Professional Documents
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-AN OVERVIEW-
DEFINITIONS
Micro Enterprise: Investment in P&M25 lacs
manufacturing & upto Rs 10 lacs in equipment in
service sector
S.S.I-Investment in p&m does not exceed
Rs500lacs in P&M and Rs10 to 200 lacs in
equipment in service sector
Medium Enterprise: Above 500 lacs and upto
Rs1000lacs in P&M in manufacturing and Above
rs 200 lacs upto Rs500 lacs in
DEFINITIONS
Equipment in service sectorncillary unitsproposes to supply 50% of its production or
services
Tiny units-Investment in p&m does not
exceed Rs25lacs
Village & cottage industry.--population not
exceeding 50000.
DEFINITION CONTD.
Women enterprises--SSI related related
service where share of the women as partner
shareholders,directors not less than 51%.
Export oriented units--exports at least 30% of
its production.
SSSBE--An industry related service business
enterprises with investment in fixed assets
upto 5lacs except land&bldg
Importance of S.S.I.
Provides employment next to Agri.
Accounts 40% of the total export of the
country
Plays crucial role in the economy.
Dehejia committee
recommendation
Appraisal of credit application based on
present & projected financial position
Bank with one bank to avoid multiple
financing
Cash credit requirement should be
segregated into hardcore &short term
component
Tandon committee
recomendations
Chore committee
recommendation
Periodical review
Quarterly information system QIS-I,II,III
Peak nonpeak level limit
Regulation of drawal of funds
Ad hoc limits
Enhancement of borrowers contribution
NAYAK COMMITTEE
RECOMMENDATION
Banks should step up the credit flow to meet the legitmate requirement of
SSI through preparing an annual budget for new units,functioning
units,&sick SSIunits
Single financing agency to meet T/L,W/c, requirement
upto20lacs&10lacs respectively.The single window scheme of SIDIBI
enables the same agency to cater the need.
Inventory norms &Ist method of lending not applicable to ssi units upto
50lacs(raised to 100lacs).As such fudbased facility upto 10lacs &10 to
50 lacs are subjected to inventory&receivable norms & ist method of
lending respectively
The banks lend on the basis of 1st method of lending to those units
engaged in marketing&trading of SSI products.subjected to condition
that dealing with100% products &due settled in30days.
Operational clearification on
Nayak commt. Contd.
Operational clearification on
Nayak commt. Recomm.
Kapur committee
recommendation
Delegation of sanctioning power
To be delegated to sanction 20% of limit as
adhoc limit
Banks to consider composite loan limit upto
5lacs (enhanced to 10lacs)
Project requiring credit upto 25lacs should be
sannctioned by banks or sfc .For loans
>25las sidibi with banks to have MOU sign
Kapur committ.recom.contd.
Exemption of collaterals upto 1lac
Upto 10lacs the collaterals plus netmeans of
3rd party guarentee should not exceed
50%of fund & non fund based business.
Banks should at least should finance 10% of
its accounts without collaterals.
EXISTNG UNITS
Balance sheet,profit&loss accounts.
Cash & credit sales
Cash& credit purchases of raw materials
Basis for manufacturing cost&overheads
basis for administration expenses
liquid surplus available
opening&closing stock balance
manufacturing process details&marketing arrangements
Projected balancesheet
Projected profit&loss account
Basis for projecting manuf.exp.&admn.exp.
Period involved in various stage of
operating cycle
Prportion of cash&credit sales
Liquid surplus presently available
The appraisal of the term loan covers 4 broad aspects of the project
such as TECHNICAL, FINANCIAL,ECONOMIC.MANAGERIAL
FINANCIAL--COST OF THE PROJECT
Land&site development,Building,Plant&Machinery,Techinical Know
how&other misc related charges,expenses on training,misc.fixed assets
preliminary exp.,preoperative expenses,provision for contigencies,
margin for working capital.
MEANS OF FINANCE
Share capital,reserve&surplus,retained earnings,long term
borrowings,deferred payments,other sources.
PRESENTING A CREDIT
PROPOSAL