SME Banking

ISBN Number : 978-93-5262-198-9

Student Price : Rs.450

Student Dollar Price : 18$

Book Edition : First

Year of Publication : 2016

No. Of Pages : 152

Book Weight :244

About The Book

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on June 16, 2006 which was notified on October 2, 2006.

With the enactment of MSMED Act 2006, the paradigm shift that has taken place is the inclusion of the services sector in the definition of Micro, Small and Medium enterprises, apart from extending the scope to medium enterprises.

The MSMED Act, 2006 has modified the definition of micro, small and medium enterprises engaged in manufacturing or production and providing or rendering of services. The Reserve Bank has notified the changes to all scheduled commercial banks. Further, the definition, as per the Act, has been adopted for purposes of bank credits vide RBI Circular Ref. RPCD.PLNFS. BC.No. 63/06.02.31/2006-07 dated April 4, 2007.

Small and Medium Enterprises (SME) sector in India is the key driver of the nation’s economic growth with a contribution of over 40% to the country's industrial output and around 35% to direct exports. It accounts for over 90% of the industrial units in the country. In terms of employment, this sector plays a very crucial role, being the second largest employer after agriculture. The impressive performance has been in spite of the inadequacies in capital, technology and marketing.

The Industries Development and Regulation Act, 1951, defines SMEs according to limits in Investment in Plant andMachinery. The small-scale sector, in India, comprises of the abstractness in defining a SME presents difficulty in identifying them, formulate and implement suitable policies for them. The limit on investment in Plant and Machinery and a plethora of laws governing (58 laws in 7 different categories) them, some of the SSIs seek refuge in remaining small inspite of opportunities to grow. The small size, opacity of the firms and their lack of awareness have bred the following hindrances to their growth:

1. Under utilization of capacities.
2. Inadequate and untimely credit flows.
3. Inability in technology upgradation.
4. Inefficient raw material procurement.
5. Inability to market finished goods.
6. Ineffective monitoring and feedback mechanism.

Small businesses today are being variously described as the backbone of the industrial economy or as the drivers of the economy or even as the engine of the growth for industry. Though individually small, collectively the small sector has emerged as a dominant player in most economies, be they developing or developed. Performance of the small sector therefore, has a direct multiplayer impact upon the growth of the national economy. The sector has been consolidating over the years. What is new is the articulation and recognition of this process and its pump priming role.


Contents -

1. Introduction
2. Products Offered and their Process Mapping
3. Why Banks are Not Interested in Financing SME?
4. Interaction with SME Clients
5. Micro, Small and Medium Enterprises (MSME)
6. Risk Management in SME with Special Context to CGFT
7. One Approach to Risk Management in SMEs Banking
8. Conclusion and Recommendations
RBI Guidelines on Priority Sector Lending

About The Author

Dr. Suresh Chandra Bihari - Director, Institute of Banking and Management Training, Bhubaneswar Dr. Bihari has 36 years experience in industry and academics which includes 18 years teaching experience.

He has organised 20 management development programmes which are widely acclaimed among industry circles. Through these programmes, he has trained about 500 bankers from all over the country. He has written 25 books in various areas of management including A Handbook on Banking Management, Carrying a Foreword from The Chairman, Indian Banks Association. He has total publications of more than 100 in various international and national journals of repute. He is the consulting editor of the ICFAI University Press Journal of Bank Management since 2012.

A post-graduate in Humanities, Journalism, Banking, Management, PMIR, Training and a graduate in law. He got his doctorate in Management 10 years ago and is presently pursuing his post-doctorate (D.Litt.) in management.

He received Micro (2011) and Macro (2009-10) research awards from Indian Institute of Banking and Finance and has received research award from IFHE Deemed University for working on the effectiveness of Pradhan Mantri Jan-Dhan Yojana in the state of Telangana. For the academic year 2013-14, he received the Best Teacher Award for overall excellence of IFHE Deemed University of which IBS, Hyderabad is a constituent. 2015 — He organised - 11th International Conferences on Business and Finance at IBS Hyderabad on 8-9, January, as Conference Chair. 2016 — Worked as a Member of a Panel to promote executives of a large public sector bank to the Senior Management Grade at the request of the bank.

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