. There
are others setup purely as a means of earning livelihood.
(b)Greater operational flexibility
The direct involvement of owner(s), coupled with flat
hierarchical structures and less number of people ensure thatthere is greater operational flexibility. Decision making such as
changes in price mix or product mix in response to market conditions
is faster.
(c)Low cost of production
SMEs have lower overheads. This translates to lower cost
of production, least up to limited volumes.
(d)High capacity to innovate export:
SMEs skill in innovation, improvisation and reverse engineering are
legendary. By being able to meet niche requirements, they are
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also able to capture export markets where volumes are not
huge.
(e)High employment orientation:
SMEs are usually the prime drives of jobs, in some cases creating up
to 80%. Jobs SMEs tend to be labour intensive per se and are
able to generate more jobs for every unit ofinvestment, compared
to their bigger counterparts.
(g) Reduction of regional imbalances
Unlike large industries where divisibility of operations is more difficult,SMEs enjoy the flexibility of location. Thus, any country,
SMEs can be found spread virtually right across, even though
some specific location s emerge as ‘clusters’.
SMEs in India:
India has a vibrant SME sector that plays an important
role in sustaining economic growth, increasing trade,
generating employment and creating new entrepreneurship in
India.
In keeping in view its importance, the promotion and
development of SMEs has been an important plank in our
policy for industrial development and a well-structured program
of support has been pursued in successive five-year plans for. SMEs in
India have recorded a sustained growth during last five decades.
The number of SMEs in India is estimated to be around13 million
while the estimated employment provided by this
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sector is over 31 million. The SME sector accounts for
about 45 per cent of the manufacturing output and over 40 per
cent of the national exports of the country.
Figure 1.1SMEs In India
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DEVELOPMENT OF SMES IN INDIA :
SME has emerged into prominent sector in Indian economy in
general and industry in particular. SSI sector in India hasposted impressive growth in 1990's from 15% in1991-92 to
55% in 2001-02.The growth in employment generation has been
equally impressive from 3% to 45% during the same period.
Employment in SME touched 19million, just behind agriculture. Share
of SSI exports crosses 40% of total exports.
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Growth by itselfin SME sector is impressive enough indicating
a positiveresponse to the Economic Reform process initiated in the
country since 1991.
--- Development of infrastructure
--- Availability of Cheap Credit ---Concessionary Taxes and Tariffs
--- Financial subsidies
--- Equity contributions are all the protective measures for the sector
--- Assured supply of Raw Materials.
The Long-Term Finance may be Raised by the Companies
from the following Sources:-
Capital market :
Capital market denotes an arrangement whereby transactions
involving the procurement and supply of long-term funds take
place among individuals and various organizations. In the capital
market, the companies raise funds by issuing shares and
debentures of different types. When long-term capital is initiallyraised by new companies or by existing companies by issuing
additional shares or debentures, the transactions are said to take
place in the market for new capital called, as 'New Issue Market'.
But, buying and selling of shares and debentures already issued
by companies takes place in another type of market called as 'the
Stock market'.
Special Financial Institutions:
A large number of financial institutions have been established in
India for providing long-term financial assistance to industrial
enterprises. There are many all-India institutions like Industrial
Finance Corporation of India (IFCI); Industrial Credit and
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Investment Corporation of India (ICICI); Industrial Development
Bank of India(IDBI), etc. At the State level, there are State
Financial Corporations (SFCs) and State Industrial Development
Corporations (SIDCs). These national and state level institutions
are known as 'Development Banks'. Besides the development banks, there are several other institutions called as 'Investment
Companies' or 'Investment Trusts' which subscribe to the shares
and debentures offered to the public by companies. These
include the Life Insurance Corporation of India (LIC); General
Insurance Corporation of India (GIC); Unit Trust of India (UTI),
etc.
Leasing companies :
Manufacturing companies can secure long-term funds from
leasing companies. For this purpose a lease agreement is made
whereby plant, machinery and fixed assets may be purchased by
the leasing company and allowed to be used by the
manufacturing concern for a specified period on payment of an
annual rental. At the end of the period the manufacturingcompany may have the option of purchasing the asset at a
reduced price. The lease rent includes an element of interest
besides expenses and profits of the leasing company.
Foreign companies :
Funds can also be collected from foreign sources, which usually
consists of:- Foreign Collaborators:- If approved by the Government of India,
the Indian companies may secure capital from abroad through the
subscription of foreign collaborator to their share capital or by way of
supply of technical knowledge, patents, drawings and designs of plants
or supply of machinery.
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International Financial Institutions:- like World Bank and
International Finance Corporation (IFC) provide long-term funds for the
industrial development all over the world. The World Bank grants loans
only to the Governments of member countries or private enterprises
with guarantee of the concerned Government. IFC was set up to assistthe private undertakings without the guarantee of the member
countries. It also provides them risk capital.
Non-Resident Indians:- persons of Indian origin and nationality
living abroad are also permitted to subscribe to the shares and
debentures issued by the companies in India.
Retained Profits or Reinvestment of Profits:
An important source of long-term finance for ongoing profitable
companies is the amount of profit which is accumulated as general
reserve from year to year. To the extent profits are not distributed as
dividend to the shareholders, the retained amount can be reinvested
for expansion or diversification of business activities. Retained profit is
an internal source of finance. Hence it does not involve any cost of
floatation which has to be incurred to raise finance from externalsources.
Short-Term Finance may be Raised by the Companies from
the following Sources:-
Trade Credit:
It is the credit which the firms get from its suppliers. It does not make
available the funds in cash, but it facilitates the purchase of supplies without immediate payment. No interest is payable on the trade
credits. The period of trade credit depends upon the nature of
product, location of the customer, degree of competition in the
market, financial resources of the suppliers and the eagerness of
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suppliers to sell his stocks.
Installment Credit:
Firms may get credit from equipment suppliers. The supplier mayallow the purchase of equipment with payments extended over a
period of 12 months or more. Some portion of the cost price of the
asset is paid at the time of delivery and the balance is paid in a
number of installments. The supplier charges interest on the
installment credit which is included in the amount of installment.
The ownership of the equipment remains with the supplier until all
the installments have been paid by the buyer.
Accounts Receivable Financing:
Under it, the accounts receivable of a business concern are
purchased by a financing company or money is advanced on security
of accounts receivable. The finance companies usually make
advances up to 60 per cent of the value of the accounts receivable
pledged. The debtors of the business concern make payment to it
which in turn forwards to the finance company.
Customer Advance:
Manufacturers of goods may insist the customers to make a part of
the payment in advance, particularly in cases of special order or big
orders. The customer advance represents a part of the price of the
products that have been ordered by the customer and which will be
delivered at a later date.
Bank Credit:
Loans:- When a bank makes an advance in lump sum, the
whole of which is withdrawn to cash immediately by the
borrower who undertakes to repay it in one single installment, it
is called a loan. The borrower is required to pay the interest on
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the whole amount.
Cash credit:- It is the most popular method of financing by
commercial banks. When a borrower is allowed to borrow up to
a certain limit against the security of tangible assets orguarantees, it is known as secured credit but if the cash credit
is not backed by any security, it is known as clean cash credit.
In case of clean cash credit the borrower gives a promissory note
which is signed by two or more sureties. The borrower has to
pay interest only on the amount actually utilized.
Overdrafts:- Under this, the commercial bank allows its
customer to overdraw his current account so that it shows thedebit balance. The customer is charged interest on the account
actually overdrawn and not on the limit sanctioned.
Discounting of bills:- Commercial banks finance the business
concern by discounting their credit instruments like bills of
exchange, promissory notes and hundies. These documents arediscounted by the bank at a price lower than their face value.
PROBLEMS OF SMES:
SME sector faces a number of problems - absence ofadequate
and timely banking finance, limited knowledge and non-availability of
suitable technology, low production capacity, follow up with variousagencies in solving regular activities and lack of interaction with
government agencies on various matters. Some of the major problems
are briefly as follows:
a)Financial problems of SMEs:
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The financial problem ofSMEs is the Root Cause for all the other
problems faced by the SME sector. The small and medium
industrialists are generally poor and there are no facilities
for cheap credit. They fall into the clutches of money lender who
charges very high rates of interest, or else they borrow from thedealers of their goods, who exploit them by completing
them to sell their products at very low price. After
the nationalization of 14 major Indian Banks in July,
1969, the Commercial banks were providing only a small
proportion of SMEs financial requirements. Credit to the SME
sector continues to be non-commensurate with its contribution
to the total industrial output. As against the share of the village and
SME at 40% in the industrial output, its share in total credit to theindustrial sector is only about 30%.
b) Raw Material problem of SMEs:
This difficulty is experienced in a very pronounced form. The
quantity,quality andregularity ofthe supply ofraw materials ar
e not satisfactory. There are noquantity discounts, since they ar
e purchased in small quantities and hencecharged, higher prices
by suppliers. Difficulty is also experienced in procuring semi-manufactured materials. Financial weakness stands in the way of
securing rawmaterialism bulk in a competitive market.
c)Technological problem of SMEs:
Today technology is changing at a very fast phase; it becomes difficult
for SMEs to cope up with changing technology. Technology up
gradation and the frequent need to renew the equipment has
emerged as a big problem.
d) Marketing problem of SMEs:
As marketing is not properly organized,helpless artisans are
completely at the mercy of middle man. The potential demand for their
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goods remains under developed. SMEs cannot afford to spend lavishly
for advertisement to promote their sales.
e) Managerial problem of SMEs:
The in efficiency in management comes first among managerial proble
ms.The entrepreneurial ability ofpromoters ofcottage industrie
s and SMEs are handicapped by technical knowhow in the areas
of production, finance, accounting and marketing management.
f) Sickness of SMEs:
A serious problem which is hampering small and medium
sector has been sickness. Many small units have fallen sick due
to one problem or the other. Sickness is caused due to both Internal and external factors. From among the various inte
rnaland external causes ofsickness the important ones are bud
management,high rate ofcapital gearing, inadequacy offinance, short
ofrawmaterials, outdated plant and machinery, low labor productivity
etc.
NEED OF THE HOUR:
The need of the hour for Indian SMEs is to upgrade theirtechnology, The availability ofadequate credit at affordable
cost, thus, becomes critical for Indian SMEs. SIDBI is the
national level principal financial institution
for promotion, financing and development ofSMEs.
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Glass Bangles
Mechanical Engg. Excluding Transport Equipment:
Steel almirah, Rolling shutters, Steel chairs – all types, Steel
tables – all other types, Steel furniture – all other types,Padlocks, Stainless steel utensils, Domestic utensils – Aluminium
SME FINANCING:
SME Finance is the funding of small and medium sized
enterprises and represents a major function of the general
business finance market – in which capital for firms oftypes is
supplied, acquired, and costed/priced. Capital is supplied
through the business finance market in the form of bankloans and overdrafts; leasing and hire-purchase
arrangements; equity/corporate bond issues; venture capital
orprivate equity; and asset- based finance such as factoring and
invoice discounting.
Importance:
The economic and social importance ofSME
sector is well recognized in academic and policy literature. It isalso recognized that these actors in the economy may be
underserved, especially in terms offinance. This has led to
significant debate on the best methods to serve this sector.
Collateral based lending offered by traditional banks and finance
companies is usually made up of a combination ofasset-based
finance, contribution based finance, and factoring based finance,
using reliable debtors or contracts.
Information based lending usually incorporates financial statement
lending,credit scoring, and relationship lending.
Viability based financing is especially associated with venture capital.
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detailed financial information – which can actually assist the finance-
raising process;
• Banks are particularly nervous of smaller businesses
due to a perception that they represent a greater credit risk.Because the information is not available in other ways, SME’s
will have to provide it when they seek finance. They will
need to give a business plan, list of the company assets,
details of the experience of directors and managers and demonstrate
how they can give providers of finance some security for amounts
provided. Prospective lenders – usually banks – will then make a
decision based on the information provided. The terms of the loan
(interest rate, term, security, and repayment details) willdepend on the risk involved and the lender will also want to monitor
their investment. A common problem is often that the banks will be
unwilling to increase loan funding without an increase in the
security given. Aparticular problem of uncertainty relates to
businesses with a low asset base. These are companies without
substantial tangible assets which can be used to provide
security for lenders. When an SME is not growing
significantly, financing may not be a major problem.
However, the financing problem becomes very important when a
company is growing rapidly, for example when contemplating
investment in capital equipment or an acquisition. Few growing
companies are able to finance their expansion plans from cash flow
alone. They will therefore need to consider raising finance
from other external sources. In addition, managers who are
looking to buy-in to a business ("management buy-in" or "MBI")
or buy-out (management buy-out" or "MBO") a business from its
owners may not have the resources to acquire the
company. They will need to raise finance to achieve their
objective.
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ROLE OF PUBLIC SECTOR BANKS IN SME FINANCING:
Banks are playing a major role in financing SMEs in India. Nearly 82%
of the total SME financing in year 2006-07 is through banks. And
among them the major share is of public sector banks i.e. 57%. Thus
it is clear that the most common source of finance for SMEs is Bank
Financing. There are no. of banks that help in assisting the
SMEs for financing.
The main channel used by the SMEs via Banks is Specialized
loans by various Banks. The Main reason for choosing bank loans by
SMEs compared to other sources offinancing like venture capital,
PE funding etc is that is only interest to be paid no stake is to be diluted thus the whole command of the SME is with the owner
only. There area number of Private as well as Public sector banks who
assist SME in Financing.
The role of Banks, in general, has become very important in the above
context The SME sector’s demands were comprehensively taken care of
by the Public sector Banks through several initiatives such as:
Single Window dispensation,
Quick decision with least Turnaround Time through specially
constituted SME Cells, and above all,
Better service. Cluster-based Schemes are also on the list of the
Bank’s initiatives. The Bank prioritized the following more
particularly:-
Provision of timely and adequate credit to the SMEs,
Encouraging Technology Up gradation, for better quality and
competitiveness oftheir product(s), and
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Proactively detecting sick and viable units in time so as to nurse
them back to health through appropriate re-structuring.
Financing of Clusters with adequate and concessional Bankfinance on liberal terms in several pockets for specified activities
concentrated in these pockets, which would result in reducing
transaction cost and greater economies of scale.
Some Public sector Banks offering SME financing schemes are as
follows:
State Bank of IndiaState Bank of India has been playing a vital role in the
development of small scale industries since 1956.The Bank has
financed over 8 lakhs SSI units in the country. It has55 specialized
SSI branches, 99 branches in industrial estates and more than 400
branches with SIB divisions
The Bank finances for Small Business activities which are of special
significance to a large number of people as many of these
activities can be started with relatively lower investment and with no special skills on the part of the entrepreneurs. The
following are the SME products offered by State Bank Of India:
• Commodity Packed Warehouse Receipt Financing
• Traders Easy Loan Scheme
• SSI Loans
• Business Current Accounts
• Open Term Loan
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needs of business and industries. The Bank has parameterized
products for transporters, dealers, traders, and vendors. In
addition, it has a separate Transaction Banking Group that has
expertise in products like cash management services, letter of credit,
bank guarantees and treasury products”
IDBI Bank provides following SME products:
• SulabhVyapar Loan
• Dealer Finance
• Funding Under CGFMSE
• Direct Credit Scheme-SIDBI
• Preferred Customer Scheme
• Vendor Financing Programme
• Lending against the security of future Credit Card Receivables
• Working Capital Financing
• Finance to Medical Practitioner
• SME Hosiery Special Current Account
Bank of Baroda
Bank of Baroda started its operation in the year 1908 in
Baroda. Its mission is"to be a top ranking National
Bank ofInternational Standards committed to augment stake
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holders' value through concern, care and competence”. Bank of
Baroda offers following SME products and services
• Baroda Vidyasthali Loan
• Baroda Arogyadham Loan
• Baroda LaghuUdhyami Credit Card
• Baroda Artisans Credit Card
• Technology Upgradation scheme
• SME short term loans
• SME medium term loans
• Composite Loans
Canara BankCanara Bank was founded by Shri Ammembal Subba Rao
Pai, a great visionary and philanthropist, in July 1906, at
Mangalore, then a small port in Karnataka.
The Bank has adopted a Policy for lending to SME sector, in
tune with Govt. of India guidelines as per MSMED Act,
2006, which has come into force w.e.f. 2ndOctober,2006.
LOAN PRODUCTS
Schemes for Capital Investment
• Term loan for acquisition of fixed assets
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• Standby credit for capital expenditure
• Standby term loan scheme for Apparel Exporters
• Loan scheme for reimbursement of investment made in fixedassets by SMEs
• Soft loan scheme for Solar Water Heaters
• Scheme for Energy Savings for SMEs
• Technology Upgradation Fund scheme (TUFS) for textile & jute
industries in SME sector
• Credit linked capital subsidy scheme (CLCSS)
• Loans under Interest Subsidy Eligibility Certificate (ISEC)
Scheme of Khadi& Village Industries Commission (KVIC) to
eligible institutions.
Schemes for Working Capital
• Simplified Open Cash Credit (SOCC)
• Open Cash Credit (OCC)
•
Micro financing jointliability groups(Handloom weaver & Agarbathimanufacturer groups)
• Laghu Udhyami Credit Card (LUCC)
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• Bill of Exchange discounting facility to Small Entrepreneurs at
concessional rate of interest (BE-SE)
NABARD - SME INITIATIVES
NABARD is an apex development bank established for facilitating
credit flow for promotion and development of agriculture, small-scale
industries, cottage and village industries, handicrafts and other rural
crafts.
NABARD had selected five cluster and 50 additional clusters for
intensive development and has partnered with other government
agencies to promote rural industrialisation, to strengthen existing
clusters and to develop new clusters in FY06. Further, during FY08,
the cluster development programme was extended to 19 clusters, that
is, 17 clusters under participatory mode and 2 under intensive mode,
which took the total number of clusters adopted under this
programme to 61 (56 in partnership and 5 under intensive mode) asat end March 2008.
Realising the growth potential of SMEs, many banks have started
offering products and services to this segment as highlighted in this
chapter. Moreover, the SMEs have to offer more growth opportunities
due to globalisation; however, this growth strongly depends on the
SMEs’ ability to scale-up their capacity and embrace new technology, which is a major hurdle in present times. The banks can help them
overcome such hurdles and cater to them through innovative
products and services.
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In this regard the financing needs of small and medium enterprises
have drawn the attention of several financial institutions. The National
Bank for Agriculture and Rural Development (NABARD) has emerged
as a pioneer in the field of micro finance, thereby ensuring financial
inclusion for more than 5.8 crore poor households within its fold.
Dr. K G Karmakar, Managing Director, NABARD says, “NABARD's role
in the growth of the micro finance model has been multi-dimensional,
i.e. policy-formulation, financial innovations, technological
interventions, and institutional strengthening. Emphasis has been on
improving the access of the rural poor to integrated micro finance
services covering both savings and credit, rather than providing just
micro credit facilities. This entails improving access of the poor tomicro-finance in a sustainable manner rather than to offer credit in
the form of subsidies.
In order to improve access of the poor to formal banking, NABARD
launched Self help Group (SHG) Bank linkage model in 1992. Under
this scheme the poor form small groups and are encouraged to pool
their savings regularly. These savings are then used to make small
interest bearing loans to the members. Bank credit follows this stage.
NABARD has initiated several measures for the healthy growth of the
SHG linkage programme viz.- developing a conducive policy framework
through the provision of opening Saving Bank Accounts in the names
of SHGs and relaxation of collateral norms, simple documentation and
delegation of all credit decisions to SHGs; training and awareness
building among the stakeholders; mainstreaming the SHG Linkage
Programme as part of corporate planning and normal business activityof banks; encouraging Regional Rural Banks and Co-operative banks
to act as SHGs promoting institutions; setting up a micro-finance
development and equity fund in NABARD for meeting the promotional
costs of up scaling the micro-finance interventions; dissemination of
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information through seminars, workshops and media and to provide
support to NGOs for promotion of SHGs.
The SHG Bank linkage programme has reportedly helped the rural
sector to avail of credit facilities to set up small enterprises and even toelevate their standard of living. A study conducted in Karnataka
showed that income levels per SHG member had increased
substantially over a period of three years. A recent study In Tamil
Nadu revealed that participation in credit and savings programmes
has enabled several families to send their children to school. The SHG
movement has ushered in women's empowerment and has helped
reduce child mortality, improve maternal health and has enabled the
poor to fight diseases due to better nutrition, housing and health.he most valuable impact of the linkage programme is that it has
brought about positive changes in the attitudes of banks towards
microcredit. The lending procedures in SHGs require branch managers
to attend group meetings, interact with members and then finalize his
lending opinion rather than spending more time in evaluating loan
documents backing the application for loans.
Another landmark has been the increasing expenditure on production
purposes and development of socially backward sections. This has led
to elevation of living standards of many households.
Moving towards a sound micro-financial sector is a big challenge for
the financial system of the country. The main task is not to provide
new institutions but to improve the access of the poor to the existing
banking network. This requires the design of new products and
delivery mechanisms. NABARD has been propagating and facilitating
the growth of the SHG linkage programme. However several challenges
still lay ahead: there is a need to check the uneven spread of the SHG-
Bank linkage programme in all parts of the country. NABARD has
initiated a three years “Pilot Project” in nine districts across nine
states in order to promote livelihood creation and employment
opportunities besides imparting relevant skills and development of
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Micro finance is not new to State Bank of India. The bank's
association with non-government organizations (NGOs) or voluntary
agencies in extending financial help can be traced as far back as 1976
well before NABARD introduced SHG-Bank Credit Linkage Programmeas a pilot project in 1992.
SHG-BANK CREDIT LINKAGE PROGRAMME
SBI has actively participated in SHG-Bank Credit Linkage programme
since its inception in 1992 as a pilot project of NABARD. Since then
the Bank has made a steady progress in financing SHGs.
SBI is maintaining its position as a leader among Commercial Banks
in credit linking of SHGs and is a prime driver for the movement. The
bank has successfully initiated various measures toward widening its
SHG network and has started to leverage the vast SHG network for
various services.
SIDBI – SME OVERVIEW
Established in 1990, SIDBI is the principal financial institution that
is engaged in promotion, financing and development of SMEs. It also
coordinates functions of other institutions engaged in SME lending.
SIDBI provides financial assistance to small scale sector under
various categories, namely refinance assistance to primary lending
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institutions (PLIs), indirect equity assistance, direct assistance, and
promotional and developmental assistance.
The range of products and services offered by SIDBI for SMEs are
direct finance, bills finance, refinance, international finance, microfinance and fixed deposit schemes. It also provides government
subsidy schemes to the SMEs in textile, leather and food processing
industries.
Further, SIDBI also acts as a nodal agency for implementing the
government’s various schemes like Technology Up gradation Fund
Scheme for the textile industry (TUFS), Scheme of Technology Up
gradation/Setting up/Modernization/Expansion of food processingindustries, Integrated Development of Leather Sector Scheme (IDLSS)
etc.
SME Financing and Development Project (SMEFDP)
SIDBI is an implementing agency of the SME Financing and
Development Project (SMEFDP), which is a World Bank-led multi-
agency/ multi-activity project for financing and developing SMEs. The
project was introduced with an objective to attend to demand andsupply-side issues of MSMEs through financial and non-financial
services. The Department of Financial Services, Ministry of Finance,
is the nodal agency and World Bank, DFID, UK; KfW, Germany, and
GTZ, Germany are the international partners for the project.
Key Highlights
• The entire credit allocation was utilised to benefit 927 MSMEs
• The BDS market was developed by strengthening both the
supply-side (BDS providers) and demand side (sensitisation and
demand articulation of MSMEs)
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• Extended capacity building support was provided to SMERA for
scaling up exclusive rating of MSMEs and to CIBIL for setting up
SME Commercial Bureau.
Apart from this, SIDBI has set up various institutions for developmentand financing of SMEs, namely
• Credit Guarantee Fund Trust for Micro & Small Enterprises
(CGTMSE)
• SIDBI Venture Capital Ltd (SVCL)
• India SME Technology Services Ltd (ISTSL)
•
SME Rating Agency of India Ltd (SMERA)
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VIJAY MALLYA
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Vijay Mallya's Career Debut : Mallya took over as Chairman of the
United Breweries Group in 1983
Vijay Mallya's Address : 333 Technology Drive Canonsburg,
Pennsylvania 15317 United States
Vijay Mallya's Education : La Martiniere Boys' College, Calcutta in
Kolkata.
Vijay Mallya's PhD : University of Southern California
Vijay Mallya's Doctorate : University of Southern California
Vijay Mallya's Father Name : Vittal Mallya
Vijay Mallya's Mother Name : Shrimati Lalitha Mallya
Vijay Mallya's Wife Name : Rekha
Vijay Mallya's Son Name : Sidhartha Vijay Mallya
Vijay Mallya's Daughter Name : Leana Mallya
Vijay Mallya's Daughter Name : Tanya Mallya
Vijay Mallya's Countries Visited : U.S.A., France, Germany, U.K., Italy,
Switzerland, Russia, South Africa, Singapore, U.A.E. and Hong Kong.
Vijay Mallya's Career : Rajya Sabha M.P.Chairman- United Breweries Group
Kingfisher Airlines
Force India
Royal Challengers Bangalore
United Racing and Bloodstock Breeders
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Vijay Mallya's Occupation : Chairman of : United Breweries Group,
Kingfisher Airlines, Force India F1 Team, Royal Challengers Bangalore,
East Bengal FC, URBB
Vijay Mallya's Sports, Clubs, Favourite Pastimes and Recreation :
Keen sportsman and an ardent aviator and yachtsman of distinction;
has won trophies on the professional car racing circuits; participates
in and also supports various sporting events worldwide, particularly
for the underprivileged
Vijay Mallya's Political career :
Mr. Mallya is a MP in Rajya Sabha. He entered politics in 2000 and
replaced Subramanian Swamy as the president of the Janata Party,
his party contested for almost 224 seats during the Karnataka State
legislative election, but the result of the election didn’t see the light of
success, he couldn’t able to win a single seat.
Vijay Mallya's Social and Cultural Activities and other Special Interests: Founded the Vittal Mallya Scientific Research Foundation, Bangalore;
co-promoted the Mallya-Aditi International School, Bangalore;
established the Mallya Super Speciality Hospital, Bangalore.
VIJAY MALLYA –THE FLAMBOYANT
Vijay Mallya, the flamboyant CEO of United Breweries – the company
that owns the Kingfisher brand – is one of the most flamboyant CEOs
in Asia. Vijay Mallya believes in leading his brand from the front by
leveraging his personality.
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Vijay Mallya has built a reputation for splurging his money in the
public. He is the key sponsor to many of India’s top derby
championships, he owns a yacht once owned by Elizabeth Taylor, flies
a personal Boeing business jet, owns super stylish homes in London,
US, Dubai and India. Vijay Mallya is a diehard party animal, and isseen as the personification of a luxurious life!
Vijay Mallya’s associations with the rich, trendy and the luxurious
have rubbed on his business venture and the brands. Similarly to
Richard Branson, he recently launched Kingfisher Airlines, which
draws a lot of its brand equity from Mallya himself.
Breweries:
Mallya took over as Chairman of the United Breweries Group in 1983.
Since then, the group has grown into a multi-national conglomerate of
over sixty companies with an annual turnover which has increased
by 639% to US$11.2 billion in 1998-1999 .The Local business areas of
the group encompass alcoholic beverages, life sciences, engineering,
agriculture, chemicals, information technology, aviation and leisure.
He owned McDowell Crest, which took loans in crores of rupees fromthe general public .Kingfisher Premium Lager Beer is currently
available in 52 countries outside India and leads the way among
Indian beers in International market. It has been ranked among top 10
fasting growing brand of UK. UNITED SPIRITS LIMITED (USL) has
a portfolio of more than 140 brands of which 19 are millionaire
brands(selling more than million cases a year) and enjoys a strong59%
market share for its first line brands in India. United Spirits recorded
global sales of 90 million cases for the year ended on March 31,2009. With the acquisition of BOUVET LADUBAY in 2006,the UB Group has
made a strategic entry into ofthe wines category. Bouvet-Ladubay,
located in the Loire valley of the Saumur region in France, has a
heritage ofover 156years.
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Formula one
VitantonioLiuzzi driving for Mallya'sFormula One team,Force India,
at the2009 Japanese Grand Prix.
In 2007, Mallya and the Mol family from The Netherlands boughttheSpyker F1 team for 88 million euros.] The team changed its name
toForce India F1 from the 2008 Season. Team's car VJM-01 was
named after its owners Vijay Mallya, Jan Mol andMichiel Mol.
Mallya also represents India in theFIA World Motor Sport Council,
where he has a seat from 2009 to 2013.
Cricket
Indian Premier League is a cricket tournament being organised by theBoard of Control for Cricket in India (BCCI) and backed by the
International Cricket Council (ICC). For the inaugural tournament
held in Apr–Jun 2008, the BCCI had finalised a list of 8 teams who
will be participating in the tournament. The teams representing 8
different cities of India, including Bangalore, were put up on auction
in Mumbai on 20 February 2008 and the Bangalore team was won by
Vijay Mallya, who paid US$111.6 million for it. This was the second
highest bid for a team in the IPL, next only to Mukesh Ambani'sReliance Industries' bid of $111.9 million for the Mumbai team.
Bollywood actresses Katrina Kaif and Deepika Padukone, and
Sandalwood film stars Ramya and Puneeth Rajkumar are the brand
ambassadors of the team.
Football
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Mallya's United Breweries sponsors theEast Bengal andMohun
Bagan football clubs inKolkata where Mallya spent his childhood.
He also was part of the consortium that acquiredQueens Park
Rangers FC; the consortium also includedBernie Ecclestone,Flavio
Briatore andLakshmi Mittal.
MISSION STATEMENT FROM THE TYCOON
We constitute a large, global group based in India. We associate
with world leaders in order to adopt technologies and processesthat will enable a leadership position in a large spectrum of
activities.
We are focused on assuming leadership in all our target markets.
We seek to be the most preferred employer wherever we operate.
We recognize that our organization is built around people who
are our most valuable asset.
We will always be the partner of choice for customers, suppliers
and other creators of innovative concepts. We will continually increase the long-term value of our Group for
the benefit of our shareholders.
We will operate as a decentralized organization and allow each
business to develop within our stated values.
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Kingfisher airlines proved out to be the most glamorous domestic
airlines.
• In just 10 months from launch, Kingfisher Airlines has received 3
International Awards. The first was the “Best New Airline of the yearaward in the Asia Pacific and Middle East region” given by the Centre
for Asia Pacific Aviation. The second was the “Skytrax award for
service excellence”. Skytrax, London is the leading independent
research and quality evaluation agency for the World Air Transport
Industry. The latest addition to the list of laurels is the “Best New
Domestic Airline for Excellent Services and Cuisine” award from
Pacific Area Travel Writers Association (PATWA), one of the biggest
travel writers’ organizations in the world.
• After Mallya’s successful airline venture, it was time now for
Entertainment industry. And what better than joining hands with
NDTV in launching India’s first lifestyle channel – NDTV Good Times.
UB group owned Kingfisher brand took over the charge for this exotic
channel’s promotion and it came into being on September 7, 2007.
• Vijay Mallya, a sports lover, bought Spykar F1 team along withMicheil Mol in October 2007 for 88 million euros. It was a 50-50 joint
venture between him and Mol, a director of Spyker Formula One, of
the Netherlands. The world saw India’s first Formula One team –
Force India came into existence
• Vijay Mallya owns one of the largest private yachts in the world
called Indian Empress
HALL OF FAME
Co-owns a Formula One team, Force India, with Dutch
businessman Michiel Mol.
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Vijay Mallya is the Chairman of public companies both in India as
well as in the USA. He has been the Chairman of Aventis
Pharma India (previously Hoechst) as well as the Chairman of Bayer
CropScience in India (previously Agrevo) for over 20 years, in
addition to his Chairmanship of several other corporations.
Vijay Mallya has received several professional awards both
in India and overseas. He was also conferred a Doctorate of
Philosophy in Business Administration, by the Southern California
University, Irvine. He has also been nominated as a Global Leader
for Tomorrow by the World Economic Forum.
Mallya was nominated ‘global leader for tomorrow’ by the WorldEconomic Forum, Davos, in 1995
He has served as an elected member of the Rajya Sabha (the upper
house) of the Indian Parliament and has served as a member of
various Parliamentary committees and on defense, science and
technology, environment and forests, and industry.
He was also conferred a Doctorate of Philosophy in Business Administration, by the Southern California University, Irvine.
He is also the chairman of both the Federation of Motor sports
Clubs in India (FMSCI) and Motor sport Association of India (MAI).
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Hardwork:Despite having his father’s own company he worked
there for just Rs.400 at the initial level. This shows the hard work
and dedication from this individual.
Leadership skills: After his father’s death he took the charge of
UB group at an early age of 28. He turned his father’s 50 crore
company into 5000 crore unit.
Passionate: It was his own passion and interest which he turned
into business units. He turns his passion into his business. It
was his passion which led him to purchase RCB of IPLand
FORCE INDIAa Formula one team.4.
Mammoth: Out of all the liquor consumption throughout the
world 9% is from the UB which shows the mammoth
contribution ofthis group.
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