Now-a-days, management is must for a day-to-day life ...



A SUMMER PROJECT ON PROMOTION OF CGTMSE SMECCC (SBI) SUBMITTED BY: DESAI HARSHIL 2ND SEMESTER MBA 2011-12 K. S. SCHOOL OF BUSINESS MANAGEMENT GUJARAT UNIVERSITY SUBMITTED TO: SMECCC (STATE BANK OF INDIA) NEHRUNAGAR AHMEDABAD PREFACENow-a-days, management is must for a day-to-day life. Management is the integral part of the business. In this world, all things need a proper management for its success. Business running without proper management is like a castle of sand built on seashore. Even human beings need proper management for running their life smoothly. Only theoretical knowledge is not enough, along with it we need some exposure in the corporate world. This training has made one thing clear that there are two pillars for getting success in business i.e. Efficiency and Effectiveness; it means not only doing right things but also doing things rightly. As I am interested in making my career in Finance with marketing, how to manage loan sanctioning is the best field to expand my knowledge. This training has brought two changes in my life. Firstly it gave me more confidence to compete at any level and secondly it carved my career in a different way. Working with the people of SBI-SMECCC was the great pleasure. I consider myself fortunate enough that I got the best guide at this stage of my life where I climbed new heights of my life. ACKNOWLEDGEMENTPerseverance, inspiration and motivation have played a great role in the success of any venture. It would be incomplete to submit this report without acknowledging the people behind this endeavor and without whose support I wouldn’t have able to achieve this.I express my great thanks to my college “K. S. School of business management” and its director Dr. Sarla Achuthan for giving me the chance of guiding myself to learn various aspects practically.I am highly thankful to Mr. Arora, Brach manager, State bank of India, ahmedabad, and Mr.oza, chief manager who has continuously guide me till the last word of this project and provide excellent motivation to me. I express my warm gratitude to all the staff members, who have been directly or indirectly involved in this project and made it an enjoyable and meaningful experience.It gives me immense pleasure to express my gratitude to everyone who shared with me their precious time and effort during the project.. DECLARATIONWe do hereby that the project report title:“PROMOTIONOF CGTMSE”At SBI-SMECCC, Ahmadabad has been submitted as a part of the curriculum for the degree of Masters of Business Administration, K.S.SCHOOL OF BUSINESS MANAGEMENT, GUJARAT UNIVERSITY. DESAI HARSHIL EXECUTIVE SUMMARY SBI is a knowledge driven industry. This project gives the overall idea about the basic concept of sanction of loan. I have mentioned the process of applying for loans and also documents required for those loans. This project gives the idea or knowledge about the loan system of the organization. How they are giving the loan, how they are dealing with the customers and the system. This project gives the knowledge about the CGTMSE scheme, its promotion, strategies to increase the business under this scheme. I have made the analysis of strengths and weakness of bank which represent the internal factors of the bank. It also includes the opportunities and threats for the bank which consist of external analysis of bank. After making this analysis we have prepared some suggestion for improvement and effectiveness of working of the bank. This way the project gives the theoretical as well as practical knowledge about the loan department of SBI. IndexNo. Name of ContentPage No.1.Introduction of SBI82.History of SBI153.Vision, Mission & Values of SBI174.Porter’s 5 Force Model 195.What is Loan?5.1 Definition5.2 Types of Loan5.3 Brief Overview of Loans2223246.Overview of Credit Appraisal – Process297.Credit Risk Assessment328.Introduction of SBI SMECCC349.Introduction of SME3710.SME Products10.1 SME Smart Score10.2 SSI Loans10.3 Traders Easy Loan Scheme10.4 Doctor Plus10.5 SBI SHOPPE10.6 SBI SME CFL10.7 Open Term Loan10.8 Small Business Credit Card394044464849515211.CGTMSE5512.Promotion of CGTMSE6912.1 5 Tools of Promotion12.2 Customer Needs12.3 Benefits of CGTMSE to the Customers12.4 Suggestion by Customer12.5 Strategies to increase the Business under CGTMSE Scheme12.6 Strategies to improve Coverage of Existing Business under CGTMSE Scheme 70727374757713.SWOT Analysis7914.Conclusion8415.Bibliography & Webography85 INTRODUCTION OF SBIState Bank of India (SBI) is the largest bank in India. If one measures by the number of branch offices and employees, SBI is the largest bank in the world. Established in 1806 as Bank of Bengal, it is the oldest commercial bank in the Indian Subcontinent. SBI provides various domestic, international and NRI products and services, through its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The government nationalized the bank in 1955, with the Reserve Bank of India taking a 59% ownership stake. In recent years the bank has focused on two priorities, 1), reducing its huge staff through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of its best and brightest defect to the private sector, and 2), computerizing its operations.RootsThe State Bank of India Act 1955, enacted by the Parliament of India, authorized the Reserve Bank of India, which is the central banking organization of India, to acquire a controlling interest in the Imperial Bank of India, which was renamed the State Bank of India on 30 April 1955.Associate banksThere are seven other associate banks that fall under SBI. They all use the "State Bank of" name followed by the regional headquarters' name. These were originally banks belonging to princely states before the government nationalized them in 1959. In tune with the first Five Year Plan, emphasizing the development of rural India, the government integrated these banks with the State Bank of India to expand its rural outreach. The State Bank group refers to the seven associates and the parent bank. All the banks use the same logo of a blue keyhole. There has been a proposal to merge all the associate banks into SBI to create a "mega bank" and streamline operations.89662086995State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of TravancoreGrowthState Bank of India has often acted as guarantor to the Indian Government, most notably during Chandra Shekhar's tenure as Prime Minister of India. With more than 9500 branches and a further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 9500 branches being incorporated so far. The bank has the largest ATM network in the country having more than 6515 ATMs. The State Bank of India has more than 84 overseas branches. The State Bank of India has had steady growth over its history, though the Harshad Mehta scam in 1992 marred its image.-374650133032531019751266825 In recent years, the bank has sought to expand its overseas operations by buying foreign banks. It is the only Indian bank to feature in the top 100 world banks in the Fortune Global 500 rating and various other rankings. According to the Forbes 2000 listing it tops all Indian companies.Group companiesSBI Capital Markets Ltd. SBI Mutual Fund (A Trust) SBI Factors and Commercial Services Ltd.SBI DFHI Ltd. SBI Cards and Payment Services Pvt Ltd.SBI Life Insurance Co. Ltd - Bancassurance (Life Insurance) SBI Funds Management Pvt Ltd. SBI Canada. BranchesThe corporate centerof SBI is located in Mumbai. In order to cater to different functions, there are several other establishments in and outside Mumbai, apart from the corporate center. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major cities throughout India. State Bank of India has 172 foreign offices in 37 countries across the globe.SBI has about 26,000+ ATMs (25,000th ATM was inaugurated by the then Chairman of State Bank Shri O.P. Bhatt on 31 March 2011, the day of his retirement); and SBI group (including associate banks) has about 45,000 ATMs.SBI has 21,500 branches, including branches that belong to its associate banks.SBI includes 99345 offices in India.Products and ServicesPersonal BankingSBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan Loan Against Shares & Debentures SBI Car Loan Rent Plus Scheme SBI Educational Loan Other ServicesAgriculture/Rural BankingNRI ServicesATM ServicesDemat ServicesCorporate BankingInternet BankingMobile BankingInternational BankingSafe Deposit LockerE-PayE-RailSBI Vishwa Yatra Foreign Travel CardBroking ServicesSymbol and sloganState Bank of India`The symbol of the State Bank of India is a circle and a small man at the center of the circle (and not a key hole). A circle depicts perfection and the common man being the centre of the bank's business.Slogans: "Pure banking nothing else “also includes: "With you – all the way" "a bank of common man" and “Banker to every Indian."Recent awards and recognitionsBest Online Banking Award, Best Customer Initiative Award & Best Risk Management Award (Runner Up) by IBA Banking Technology Awards 2010.The Bank of the year 2009, India (won the second year in a row) by The Banker Magazine.Best Bank – Large and Most Socially Responsible Bank by the Business Bank Awards 2009.Best Bank 2009 by Business India.The Most Trusted Brand 2009 by The Economic Times.Most Preferred Bank & Most preferred Home loan provider by CNBC.Technology Bank of the Year by IBA Banking Technology AwardsSKOCH Award 2010 for Virtual Corporation Category for its e-payment solution.The Brand Trust Report: 11th most trusted brand in India. HISTORY OF SBIThe origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.2995930156845-6616701568451209675577851134745-88265Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernize India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework. VISION, MISSION AND VALUES OF SBIVISIONMy SBI.My Customer first.My SBI: First in customer satisfactionMISSIONWe will be prompt, polite and proactive with our customers.We will speak the language of young India.We will create products and services that help our customers achieve their goals.We will go beyond the call of duty to make our customers feel valued.We will be of service even in the remotest part of our country.We will offer excellence in services to those abroad as much as we do to those in India.We will imbibe state of the art technology to drive excellence.VALUESWe will always be honest, transparent and ethical.We will respect our customers and fellow associates.We will be knowledge driven.We will learn and we will share our learning.We will never take the easy way out.We will do everything we can to contribute to the community we work in.We will nurture pride in IndiaPORTER’S FIVE FORCES MODEL FOR BANKING Bargaining powerof customers (loanReceivers) is highdue to possibilityof multiple banking INDUSTRY 5 forcesAnalysisThreat of newentrants is high asMNCs with largeCapital powers arelikely to enter intothe areaBargaining powerof suppliers (a/cHolders) is highdue to strongCompetitionCompetitiveRivalry is high asthere are manyprivate playerswith the state ofthe art technologyThreat ofsubstitutes is lowas banking is moreConvenient andsafe investmentRivalry among existing firmsWith the process of liberalization, competition among the existing banks has increased. Each bank is coming up with new products to attract the customers and tailor made loans are provided. The quality of services provided by banks has improved drastically.Potential EntrantsPreviously the Development Financial Institutions mainly provided project finance and development activities. But they now entered into retail banking which has resulted into stiff competition among the exiting players.Threats from SubstitutesBanks face threats from Non-Banking Financial Companies. NBFCs offer a higher rate of interest.Bargaining Power of BuyersCorporate can raise their funds through primary market or by issue of GDRs, FCCBs. As a result they have a higher bargaining power. Even in the case of personal finance, the buyers have a high bargaining power. This is mainly because of competition.Bargaining Power of Suppliers With the advent of new financial instruments providing a higher rate of returns to the investors, the investments in deposits is not growing in a phased manner. The suppliers demand a higher return for the investments.Overall AnalysisThe key issue is how banks can leverage their strengths to have a better future. Since the availability of funds is more and deployment of funds is less, banks should evolve new products and services to the customers. There should be a rational thinking in sanctioning loans, which will bring down the NPAs. As there is an expected revival in the Indian economy Banks have a major role to play. Funding corporate at a low cost of capital is a special requisite. WHAT IS LOAN? DefinitionA loan is an amount of money that's given from one (the lender) to another person (the borrower) with an expectation of repayment. Loans are a type of debt. Types of loanOpen-Ended and Closed-Ended LoansOpen-ended loans are loans that you can borrow over and over. Credit cards and lines of credit are the most common types of open-ended loans. With both of these loans, you have a credit limit that you can purchase against. Each time you make a purchase, your available credit decreases. As you make payments, your available increases allowing you to use the same credit over and over.Closed-ended loans cannot be borrowed once they’ve been repaid. As you make payments on closed-ended loans, the balance of the loan goes down. However, you don’t have any available credit you can use on closed-ended loans. Instead, if you need to borrow more money, you’d have to apply for another loan. Common types of closed-ended loans include mortgage loans, auto loans, and student loans.Secured and Unsecured Loans:Secured loans are loans that rely on an asset as collateral for the loan. In the event of loan default, the lender can take possession of the asset and use it to cover the loan. Interest rates for secured loans may be lower than those for unsecured loans. Unsecured loans don’t have asset for collateral. These loans may be more difficult to get and have higher interest rates. If you default on an unsecured loan, the lender has to exhaust collection options including debt collectors and lawsuit to recover the loan.Conventional Loans:When it comes to mortgage loans, another term “conventional loan” is often used. Conventional loans are those that aren’t insured by a government agency like the Federal Housing Administration (FHA), Rural Housing Service (RHS), or the Veterans Administration (VA). Conventional loans may be conforming, meaning they follow the guidelines set forth by Fannie Mae and Freddie Mac. Non-conforming loans don’t meet Fannie and Freddie qualifications. Brief overview of loansLoans can be of two types fund base & non-fund base:FUND BASED includes:Working CapitalTerm LoanNON-FUND BASED includes:Letter of CreditBank GuaranteeFUND BASEDWORKING CAPITAL: IntroductionThe objective of running any industry is earning profits. An industry will require funds to acquire “Fixed assets” like land, building, plant, machinery, equipment, vehicles, tools etc., & also to run the business i.e. its day to day operations.Funds required for day to-day working will be to finance production & sales. For production, funds are needed for purchase of raw materials/ stores/ fuel, for employment of labour, for power charges etc., for storing finishing goods till they are sold out & for financing the sales by way of sundry debtors/ receivables.Capital or funds required for an industry can therefore be bifurcated as fixed capital & working capital. Working capital in this context is the excess of current assets over current liabilities. The excess of current assets over current liabilities is treated as net working capital or liquid surplus & represents that portion of the working capital, which has been provided from the long-term source.DefinitionWorking capital is defined as the funds required to carry the required levels of current assets to enable the unit to carry on its operations at the expected levels uninterruptedly.Thus Working Capital required is dependent onThe volume of activity (viz. level of operations i.e. Production & sales)The activity carried on viz. manufacturing process, product, production programme, the materials & marketing mix.TERM LOAN:A term loan is granted for a fixed term of not less than 3 years intended normally for financing fixed assets acquired with a repayment schedule normally not exceeding 8 years. A term loan is a loan granted for the purpose of capital assets, such as purchase of land, construction of, buildings, purchase of machinery, modernization, renovation or rationalization of plant, & repayable from out of the future earning of the enterprise, in installments, as per a prearranged schedule.It may thus be observed that the scope & operation of the term loans are entirely different from those of the conventional working capital advances. The Bank’s commitment is for a long period & the risk involved is greater. Longer the duration of the credit, greater is the attendant uncertainty of repayment & consequently the risk involved also becomes greater.However, it may be observed that term loans are not so lacking in liquidity as they appear to be. These loans are subject to a definite repayment programme unlike short term loans for working capital (especially the cash credits) which are being renewed year after year. Term loans would be repaid in a regular way from the anticipated income of the industry/ trade.The repayment of a term loan depends on the future income of the borrowing unit. Hence, the primary task of the bank before granting term loans is to assure itself that the anticipated income from the unit would provide the necessary amount for the repayment of the loan. This will involve a detailed scrutiny of the scheme, its financial aspects, economic aspects, technical aspects, a projection of future trends of outputs & sales & estimates of cost, returns, flow of funds & profits.NON-FUND BASEDLETTER OF CREDIT:Introduction The expectation of the seller of any goods or services is that he should get the payment immediately on delivery of the same. This may not materialize if the seller & the buyer are at different places (either within the same country or in different countries). The seller desires to have an assurance for payment by the purchaser. At the same time the purchaser desires that the amount should be paid only when the goods are actually received. Here arises the need of Letter of Credit (LCs). The objective of LC is to provide a means of payment to the seller & the delivery of goods & services to the buyer at the same time.Definition A Letter of Credit (LC) is an arrangement whereby a bank (the issuing bank) acting at the request & on the instructions of the customer (the applicant) or on its own behalf,is to make a payment to or to the order of a third party (the beneficiary), or is to accept & pay bills of exchange (drafts drawn by the beneficiary); orAuthorizes another bank to effect such payment, or to accept & pay such bills of exchanges (drafts); orAuthorizes another bank to negotiate against stipulated document(s), provided that the terms & conditions of the credit are complied with.Bank Guarantees:A contract of guarantee is defined as ‘a contract to perform the promise or discharge the liability of the third person in case of the default’. The parties to the contract of guarantees are:Applicant: The principal debtor – person at whose request the guarantee is executedBeneficiary: Person to whom the guarantee is given & who can enforce it in case of default.Guarantee: The person who undertakes to discharge the obligations of the applicant in case of his default.Thus, guarantee is a collateral contract, consequential to a main contract between the applicant & the beneficiary.OVERVIEW OF CREDIT APPRAISALCredit appraisal means an investigation/assessment done by the bank prior before providing any loans & advances/project finance & also checks the commercial, financial & technical viability of the project proposed its funding pattern & further checks the primary & collateral security cover available for recovery of such funds.Credit Appraisal is a process to ascertain the risks associated with the extension of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers. However the 3 ‘C’ of credit are crucial & relevant to all borrowers/ lending which must be kept in mind at all times. CharacterCapacityCollateralIf any one of these are missing in the equation then the lending officer must question the viability of credit.There is no guarantee to ensure a loan does not run into problems; however if proper credit evaluation techniques and monitoring are implemented then naturally the loan loss probability / problems will be minimized, which should be the objective of every lending officer.Credit Appraisal ProcessReceipt of application from applicant|Receipt of documents(Balance sheet, KYC papers, Different govt. registration no., MOA, AOA, and Properties documents)|Pre-sanction visit by bank officers|Check for RBI defaulters list, willful defaulters list, CIBIL data, ECGC caution list, etc.|Title clearance reports of the properties to be obtained from empanelled advocates|Valuation reports of the properties to be obtained from empanelled valuer/engineers|Preparation of financial data|Proposal preparation|Assessment of proposal|Sanction/approval of proposal by appropriate sanctioning authority|Documentations, agreements, mortgages|Disbursement of loan|Post sanction activities such as receiving stock statements, review of accounts, renew of accounts, etc(on regular basis)Requirement of documents for process of loanApplication for requirement of loan.Copy of Memorandum & Article of Association.Copy of incorporation of business.Copy of commencement of business.Copy of resolution regarding the requirement of credit facilities.Brief history of company, its customers & supplies, previous track records, orders in hand. Also provide some information about the directors of the company.Financial statements of last 3 years including the provisional financial statement for the year 2008-09.Copy of PAN/TAN number of company.Copy of last Electricity bill of company.Copy of GST/CST number.Copy of Excise number.Photo I.D. of all the directors.Address proof of all the directors.Copies related to the property such as 7/12 & 8A utara, lease/ sales deed, 2R permission, Allotment letter, Possession.Bio-data form of all the directors duly filled & notarized.Financial statements of associate concern for the last 3 years.CREDIT RISK ASSESSMENTFor a bank, what is RISK?Risk is inability or unwillingness of borrower-customer or counter-party to meet their repayment obligations/ honor their commitments, as per the stipulated terms.Lender’ taskIdentify the risk factors, andMitigate the riskHow does risk arise in credit?In the business world, Risk arises out ofDeficiencies / lapses on the part of the management (Internal factor)Uncertainties in the business environment (External factor)Uncertainties in the industrial environment (External factor)Weakness in the financial position (Internal factor)Credit & RiskGo hand in hand.They are like twin brothers.They can be compared to two sides of the same coin.All credit proposals have some inherent risks, excepting the almost negligible volume of lending against liquid collaterals with adequate margin.Lending despite risks:So, risk should not deter a Banker from lending.A banker’s task is to identify/ assess the risk factors/ parameters & manage / mitigate them on a continuous basis.But it’s always prudent to have some idea about the degree of risk associated with any credit proposal.The banker has to take a calculated risk, based on risk-absorption/ risk-hedging capacity & risk-mitigation techniques of the Bank.CREDIT RISK ASSESSMENT (CRA):Credit is a core activity of banks & an important source of their earnings, which go to pay interest to depositors, salaries to employees & dividend to shareholders.In credit, it is not enough that we have sizable growth in quantity/ volume, it is also necessary to ensure that we have only good quality growth.To ensure asset quality, proper risk assessment right at the beginning, that is, at the time of taking an exposure, is extremely important.Moreover, with the implementation of Basle-II accord4, capital has to be allocated for loan assets depending on the risk perception/ rating of respective assets. It is, therefore, extremely important for every bank to have a clear assessment of risks of the loan assets it creates, to become Basle-II compliant.That is why Credit Risk Assessment (CRA) system is an essential ingredient of the Credit Appraisal exercise.SBI Scenario:However, like in many other fields, in the field of Credit Risk Assessment too, our Bank played a proactive & pioneering role. We had our Credit Rating System (CRA) in 1988. Then, the CRA system was introduced in the Bank in 1996. The first CRA model was rolled out in 1996 to take care of exposures to the C & I (Manufacturing) segment. Thereafter, separate models for SSI & AGL segments were introduced in 1998, when the C&I (Mfg) CRA model was developed for Non Banking Finance Companies (NBFCs).As of now, in SBI, CRA is the most important component of the Credit Appraisal exercise for all exposures > 25 lacs& a very important tool in decision-making (a Decision Support System) as well as in pricing. INTRODUCTION OF SBI SMECCCSmall and Medium Enterprises City Credit Centre (SMECCC) has been established to take care of the undernoted activities for cases under SMALL ENTERPRISES:Pre-sanction, appraisal and sanction.Documentation.Account creation and set up on behalf of home branches (Home branch will be the identified branch where the customer would like to do transactions).Disbursal. Post disbursal credit decisions. e.g., granting of excess drawings, ad-hoc sanctions, extensions etc. Post sanction monitoring and supervision i.e., Receipt of stock statement, allocation of drawing power, periodical inspection of units asset verification, taking confirmation of excess drawings if any.Soft collections.Units withSourcingProcessingSanctionPost Sanction SupervisionTurnover up to Rs.5 crores with Fund based limits up to Rs.50 lacs.BranchSMECCCSMECCCSMECCCTurnover up to Rs.5 crores with Fund Based limits more than Rs.50 lacs.Branch ME(RM)ME (RM) if posted in the Micro market / Branch otherwise SMECCC???????If ME(RM) processes the proposal: Branch Head /MM head or CCC (As per financial powers vested with them)If SMECCC processes the proposal: CCC (As per financial powers vested with them)?ME (RM) if posted in the Micro market / Branch, otherwise SMECCC??????? SMECCC ORGANIZATION STRUCTURE-417195424180??????????????? INTRODUCTION of SME Defining SMEs In india, the enterprises have been classified broadly into two categories: (1) Manufacturing and (2) Those engaged in providing/rendering of services. Both categories of enterprises have been further classified into micro, small and medium enterprises based on their investment in plant and machinery (for manufacturing enterprises) or on equipments (in case of enterprises providing or rendering services).classification Investment ceiling for plant , machinery or equipmentManufacturing EnterprisesService EnterprisesMicroUp to Rs.25 lacsUp to Rs. 10 lacsSmallAbove Rs. 25 lacs &Up to Rs. 1 croreNot definedMediumNot definedNot definedRole of SME sector?in Nation DevelopmentThe Small and Medium sector plays an important role in the Indian economy in terms of employment and growth has recorded a high rate of growth after independence. SMEs?play a vital role for the growth of Indian economy by contributing 45% of the industrial output, 40% of exports, 42 million in employment, create one million jobs every year and?produces more than 8000 quality products for the Indian and international markets.As a result, SMEs are today exposed to greater opportunities for expansion and diversification across the sectors.Importance of SMEImportant sector for our national economyLargest employment generating sector next to AgricultureEmployment potential at low capital costConstitutes 95% of industrial unitsContributes 45% of manufacturing output and nearly 40% of total exports SME PRODUCTS1) SME SMART SCORESimplified Loan For Small & Medium EnterprisesEligibility:Scheme is available to small and medium enterprise units engaged in manufacturing, trade or services.?Purpose of loan:Working Capital requirements & Purchase of fixed assets like land, building, plant & machinery.?Type of Facility:Working capital & Term loan.?Loan Amount:?For manufacturing units total limits up to Rs. 50 lacs.For trade & services units total limits up to Rs. 25 lacs.Margin Requirement:?25% for working capital and 33% for Term Loan.?Rate of Interest:Floating rate of interest linked to Base rate.?Repayment:?Term loan to be repaid in 5 years.Working Capital loan to be renewed every two years and reviewed annually subject to satisfactory conduct of account.Security:Primary:??Hypothecation of stocks and assets financed by BankCollateral:??As per bank’s norms.Special Features:?A simplified loan application format.?Concessionary rate of interest.Quick and hassle-free loan sanction process.2) SSI LOANSGeneral purpose of term loans:State Bank of India?grants term loans to small scale industries for meeting general commercial purposes like substitution of high cost debt, research and development, sharing up net worth and funding business expansion.?The?tenor of the loan is normally is 3 years,?and the pricing is fine-tuned to suit the risk profile of the borrower. The?repayment is structured in monthly or quarterly installments, according to the cash generation cycle.?Eligibility:The SSI unit that takes the loan should not have any history of defaults in payment of interest or installments of the principal. The unit should have a strong performance record and a respectable credit rating as per the bank’s own credit assessment scales (In case of loan above Rs. 25 lacs).Security/guarantee:Extension of hypothecation charge over the current assets and fixed assets is required as primary security. Further, the borrower whose aggregate loans with the Bank exceed Rs 5 lacs may explore the possibility of collateralizing tangible security such as immovable property and third party guarantee. In all cases, personal guarantees of proprietors/partners/promoters have to be furnished.Margin requirement:A minimum margin of 25 per cent is applicable for acquisition of land and building, building construction, renovation of offices, showrooms, godowns, purchase of equipment, vehicles etc. In other words, the quantum of the loan will be restricted to 75 per cent of the total expenditure.Liberalized credit fir SSI: State Bank of India?extends production-linked credit facilities to small-scale industries, ancillary industrial units and village and cottage industrial units on liberal terms and conditions.?Under this scheme,?the quantum of advances is not linked to the security furnished, but the genuine requirements of the unit.?The pricing of the loan is based on credit assessment, and the units with strong ratings may be given finer rates.?No collateral security is required for loans up to Rs 5 lacs. Composite term loans can be sanctioned up to Rs 25 lacs combining term loan and working capital.Type of Facility:Term loans for acquisition of fixed assets.Working capital loans financing current assets.Letter of credit for acquisition of machinery and purchase of raw materials.Bank guarantee in lieu of security deposits to be made with government department/other departments for execution of orders.Deferred payment guarantees for purchase of machinery on deferred payment basis.Bill facility for purchase of raw materials and for sale of finished posite loans (term loans plus working capital) up to Rs 25 lakh.?Margin requirement:?For requirements up to Rs 25,000, no margins are involved. For limits ranging from Rs 25,000 to Rs 5 crore, the margin is set at 20 per cent.For credit limits above Rs 5 crore, a 25 per cent margin may be applied.Entrepreneur scheme:State Bank of India?grants financial assistance to technically qualified, trained and experienced entrepreneurs for setting up new viable industrial projects.?Loans are extended to technocrats who are unable to meet the normal margin requirements under the liberalized schemes.?Eligibility:The borrower has to be a technically qualified person (a degree/diploma holder in engineering or technology), a craftsman with adequate experience or training or a person possessing a degree in business or industrial management, a chartered accountant or a cost accountant with relevant experience.?Type of Facility:term loansworking capital andequity fund financeMargin requirement:For requirements up to Rs 5 lacs, no margins are involved. For needs ranging from Rs 5 lacs to Rs 20 lacs, the margin is set at 10 per cent.Equity fund scheme: Under the Equity Fund scheme, the SBI grants financial assistance to entrepreneurs who are not able to meet their share of equity fully, by way of Interest-free loans repayable over a long period.This type of assistance fills in the gap between the margin requirements in the project and the capital contributed by the promoter. The Equity Fund assistance can be normally repaid over 5 to 7 years.Eligibility:The bank extends Equity Fund assistance only to new projects, which are also eligible for the SBI’s Liberalized scheme and the Entrepreneur scheme.?The project cost has to be more than Rs 25,000.?Security:Security available for other loans should be extended to cover equity assistance also.Stree Shakti package:The Stree Shakti Package is a unique scheme run by the SBI, aimed at supporting entrepreneurship among women by providing certain concessions. An enterprise should have more than 50% of its share capital owned by women to qualify for the scheme.?The?concessions offered?under the Stree Shakti Package are:?The margin will be lowered by 5% as applicable to separate categories.The interest rate will be lowered by 0.5% in case the loan exceeds Rs 2 lakh.No security is required for loans up to Rs 5 lacs in case of tiny sector units.3) TRADERS EASY LOAN SCHEMEEligibility:The Scheme is to provide loan to the Traders/ business man professionals/?entrepreneurs?etc for their business needs on easy terms against property.Purpose of loan:Loan under the scheme can be availed to meet normal business requirements and is sanctioned against equitable mortgage of property. Any residential or commercial property in the name of unit/ proprietor/partner OR their close relatives is acceptable. Agriculture property or property outside urban limits is not accepted.?Type of Facility:The advance can be availed by way of Loan or Cash Credit limit. It can also be availed for Non Fund Based requirements (for issuance of Bank guarantees or LCs). Cash Credit limit or non fund based limit is renewable every 12 months.Loan Amount:Minimum and maximum amount of loan is Rs 25,000/- and Rs 5.00 Crore. Margin requirement:Margin is 35%. i.e. loan can be up to 65% of the realizable value of the property or the business requirement- whichever is less. Business requirement:Business requirement is assessed on the basis of projected business turnover.Rate of Interest:Interest at floating rate is charged at monthly intervals on daily reducing balance.Repayment:In case of Cash Credit limit or non fund based limit is renewable by the bank every 12 months.Loan can be repaid in monthly or quarterly, even half yearly installments - as may be suitable to the borrower – in a period up to 5 years.Special Features:No Third party guarantee is required to avail the loan.Documents required: Usual documents for identification and copy of the latest balance sheet, last income tax return etc and Advocate’s search report, title certificate and valuation certificate of the property that are normally required for creation of mortgage.4) DOCTOR PLUSTarget Group:Medical practitioners of any discipline, promoters of hospitals, nursing homes, pathological clinics, polyclinics, X-ray labs, etc.?Purpose of loan:To finance qualified medical practitioners.For buying equipments (For dentists, the loan also covers dental implants besides equipments; for orthopedists, the loan also covers various replacements/ implants for hip/ knee/ shoulder/ spine etc.)Setting up clinic, nursing home, pathology labs, drug store, ambulance, computers, vehicles, etc.Expansion/ renovation/ modernization of existing premises.Type of facility:Term LoanCash CreditLoan Amount:Maximum- Rs 10 Crores subject to certain conditions. For individuals and proprietors maximum is Rs.5 Crores.Sub ceiling for working capital at10% of total loan amount for up to Rs.1 crore.5% of total loan amount for above Rs.1 crore.For Non Allopathic doctors (Unani, Ayurvedic, Homeopathic): Maximum of Rs.10 lacs of which a sub ceiling for working capital limits at10% of total loan amount.Margin Requirement:Up to Rs. 10 lacs: 15%.Above Rs.10 lacs up to Rs.5 crore: 20%Rs.5 crore – Rs.10 crore: 25%.????Rate of Interest:Interest is floating and linked to Base Rate*.*?Subject to change.?Processing Charges/ Upfront fee:For Term Loan: Upfront fee ranges from 0.50% to 0.75% of the loan amount.For Working Capital: Processing charges ranges from Rs.200 to Rs.250 per lacs. Minimum Rs.25, 000/- and Maximum Rs.10 lacs.Security:Primary Security- Hypothecation of assets financed by the Bank.Collateral:For loan up to Rs.25 lacs: No tangible collateral security. They are to be covered under CGTMSE. CGTMSE fees to be borne by the borrower.For loans above Rs.25 lacs: Tangible security for at least 25% of the loan amount. However, loans above Rs.25 lacs and up to Rs.1 Crore:May be covered under CGTMSE scheme at the discretion of the Bank. CGTMSE fees to be borne by the borrower.Insurance:The assets created out of Bank’s finance are to be insured for the full value.Repayment:Maximum period is 5 to 7 years depending upon the purpose.5) SBI SHOPPETarget Group:Present and prospective owners of shops/ offices/ show-rooms/ training centers/ service centers/ garages/ offices for Chartered Accountants / Consultants.?????????????????????????????????Eligibility:?????????????????????????????????????Individuals /firms / partnerships / trusts / franchisees.????????????????????????????????????????????Purpose of loan:?????????????????Purchase of new/old shops/establishments/offices.Modernization/expansion of establishments/shops, etc.All furniture/fixtures, electrical fittings and other accessories required for shops/showrooms/offices.????????????????????????Type of facilities:Term Loan?Loan Amount:Maximum of Rs.20 Lacs.?Margin Requirement:25% for purchase of new property.40% in respect of purchase of old property.?Rate of Interest:Interest is floating and linked to Base Rate*.Security:Primary- Hypothecation / pledge / mortgage / assignment of the assets purchased out of Bank's finances including non-industrial assets.?Processing fee:Processing fee ranges from 1.00% to 1.50% of the loan amount.?Insurance:The assets created out of Bank’s finance are to be insured for the full value.6) SBI SME CFL (COLLATERAL FREE LOAN)Eligibility:New and existing Micro and Small Enterprises engaged in Manufacturing and Service sector. For manufacturing sector, original investment in plant & machinery should be up to Rs. 5 crore and for Service sector, original investment in equipment up to Rs. 2 crore.?Purpose of loan:?Working capital needs (Fund Based+ Non Fund Based).Term loan for construction of Building, office, acquisition of machines / equipments including expansion and modernization of the unit.Type of Facilities:Cash CreditTerm LoanLetter of CreditBank GuaranteeLoan Amount:Total Exposure to the unit: Up to Rs. 1.00 crore (All facilities WC, TL & NFB facilities).Interest Rate:Attractive rates of interest.Service Charges:50% concession in processing and service charges.Other charges as applicable.Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) Guarantee:Borrowers eligible under the scheme will be covered under CGTMSE guarantee scheme.The Guarantee Fee & Annual Service Fee as per the rates prescribed by CGTMSE from time to time to be borne by borrower.Security:Security as defined by CGTMSE?: “Primary Security”?in respect of?credit facility shall mean the Assets created out of?the credit facility so extended and / or?Existing Unencumbered?assets which are directly?associated with the project or business for which the?credit facility has been extended. (i.e. Plant,?Machinery, land & building pertaining to the project?or business).Guarantee: No third party guarantee?is required. However in case the constitution of the borrower is proprietary or partnership, the personal guarantee of proprietor /partner is not treated as third party guarantee.Repayment:?Working Capital (WC): One year, repayable on demand.?Working capital limits will be renewed every two year.However, performance of the unit and conduct of account will be reviewed annually for continuation of limits.Term Loan: Maximum Seven Years including moratorium period.7) OPEN TERM LOAN Nature of Facility:The product is a pre-approved term loan facility which can be disbursed over a period of 12 months depending on unit’s request.The units get comfort of preapproved sanction to plan their capital expenditure and negotiate with suppliers of machinery to finalize the best possible terms and then get the loan disbursed.Facility available for:All units under manufacturing sector.Under Service sector: Educational Institution, Healthcare Industry (Hospital, Doctors, Pathological Labs, and Nursing Home), Hospitality Industry (Hotels, Restaurants, and Health Club etc), and Transport Operators with minimum 25 vehicles.?Purpose of Loan:Any genuine commercial purposes in line with regular business activity of the customer. These would includeExpansion and modernization.Substitution of high cost debts/ high cost term debts of other banks/FIs.Design and introduction of new lay-outs in the factory to enhance productivity.Up gradation of technology & energy conservation schemes/ machinery.Acquisition of software, hardware, consumable tools, jigs, fixtures, vehicles, equipment, furniture upholstery etc.Acquisitions of ISO & other similar certifications.Visits abroad for acquiring technology, finalizing business deals, participating in exhibitions/ fairs for market promotion etc.R&D activities of the units in overall business development objectiveLoan Amount:Maximum Rs 2.50 crore for both manufacturing and services enterprises, subject to credit rating and purpose of the loan.?Margin requirement:Minimum 10%Repayment Period:3- 5 years?Interest Rate:Floating rate linked to Base Rate.?Security:Primary Security: Hypothecation / pledge of the assets proposed to be purchased out of the term loan.Collateral Security:??As per Bank’s norms.8) SMALL BUSINESS CREDIT CARDA hassle free, convenient and novel Small Business Credit Card Scheme launched for easy credit delivery to SSI and SBF segments.?Eligibility:SSIUnits with satisfactory track record of 2 years.New units with excellent credentials.?SBFRetail TradeProfessional and Self-EmployedSmall Business Enterprises?Amount of loan:Up to Rs.5 lacsAssessment:SSI - Limit @ 20% of projected annual turnover (Nayak Committee)Small Business Enterprises (Retail Traders) - Credit limit @ 20% of annual turnover declared for tax purpose or @ 20% of last 12 months turnover in the operation account, whichever is higher.Professional and Self Employed persons - Limit based on 50% of their gross annual income as per IT Return.Validity:3 years subject to satisfactory conduct of the account. Annual review based on conduct / operation of the account.?Collateral Security:?SSINo Collateral Security?SBFCharge over movable / immovable property / third party guarantee, if limit is over Rs.25, 000/-.Special Features:Less paper work.Stock Statement waived.Submission of audited Balance-Sheet waived.Borrower to be issued a small plastic card.Half-yearly inspection.Simplified application.Simplified scoring model for appraisal.Annual review based on the conduct of the account.Repayment of term loan component up to 5 years. CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGTMSE)Introduction of CGTMSEAvailability of bank credit without the hassles of collaterals / third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE). Keeping this objective in view, Ministry of Micro, Small & Medium Enterprises (MSME), Government of India?launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector. To operationalise the scheme, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) which came into force from August 1, 2000. Credit Guarantee Schemes are globally treated as instruments of credit enhancement for targeted sections. As internationally, so also in India, the main public policy purpose of the CGS for MSEs is to catalyse flow of bank credit to first generation entrepreneurs for setting up their MSE units without the hassles of secondary collateral/ third party guarantee.The Scheme is intended to encourage Member Lending Institutions to rely in their appraisal essentially on the viability of the project and the security of primary collateral of assets financed. The other objective is to encourage lenders availing of guarantee facility to extend composite credit facilities to borrowers comprising both working capital and term loans. The CGS seeks to reassure lenders that, in the event of a default by MSE unit covered by the guarantee, the Guarantee Trust would meet the loss incurred by the lender up to 85 per cent of the outstanding amount in default.CGTMSE Logo - What does it depict? Three light blue stripes connecting the word CGTMSE indicate sources of 'comfort', 'hope' and 'inspiration' the Trust provides and the Flame indicates the continuous support being provided by the Trust to the entrepreneurs in realising their dream of setting up units of their own.Yellow colour around flame indicates source of energy given by the Trust to the entrepreneurs for setting up units in the MSE sector without having to worry about providing collateral security and / or third party guarantees.The blue triangular shape resting on the word CGTMSE indicates the shed of an industrial unit and growth of MSEs in upward direction.All above things lead to believe that both the word CGTMSE & its LOGO ensure assured help for the entrepreneurs to set up MSE units.Benefits of Guarantee Coverage from CGTMSECredit facilities guaranteed under the Scheme carry Zero per cent Risk Weight / Provisioning for guaranteed portion (RBI Circular DBOD No.BP.BC.128/21.04.048/00-01 dated June 07, 2001)Reduction in waiting period for recovery through legal process, realizing the time value of money with hassle free & quick recovery of major portion of defaulted amount Quicker dispensation of credit due to time saved on security creation / Title related issues of collateralsIn case of collateral, it is Bank’s responsibility to insure / secure the property when asset is taken overOverall significant saving in Time & Energy cost of Bank’s Human ResourcesRole of Guarantee Trust for Micro and Small EnterpriseShift from collateral to merit based lendingAct as catalyst for entrepreneurship promotionFacilitate institutional credit flow to MSE sectorAddress the growth constraints of MSE sectorEnable financial inclusion / employment generation The Trust play a vital role to improve credit flow to MSEs Main Features of Credit Guarantee SchemeMicro & Small Enterprises as per MSMED Act eligibleBoth Manufacturing and Service sectors coveredCredit Facility upto Rs.100 lakh coveredAll fund / non-fund based facility coveredGuarantee Cover based on size of limit Maximum upto 85% of credit facilityCredit for retail trade, educational / training institutions and SHGs are not eligible for the presentAll credit facility must be extended without any collateral security / third party guaranteeEligible MLIsThe CGTMSE operates the CGS through Member Lending Institutions (MLIs). All commercial banks included in the Second Schedule to the RBI Act, 1934, and such other institution(s) as may be notified by the Government of India from time to time are eligible to become MLIs. As of January 31, 2010, there were 110 MLIs registered with CGTMSE. Of this, 27 are Public Sector Banks, 16 Private Sector Banks, 59 Regional Rural Banks, 6 financial institutions and 2 foreign banks.Eligible BorrowersAll new and existing MSEs, which have been extended credit facilities by MLIs without any collateral security and / or third party guarantees, are eligible for guarantee cover under the Scheme.The MSEs are enterprises as defined under the MSMED Act, 2006, as given below:SectorMicro EnterprisesSmall EnterprisesManufacturing?or ProductionInvestment in plant and machinery does not exceed Rs.25 lakhInvestment in plant and machinery is more than Rs.25 lakh but does not exceed Rs.5 croreServicesInvestment in equipment does not exceed Rs.10 lakhInvestment in equipment is more than Rs.10 lakh but does not exceed Rs.2 croreGuarantee Fee and Annual Service FeeA one-time Guarantee fee at the rate of 1% of the credit limit for credit facility up to Rs. 5 lakh and 1.5% in the case of credit facility above Rs. 5 lakh is charged. In case of credit facilities up to Rs.50 lakh sanctioned to units in North Eastern Region (including State of Sikkim) the Guarantee fee is 0.75% of the credit facility sanctioned. The guarantee fee is to be paid upfront to the Trust by the lending institution.An annual service fee at specified rate (currently 0.50% in the case of credit facility up to Rs. 5 Lakh and 0.75% in the case of credit facility above Rs. 5 Lakh) of the credit facility sanctioned (comprising term loan and / or working capital facility) is charged to the MLIs. The rates of guarantee and annual fees charged on the basis of the credit facility sanctioned are furnished in the Table below:Credit Facility Upfront Guarantee FeeAnnual Service Fee North East Region(incl. Sikkim)OthersUpto Rs.5 lakh 0.75% 1.00% 0.50%Above Rs.5 lakh to Rs.50 lakh 0.75% 1.50% 0.75%Above Rs.50 lakh to Rs.100 lakh 1.50% 1.50% 0.75%The guarantee fee and / or annual service fee once paid by the lending institution to the Trust is non-refundable. Guarantee fee / Annual Service Fee, shall not be refunded, except under certain circumstances like -Excess remittance,Remittance made more than once against the same credit application,Guarantee fee & / or annual service fee not due,Guarantee fee paid in advance but application not approved for guarantee cover under the scheme, etc.Primary & Collateral Security and TPGUnder normal lending: Primary Security – Assets created out of the credit facility extendedCollateral Security – Security provided in addition to the primary security, in connection with the credit facility extended to the borrower Third Party Guarantee : Guarantees from Third parties and Directors in case of company have not to be obtained under CGTMSE Guaranteed loans, however, guarantee from partners in partnership firm is eligible under the scheme.Security eligible under CGTMSE Guarantee loan accountAs per the CGTMSE the undernoted security is eligible: Assets created out of the credit facility extended and / or Existing unencumbered assets which are directly associated with the project or business. Scope of the scheme?Credit facilities eligible under the Scheme:The Trust shall cover credit facilities (Fund based and/or Non fund based) extended by Member Lending Institution(s) to a single eligible borrower in the Micro and Small Enterprises sector for credit facility (i) not exceeding Rs. 50 lakh (Regional Rural Banks/Financial Institutions) and (ii) not exceeding Rs.100 lakh (Scheduled Commercial Banks and select Financial Institutions) by way of term loan and/or working capital facilities on or after entering into an agreement with the Trust, without any collateral security and\or third party guarantees?or such amount as may be decided by the Trust from time to time.Conditions for coverage under the scheme:No collateral security and/or third party guarantee is taken by the bank. The dues to the lending institution has not become bad or doubtful of recovery; and / orThe business or activity of the borrower for which the credit facility was granted has not ceased; and / orThe credit facility has not wholly or partly been utilized for adjustment of any debts deemed bad or doubtful of recovery, without obtaining a prior consent in this regard from the Trust. Credit facilities not eligible under the Scheme:???? The following credit facilities shall not be eligible for being Guaranteed under the Scheme: -Any credit facility in respect of which risks are additionally covered under a scheme operated / administered by Deposit Insurance and Credit Guarantee Corporation or the Reserve Bank of?India, to the extent they are so covered.Any credit facility in respect of which risks are additionally covered by Government or by any general insurer or any other person or association of persons carrying on the business of insurance, guarantee or indemnity, to the extent they are so covered.Any credit facility, which does not conform to, or is in any way inconsistent with, the provisions of any law, or with any directives or instructions issued by the Central Government or the Reserve Bank of?India, which may, for the time being, be in force.Any credit facility which has been sanctioned by the lending institution against collateral security and / or third party guarantee.Any credit facility which has been sanctioned by the lending institution with interest rate more than 3% over the Prime Lending Rate (PLR) of the lending institution.??????????????????????Responsibilities of lending institution under the scheme:The lending institution shall evaluate credit applications by using prudent banking judgment and shall use their business discretion / due diligence in selecting commercially viable proposals and conduct the account(s) of the borrowers with normal banking prudence.The lending institution shall closely monitor the borrower account.The lending institution shall safeguard the primary securities taken from the borrower in respect of the credit facility in good and enforceable condition.The lending institution shall ensure that the guarantee claim in respect of the credit facility and borrower is lodged with the Trust in the form and in the manner and within such time as may be specified by the Trust in this behalf and that there shall not be any delay on its part to notify the default in the borrowers account which shall result in the Trust facing higher guarantee claims.?The lending institution shall exercise all the necessary precautions and maintain its recourse to the borrower for entire amount of credit facility owed by it and initiate such necessary actions for recovery of the outstanding amount, including such action as may be advised by the Trust.The lending institution shall comply with such directions as may be issued by the Trust, from time to time, for facilitating recoveries in the guaranteed account, or safeguarding its interest as a guarantor, as the Trust may deem fit and the lending institution shall be bound to comply with such directions.The lending institution shall, in respect of any guaranteed account, exercise the same diligence in recovering the dues, and safeguarding the interest of the Trust in all the ways open to it as it might have exercised in the normal course if no guarantee had been furnished by the Trust. In particular, the lending institution should intimate the Trust while entering into any compromise or arrangement, which may have effect of discharge or waiver of personal guarantee(s) or security. Extent of Guarantee Cover?Borrower CategoryMaximum extent of Guarantee where credit facility is?Upto Rs.5 lakhAbove Rs.5 lakh upto Rs.50 lakhAbove Rs.50 lakh upto Rs.100 lakhMicro Enterprises85% of the amount in default subject to a maximum of Rs.4.25 lakh75% of the amount in default subject to a maximum ofRs.37.50 lakhRs.37.50 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.62.50 lakhWomen entrepreneurs/??Units located in North East Region (incl.?Sikkim) other than credit facility upto Rs.5 lakh to micro enterprises??80% of the amount in default subject to a maximum of Rs.40 lakhRs.40 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.65 lakhAll other category of borrowers75% of the amount in default subject to a maximum ofRs.37.50 lakhRs.37.50 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.62.50 lakhTenure of GuaranteeTenure of Guarantee Cover for Term Credit, Composite Credit, and Combined Working Capital & Term Credit is tenure of Term Credit / Composite Credit or loan termination date, whichever is earlier.Where Working Capital facility alone is covered, the tenure is for a block of 5 years or loan termination date, whichever is earlier. Thereafter, MLI should apply for renewal of Guarantee Cover.If tenure of Term Loan is 3 years, tenure of working capital would be co-terminus with that of term loan and will also be for 3 years. After 3 years, if guarantee cover is to be continued for working capital, application for renewal to be lodged online.Payment of Guarantee FeeOn approval of Guarantee Cover, Demand Advice for Guarantee Fee is generated by the system and is to be paid upfront for commencement of Guarantee CoverIn enhancement cases, Guarantee Fee is calculated on pro-rata basis for residual tenure of guarantee In case of working capital, payment is to be made within one month from Demand Advice dateIn case of term credit, payment is to be made within one month from date of first disbursement / demand advice date, whichever is laterPayment has to be debited to Charges account Insurance. Payment of Annual Service Fee Annual Service Fee (ASF) is to be paid for all accounts for where Guarantee has been availed / is in force in a Financial Year (FY), at the beginning of the next year within 60 days from the end of the financial year. Annual Service Fee is to be paid till disbursement of first installment of claim.The existing procedure for Invocation of Guarantee and Settlement of claimsi) The MLIs can invoke the guarantee within a maximum period of one year from date of account becoming NPA, if the date of classification as NPA is after the lock-in period of 18 months from the date of guarantee, or within one year after lock-in period, if date of classification as NPA is within lock-in period, if the following conditions are satisfied:The guarantee in respect of that credit facility was in force at the time of account turning NPA;The lock-in period of 18 months from either the date of last disbursement of the loan to the borrower or the date of payment of the guarantee fee in respect of credit facility to the borrower, whichever is later, has elapsed;The amount due and payable to the lending institution in respect of the credit facility has not been paid and the dues have been classified by the lending institution as Non Performing Assets. The lending institution shall not make or be entitled to make any claim on the Trust in respect of the credit facility, if the loss in respect of the said credit facility had occurred owing to actions / decisions taken contrary to or in contravention of the guidelines issued by the Trust;The credit facility has been recalled and the recovery proceedings have been initiated under due process of law. Mere issuance of recall notice under SARFAESI Act 2002 cannot be construed as initiation of legal proceedings for the purpose of preferment of claim under CGS. MLIs are advised to take further action as contained in Section 13 (4) of the said Act wherein a secured creditor can take recourse to any one or more of the recovery measures out of the four measures indicated therein before submitting claims for first installment of guaranteed amount. ii) The Trust shall pay 75 per cent of the guaranteed amount on preferring of eligible claim by the lending institution, within 30 days, subject to the claim being otherwise found in order and complete in all respects. The Trust shall pay to the lending institution interest on the eligible claim amount at the prevailing Bank Rate for the period of delay beyond 30 days. The balance 25 per cent of the guaranteed amount will be paid on conclusion of recovery proceedings by the lending institution. On a claim being paid, the Trust shall be deemed to have been discharged from all its liabilities on account of the guarantee in force in respect of the borrower concerned.iii) In the event of default, the lending institution shall exercise its rights, if any, to take over the assets of the borrowers and the amount realised, if any, from the sale of such assets or otherwise shall first be credited in full by the MLI to the Trust before it claims the remaining 25 per cent of the guaranteed amount.iv) The lending institution shall be liable to refund the claim released by the Trust together with penal interest at the rate of 4% above the prevailing Bank Rate, if such a recall is made by the Trust in the event of serious deficiencies having existed in the matter of appraisal / renewal / follow-up / conduct of the credit facility or where lodgment of the claim was more than once or where there existed suppression of any material information on the part of the MLIs for the settlement of claims. The lending institution shall pay such penal interest, when demanded by the Trust, from the date of the initial release of the claim by the Trust to the date of refund of the claim.v) The Guarantee Claim received directly from the branches or offices other than respective operating offices of MLIs will not be entertained.Subrogation of rights and recoveries on account of claims paid(i) The Member Lending Institution shall furnish to the Trust, the details of its efforts for recovery, realizations and such other information as may be demanded, or required, from time to time. The MLI will hold lien on assets created out of the credit facility extended to the borrower, on its own behalf and on behalf of the Trust. (ii) In the event of a borrower owing several distinct and separate debts to the MLI and making payments towards any one or more of the same, whether the account towards which the payment is made is covered by the guarantee of the Trust or not, such payments shall, for the purpose of this clause, be deemed to have been appropriated by the MLI to the debt covered by the guarantee and in respect of which a claim has been preferred and paid, irrespective of the manner of appropriation indicated by such borrower, or, the manner in which such payments are actually appropriated.(iii) Every amount recovered and due to be paid to the Trust shall be paid without delay, and if any amount due to the Trust remains unpaid beyond a period of 30 days from the date on which it was first recovered, interest shall be payable to the Trust by the lending institution at 4% above Bank Rate for the period for which payment remains outstanding after the expiry of the said period of 30 days. PROMOTION OF CGTMSEPromotion is the part of the marketing mix that many people consider to be "marketing" but this is really the end result of all your hard work in defining products to satisfy needs and pricing it accordingly.It can be defined as “activity that communicates the product or service and its merits to target customer and persuade them to buy”. The success of any business entity depends on how well it has been able to create awareness about its products or services in its target segment so as to induce its consumption by customers.Promotion is the marketing communication.There are traditionally 5 promotional tools:AdvertisementSales PromotionPublic relationDirect marketingPersonal SellingADVERTISEMENTa) Informative advertisement:Informative advertisements are those from which the consumer gets the necessary information about the CGTMSE scheme and other relevant details.b) Influential advertisement:Influential advertisement which influences the customers to buy the product. Marketers can use hoardings, T.V., magazine, radio, news-paper, road show etc. to build up long term image and to create awareness among the customers.They are mostly use news paper, participation in exhibitions and fairs to spread awareness among the potential customers and promote their product.SALES PROMOTIONSales promotion is collection of incentive tools, mostly shorter, and design to stimulate quicker or greater purchase of particular products or services by consumer or trade.In sales promotion different types of promotion schemes or offers like price pack, discount, cash refund, premium price etc are offered.Under this scheme, sometimes bank gives some part of loan as interest free to their customers. PERSONAL SELLING When the company opts to sell the product via salesman/agent it is known as personal selling. In case of personal selling, to whom it is sold is not important but who is selling is important. A company can make selling via salesman/agent to households, companies, institutes and even government.Bank is not using any agent as a middleman.DIRECT MARKETING When a company opts to sell directly to customers, eliminating the middlemen and reducing the cost of selling for the benefit of a customer, it is known as direct selling. These channels include direct mail, catalogue, telemarketing, interactive T.V., websites and mobile devices.Bank has its own website to deal directly with the customers.PUBLIC RELATIONS It includes activities done to maintain good relations with the public. Marketing of public relations is called publicity. We have visited some customers of CGTMSE and got the information regarding their needs of taking a loan, benefits that they are getting from the scheme, and also we have got their suggestions regarding the scheme which are as follows: CUSTOMER NEEDSFor the premises of that businessFor purchase of machineryFor purchase of equipmentsFor expansion of their businessFor renovation or rationalization of plantFor starting up of new business BENEFITS OF CGTMSE TO THE CUSTOMERS1. Collateral free loan -No collateral is taken providing ease to customers.?2. Fast processing -?De-centralized operations and simple documentation enabling fastturnaround time.3. Convenient Documentation -Convenient documentation process to offer ease and flexibility.4. Hassle -free loan -No third party guarantee required.5. Attractive Pricing -Low interest rates and commission charges.6. Wide reach -?Loan can be availed at any of our 2500 plus branch network.7. Multiple banking possible -Multiple banking facilities can be availed by offering charge oncurrent assets.8.Dedicated and exclusive relationship managers -Dedicated relationship managers to provide complete financial solutions.9.Fast and Easy renewals -Hassle free renewals with less documentation. SUGGESTIONS GIVEN BY CUSTOMERSThere should be more no. of the branches like SMECCC in metro city for the customer’s convenience.If possible documentation should be minimized for easy disbursement.Bank should extend quicker and superior services than their competitor’s.SMECCC should make the arrangement for “Internet banking” so that customer can easily check the status of their loan application, amount sanctioned and disbursement.Appointment for the process of documentation and disbursement should give according to the convenience of the customer.Instead of filling system, there should be computerized system to keep record of the documents submitted by the customer.Motivation should be set high for the employees of the bank to attend and provide solution to the customer’s query and if possible check out with the preferred customers at regular intervals.The procedure to sanction the loan should be fast.Advertisements of SBI are there but not so aggressively with which private banks are doing. STRATEGIES TO INCREASE THE BUSINESS UNDER CGTMSE SCHEMETry online news releases:They put your name where customers look—search engines. They can get your name to the very top of a Google page so potential customers find you faster. They have a broader reach than email marketing and they reach people way beyond your email list, like prospects, journalists and bloggers.Tell everyone about your latest accomplishment or award:The next time you win an award or have a major breakthrough – or win an award for your latest major breakthrough – let the world know about it. An online news release can take the story beyond your industry in all sorts of ways and connect you with all sorts of people, including journalists looking for a story, and customers looking for a well-reviewed, credible product or service.Share an inspirational story:For inspiration for your next release, looks no further then… inspiration. Readers love to hear about people going the extra mile, overcoming adversity, and becoming successful–and the publicity can generate even more success.Offer useful, free educational resources:Educate the public about your latest initiative, event, product or service. No one likes to be lectured, but you can present helpful, useful information by telling a story. This sort of news can build your credibility with readers and provides a resource they might share.Share new market studies, research, surveys:Everyone loves stats and surveys, who find ready-made stories in this type of news release. Readers also love sharing them in a big way, via links, tweets, Face book and just about every other communication channel.Provide helpful tips:Publishing a few helpful tips can turn a search engine user into a potential customer, so get your industry knowledge out there. You have the tips and people are out there searching for them. Get publishing and get connected. Remember though: just one or two brilliant tips is much better than a long list of useless ones.Promote your event or team sponsorship:A great way to reach local customers is to sponsor a local team or event, and then publish a news release promoting your involvement. It’s added publicity for them, and it’s great publicity for you – especially when it connects you to customers.STRATEGIES TO IMPROVE COVERAGE OF EXISTING BUSINESS UNDER CGTMSE SCHEMElefttopWe can explain this by the six sigma concept. It is normally defined as a set of practices that improves efficiency and eliminate defects.Six Sigma has been around more than 20 years and TQM (Total Quality Management) and Zero Defect Principles have heavily influenced it. These processes must be measured, analyzed, controlled, and improve upon. In order to improve upon these processes, the six sigma system requires sustained commitment from the top level people to guide lower level people and policies.This is five step processes: Define Measure, Analyze, Improve, and control. Define: Define is the first step process. In this step, it is important to define specific goals for achieving outcomes that are consistent with both the customer’s demand and one’s own business’s strategy. Measure: In order to determine whether defects have been reduced, the user needs a base measurement. In this step, accurate measurements must be made and relevant data must be collected so that future comparisons can be measured to determine whether defects have been reduced.Analyze: Analysis is extremely important to determine relationships and the factors of causality. If trying to understand how to fix a problem, cause and effect are extremely necessary and must be considered. Improve: Making improvements or optimizing processes based on measurements and analysis can ensure that defects are lowered and processes are streamlined.Control: Control ensures that any variances stand out and are corrected before they can influence a process negatively causing defects. However, continued measurement and analysis must ensure to keep processes on track and free of defects below the six sigma limit.SWOT ANALYSISA scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection.The performance of banking industry is done through SWOT Analysis. It mainly helps to know the strengths and Weakness of the industry and to improve will be known through converting the opportunities into strengths. It also helps for the competitive environment among the banks.STRENGHTS1. Availability of FundsThere are seven lakh crore wroth of deposits available in the banking system. Because of the recession in the economy and volatility in capital markets, consumers prefer to deposit their money in banks. This is mainly because of liquidity for investors.2. Banking networkAfter nationalization, banks have expanded their branches in the country, which has helped banks build large networks in the rural and urban areas. Private banks allowed to operate but they mainly concentrate in metropolis.3. Large Customer BaseThis is mainly attributed to the large network of the banking sector. Depositors in rural areas prefer banks because of the failure of the NBFCs.4. Low Cost of CapitalCorporate prefers borrowing money from banks because of low cost of capital. Middle income people who want money for personal financing can look to banks as they offer at very low rates of interests. Consumer credit forms the major source of financing by banks.WEAKNESS1. Loan DeploymentBecause of the recession in the economy the banks have idle resources to the tune of 3.3 lakh crores. Corporate lending has reduced drastically2. Powerful UnionsNationalization of banks had a positive outcome in helping the Indian Economy as a whole. But this had also proved detrimental in the form of strong unions, which have a major influence in decision-making. They are against automation.3. Priority Sector LendingTo uplift the society, priority sector lending was brought in during nationalization. This is good for the economy but banks have failed to manage the asset quality and their intensions were more towards fulfilling government norms. As a result lending was done for non-productive purposes.4. High Non-Performing AssetsNon-Performing Assets (NPAs) have become a matter of concern in the banking industry. This is because of change in the total outstanding advances, which has to be reduced to meet the international standards.OPPORTUNITIES1. Universal BankingBanks have moved along the valve chain to provide their customers more products and services. For example: - SBI is into SBI home finance, SBI Capital Markets, SBI Bonds etc.2. Differential Interest RatesAs RBI control over bank reduces, they will have greater flexibility to fix their own interest rates which depends on the profitability of the banks.3. High Household SavingsHousehold savings has been increasing drastically. Investment in financial assets has also increased. Banks should use this opportunity for raising funds.4. Overseas MarketsBanks should tape the overseas market, as the cost of capital is very low.5. Interest BankingThe advance in information technology has made banking easier. Business can effectively carried out through internet banking. THREATS1. NBFCs, Capital Markets and Mutual fundsThere is a huge investment of household savings. The investments in NBFCs deposits, Capital Market Instruments and Mutual Funds are increasing. Normally these instruments offer better return to investors.2. Change in the Government PolicyThe change in the government policy has proved to be a threat to the banking sector.3. InflationThe interest rates go down with a fall in inflation. Thus, the investors will shift his investments to the other profitable sectors.4. RecessionDue to the recession in the business cycle the economy functions poorly and this has proved to be a threat to the banking sector. The market oriented economy and globalization has resulted into competition for market share. The spread in the banking sector is very narrow. To meet the competition the banks has to grow at a faster rates and reduce the overheads. They can introduce the new products and develop the existing services. CONCLUSION By doing this project, I come to the conclusion that considering the condition andCircumstances, the project is definitely variable.This task has provided me a opportunity to play a role as an entrepreneur. I am confident that it will help me in my career in future.I am thankful to the supporters who have contributed somewhere and somewhat to my project. Special thanks go to Mr. Arora, branch manager, who guide me at any time without fail and provided me an opportunity to learn so much about practical aspect of corporate world.BIBLIOGRAPHYMarketing management- Philip kotler WEBOGRAPHYstatebankof ................
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