Final Copy Samiullah

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ACKNOWLEDGEMENT

I am greatly thankful to the almighty Allah, with the grace of whom my ProjeWork completedsuccessfully. Every work involves the contribution of lots of people but it is neasy to mention

each and everybodys name but through this acknowledgement I have tried thank all thosepeople who have directly or indirectly helped me in completion of my projec

I wish to avail this opportunity to express my profound pleasure and immengratitude to thosewho helped me during the preparation of this project, without whose supporproject wouldnot see the light of the day.

It is my first and foremost duty to express my profound sense of gratitude t

Riaz Ahmad Mir(Sr.Executive Manager, Zonal Office J&K Bank North Kashmir) for providing aopportunity toundertake summer training in their esteem organization.

I owe my deep debt of gratitude to my other Staff members of Zonal OfficeTJammu & KashmirBank LTD Srinagar for providing me guidance, information and valuablesuggestion from time totime as well as encouragement during completion of my project work

I would be failing in my duty if I dont mention the cooperation extended to Mr Bateshwar(Lecturer) ofSASIIT&RMohali and my guide and without whose constantguidance, propermotivation and undivided attention. I wouldnt have completed the mammo

task.

I am beholden to My Parents & My Brothers & Friends, whose blessing andaffection have alwaysbeen a source of inspiration for me and whose touch have enlightened my hand stiulated me while

I was preparing this Project report


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I am also thankful to Mr. Javid ah.Bhat (Owner/Manager of sports syndicatemanufacturing cricket bats located in Industrial estate area at Amargrah SopKashmir for sharing with me, his immenseexperience & dealings with the JK bank.


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SASIIT&R

MOHALI PUNJAB

SUMMER TRAINING PROJECT TITLED

FINANCING SMALL SCALE INDUSTRIES AND CUSTOME

SATISFACTION WITH THIS REGARD

BY

The Jammu & Kashmir Bank LTD.

Under Supervision of :

MR. BATESHWARSubmitted By:

SAMIULLAH BHAT

MBA-3RD


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CONTENTS

SASIIT&R MOHALI

S.no. Topic Page . no.1. COMPANY PROFILE 02

2. HISTORY OF THE ORGANISATION 05

3. BOARD OF DIRECTORS 06

4. ACHEIVMENTS OF THE BANK 12

5. INTRODUCTION OF THE STUDY 22

6. RESEARCH METHODOLOGY 23

7. OBJECTIVES OF THE RESEARCH 25

8. INTRODUCTION OF THE SMALL SCALEINDUSTRIES

26

9. RBI GUIDELINES TO BANKS FOR FINANCING

SSIs

29

10. JK BANK FINANCING FOR SSIs 37

11. CODE OF BANKS COMMITMENT TOMICRO & SMALL ENTERPRISES

42

12. BANKS STEPS TOWARDS THE IMPROVEMENTOF SMEs

56

13. ANALYSIS & INTERPRETATION 58

14. FINDINGS 66

15. SUGGESTIONS & RECOMMENDATIONS 68

16. LIMITATIONS OF THE STUDY 7017. QUESTIONNAIRE 71

18. BIBLIOGRAPHY 75


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2

COMPANY PROFILE

The Jammu and Kashmir Bank has become ahousehold name not only in this part of the country but is a well known banking institute all over

the country. In a span of about seven decades this bank has grown from a small regional bank

into a premiere banking institute of the country. The Jammu and Kashmir Bank Ltd.

Incorporated on October 1st, 1938 commenced business on July 4th, 1939. From a small

beginning the bank has grown to become a giant with a wide network of branches spread over

the length and breadth of India. It was declared as A Class Bank by RBI in 1976. The bank is

regulated by Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI) as

well, as the bank is listed both on National Stock Exchange (NSE) and Bombay Stock Exchange

(BSE). Till 1998 the bank was a state owned bank till it came with its Initial Public Offering in

the same year. Although the state owns 53% capital it is still a private sector bank. The bank has

an uninterrupted profitability and dividends for the last four decades. The bank has been rated

P1+ by Standard and Poor-CRISIL connoting highest degree of safety. The bank is only one of

its kind as the only private sector bank designated as an agent of RBI for banking. It also collects

taxes pertaining to Central Board of Direct Taxes in Jammu and Kashmir. Jammu and Kashmir

bank is also the sole banker and lender of last resort to the Government of J & K. The bank has

strength of 558 branches, the latest being opened at Kunzer in North Kashmir on 11 th April 23,

2008. The bank has recently passed the magic figure of being a billion dollar company.The

Jammu and Kashmir Bank Ltd. is the first state owned bank of the country and 53% of the equity

is held by the Govt. of J&K. The bank has a unique distinction of being banker to the J&K State

Govt. and has also been appointed by RBI as its agency in J&K, responsible for carrying general

banking business of the Central Government and collection of taxes pertaining to the Central

board of Direct Taxes.

The landmark achievements in the diversification of the Banks functions include the

sponsoring of the two Regional Rural Banks , permission for dealing in the foreign exchange,

holding the lead bank responsibilities in eight of the fourteen districts in J&K, Governorship of

State Level Export Promotion Committee (SLEPC). The bank is the only one in non-nationalized

sector, having been entrusted With such assignments and has come up to the expectations of RBI

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and other agencies, like CBDT.The bank has been swift in responding to the need for technology

adaptations in meeting its commitment to customers and offers the best of services and a wide

range of products. The bank has been forerunner in responding to the need for technology up-

gradation in meeting its commitment to the customer to offer the best of services and wide range

of products. The bank is investing in a big way in information technology.

Nearly 400 branches have been either or partly computerized covering 90% of the total

business of the bank. The bank has already installed around 180 ATMs at vital installations of

the country. The ATM share interconnected and thus provided the customer convenience and 24

hour banking facilities. Bank has also introduced Global Access Card in collaboration with

Master Card International recently, thus increasing the acceptability of card to all maestro

locations throughout the globe. Bank has also commissioned Anywhere Banking facilities ataround 103 branches through the country. The bank has already made available the EFT and E-

mail facilities at all of its computerized branches and also Tele-banking facilities at most of these

branches. The bank has launched Internet Banking with wide appreciation. The bank holds the

distinction of being only bank in providing these services in the state of Jammu & Kashmir. The

bank is the fastest growing bank in India with a network of more than 577 branches spread

across the country offering world class banking products and services to the masses. Today bank

has a status of value driven Organization and is always working towards building trust with

Shareholders, employees, customers, borrowers, regulators and other diverse Stakeholders, for

which it has adopted a strategy directed to developing a sound foundation of relationship and

trusted aimed at achieving excellence, which of course, comes from the womb of good Corporate

Governance. Jammu and Kashmir Bank considers good Corporate Governance as the sine quo

non of a good banking system and has adopted a policy based on all the four pillars of good

Governance- transparency, disclosures, accountability, and value, enabling it to practice

trusteeship, transparency, fairness and control, leading to stakeholders delight, enhanced

shareholder value and ethical corporate citizenship. It also ensures that bank is managed by an

independent and highly qualified board following best globally accepted practices, transparent

disclosures and empowerment of shareholders, besides also ensuring that shareholder

shareholders aspirations and societal expectations are met, following principles of managements

executive freedom to drive the bank forward without undue restraints but within the framework

of effective accountability. The excellence achieved by the bank in its operations stemming from

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the roots of voluntarily good Governance has not gone unrecognized and bank has recently

bagged three very prestigious awards for following fair business practices and commitment to

social obligation.Bank has touched business turnover of US$10 Billion by which the impact on

the economy of Jammu & Kashmir State that has gross domestic product of US$ 6 billion is

enormous. Bank is in a strong position to meet the challenges of the future wherein due to

liberization the foreign banks will be able to freely expand their branch network as well as

acquire Indian Banks after March 2009. Banks strategy pressed ahead with the customer-,

innovative methods to optimize business processes consolidate IT systems and simplify customer

services, while complying with regulatory norms and enhancing security. By delivering on these

banks will continue to generate significant cash flow, and that will allow it to radically change

business and invest in the future. Bank is doing this by focusing on customers need and throughinvests in new distribution channels. Bank will also continue to improve cost efficiency, by

radically developing business and by embracing e-commerce. To do this, bank will explore new

business opportunities, invest heavily in new markets and also improve business infrastructure

and processing efficiency.Bank will continue to improve operational efficiency, building on

success to date, the bank will not hesitate to reinvest these savings in new propositions, new

initiatives and new business especially if they allow bank to exploit profitable growth

opportunities .Bank is confident to continue to be a winner.

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HISTORY OF THE ORGANISATION

Till 1920-30, traditional money lenders performed entire banking in the State of Jammuand Kashmir too, at exorbitant rates. At the same time, some banks functioned but at a very

limited scale, such as Punjab National Bank, Grindlays Bank, and Imperial Bank of India. The

role of these banks was reduced to the acceptance of deposits, as they not grant loans and

advances to the people of the State owing to the statutory limitations. Under this scenario, banks

could not ameliorate the financial and social position of the State. To overcome this critical

situation the then Maharaja of State conceived an idea of setting up of a State Bank in the State.

After prolonged exercises and deliberations the assignment for establishment of The Jammu

and Kashmir Bank Limited was given to the late Sir Sorabji N.Pochkhanwala, the then

Managing Director of the Central Bank of India. Mr. Pochkhanwala formulated a scheme on 24-

09-1930,suggesting establishment of a semi State bank of India with participation in capital by

State and the public under the control of State Government. Thus, the bank was formally

incorporated on 1st of October 1938 and commences its business from 4th of July 1939 at its

Registered Office, Residency Road, Srinagar, Kashmir.The Jammu and Kashmir Bank Limited

has been the first of its nature and composition as a State owned bank in the country. The State

Government besides contributing half of the issued capital also appointed it as its bankers for

general banking and treasury business. In its formative years, the Bank had to encounter several

serious problems, particularly around the time of independence, when out of its total of 10branches two branches of Muzaffarabad and Mirpur fell to the other side of Line of Control (now

Pakistan Administrated Kashmir) along with cash and other assets in 1947. However, the State

Government came to its rescue with the assistance of Rs.6 lakhs to meet the claims. However,

the Bank steadily overcame its difficulties and kept growing. Following the extension of Central

laws to the State of Jammu and Kashmir the bank was defined as a Government Company as per

the provisions of Indian Companies Act 1956. The bank had its first full time Chairman in 1971,

following the social central measures in banks. The year 1971 was a turning point for the Bank

on conferment of scheduled bank status and witnessed remarkable progress in all the vital fields

of operations. Reserve Bank of India (RBI) declared the bank as A class bank. In recognition

of dominant role and exalted performance. RBI appointed the bank as its agent for performing

the general banking business of the Central Government especially in maintaining currency chest

and collection of taxes.

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BOARD OF DIRECTORS

Mr. Mushtaq Ahmed and Mr. Abdul Rauf Fazili, Executive Directors of the Bank retiredfrom the services of the Bank with effect from 29th Feb. 2008 and 30th April 2008 respectively

on attaining the age of superannuation. Mr. Umar Khurshid Tramboo, Director resigned from

Directorship of the Bank w.e.f 3rd June, 2008. Directors place on record their deep sense of

appreciation for the valuable services rendered by Mr. Mushtaq Ahmad, Mr. Abdul Rauf Fazili

and Mr. Umar Khurshid Tramboo during their tenure as directors of the Bank.

Pursuant to the approval accorded by the Reserve Bank of India, Mr.Ashok Kumar

Mehta and Mr. Abdul Majid Mir were appointed as Executive Directors on the Banks Board

w.e.f. 1st May, 2008. With a view to broad base the Board, eminent personalities - Mr.

Mayashanker Verma and Mr. G P Gupta were re-appointed as additional Directors of the Bank

w.e.f. 9th June 2008. The Bank has immensely benefited from their rich and varied experience.

Mr. B. L. Dogra Director retires by rotation at the ensuing Annual General Meeting in

accordance with Article 78 of the Articles of Association of the Bank and Provisions of the

Companies Act, 1956 and being eligible, offer himself for reappointment.

Name of the Board of Directors1. Mushtaq Ahmad Chairman & CEO2. M S Verma Director3. G P Gupta Director4. B B Vyas, IAS Director5. Ashok Kumar Mehta Executive Director6. Abdul Majid Mir Executive Director7. B L Dogra Director

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Description of CEO:

StatementValued shareholders and distinguished guests, On behalf of the J&K Bank fraternity, it is

my privilege to welcome you to the 69th Annual General Body meeting of the Bank. It is a sheercoincidence that exactly today, I complete two years as Chairman and Chief Executive. It hasbeen a very satisfying and enriching experience for me to work at the Bank. In the last two years,the Bank has registered a 140 per cent increase in profits. We have seen a 108 per cent increase inthe rate of return on your equity, thereby showing a vast improvement in the Banks efficiency to

generate profits from every invested rupee.

Our predecessors have handed down a national brand to us. It is for us to now contributeour bit and make it a global brand. To build a global brand we need to do two things go globalphysically and second, more importantly, have a unique business model, product offering andservice standards, all of which are globally recognized .

We have taken initial steps to achieve the first. As of today, after the state government, oursecond largest shareholders are Foreign Institutional Investors, with a combined stake of almost36 per cent. Some of the biggest names in the world figure in the sixty plus funds that haveinvested in the Bank. The list is truly international, with funds from USA, Europe, Singapore,

Japan, Sweden, Mexico and Spain, having investments valued at more than $300 million in theBank .

As a next step in this direction, it is our plan this year to raise money abroad. We will offerGlobal Depository Receipts and list the Bank in international capital markets. This will be alandmark in our illustrious history. .

To do this we have to work out processes, products and procedures that are unique to theJ&K Bank. It has to be the J&K Bank way of doing business. Within our industry and closerhome, the Bangladesh Grameen Bank and Bank Danamon have become global names. We dontwant to replicate their business model but we do want to emulate their uniqueness of doing

business.

I can say with some satisfaction that we have already embarked on this journey. Itpromises to be a hard but eventful one. For the last two years we have been on a voyage of self-discovery of the institutional self of J&K Bank. Let me quote to you from the originalmemorandum drafted in 1930 by Sir S N Pochkhanawalla, Managing Director of the Central Bankof India, who was commissioned by His Highness Maharaja Hari Singh to work out a scheme forsetting up what is now known as J&K Bank: In my opinion the Bank should be an organ of

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public interest and not an instrument for . We have changed the business model and made itrelevant to the people of the state. But that was the easier part. Now we have to change ourattitude and mind-set.

The most important change is to move away from trying to govern to trying to serve. Ourvalues tend to emphasize rigid hierarchies and power structures, when we should be focusing onegalitarianism and individual worth. We have to eschew the common top-down hierarchical style,and instead emphasize collaboration, trust, empathy and the ethical use of power. The traditionalautocratic and hierarchical modes of functioning have to yield to a newer model of collaboration.We have, in the years gone by, spoken much about our achievements and ourselves;now we must,as an organisation, lead the campaign to listen; listen to our customers and our constituents.

Our mission is to empower the people of J&K. Within the framework of this approach, wecannot now conceive strategies for the Bank, which have little or no connection with the people ofJ&K. In the past we have tried to maximize profits without directly linking it to the impact on the

welfare of the society as a whole. What we need to do now is to combine the sensibility of thesocial enterprise with the form of a for-profit business.

Our overriding mission as a corporation is to use our core competency to serve andempower the people of the state in general, and entrepreneurs in particular, rather than servingthem as an afterthought

Within the empowerment framework, the Bank is starting a program, EntrepreneuringPeace by funding, and collaborating with entrepreneurs starting private, for-profit ventures.Innovate, collaborate and incorporate is the motive of this initiative. The Entrepreneuring Peaceinitiative will serve as an operational framework that sets the context for each individual to

contribute to the process of peaceful development within his own area of work. This will besustainable because it increases his stake in the system. With our programs and your participation,we will not just empower and rebuild our community, but will also build a socio-financialmovement.

In making these changes possible, I want to thank, first and foremost, the stategovernment. While there is absolutely no intrusion, there has been tremendous cooperationextended by the government to the Bank in facilitating its plans new or old. I can say withcomplete confidence, that J&K Bank is a great example of public-private cooperation where thebest of both worlds is combined. For this, I have to complement the sagacity of the stategovernment.

Chairman's Profile Name and Age (Years) Haseeb A. Drabu (47)

Designation Nature of duties Chairman & CEO

Remuneration Rs 28,08,000

Qualification M & D.Phil EconomicsExperience (years) 17 yearsLast employment Economic Advisor to Govt, of J&K

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ACHIEVEMENTS OF THE BANK

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CAPITAL & RESERVES

The Bank was incorporated with the authorized capital of two lakh shares of Rs. 25/- each

amounting to Rs. 50.00 lacs. The first value issue comprised 80,000 shares amounting to Rs. 20.00 lac

A total number of 62716 shares of the value of Rs. 15, 67,900 were authorized and Rs. 7.65 lacs paid u

as on 30.06.1940. The authorized capital was subsequently reduced to nearly 1 lacs shares amounting t

Rs. 30.00 lacs in 1958 and later enhanced to 4 lacs shares in 1992 and 80 lacs shares in 1993 amount t

Rs. 10.00 crores and Rs. 20.00 crores respectively. The issued capital of Rs. 28.00 lacs shares amount t

Rs. 7.00 crores stands subscribed and paid up as on March 31, 1997.

In order to further strengthen its capital base and related ratios, Bank floated its maiden publi

issue in March 1998, which received overwhelmed response and was subscribed by 2 times. Ti

March 2005, the share capital stood at 48.49 crores.The Banks net worth as at 31st March 2009 was R

2308.92 crores comprising of paid up capital of Rs 48.49 crores, share warrants of Rs28.10 crores an

reserves of Rs 2232.34 crores. An amount of Rs 272.09 crores was transferred to reserves from thprofits earned during FY08.PROFIT

Except for the first year of business, when Bank suffered a loss of Rs. 0.07 lacs as o30.06.1941, the Bank has a consistent track record of growth and profitability. In just the second year o

commencement of business, it recorded an impressive profit of Rs. 0.48 lacs and wiped out the losses o

previous year. With excellent fund management, the profits of the Bank jumped from Rs.177 lacs i

1990 to Rs. 1251 lacs in March 1994 after providing for all statutory and mandatory provisions. Durin

the last eleven years the net profit of the Bank have increased at impressive rate and were recorded aRs. 176.84 crore in 2005-06 and Rs. 276.49 crore for the year 2006-07 registering an impressive growth

of 55.The Bank posted a net profit of Rs 360.00 crores for the year, which is 31.15% higher than R

274.49 crores in the previous year. The operating profits were up by over 17% at Rs.651.84 Crores a

the end of March 2008 as compared to previous year.

INCOMEThe Bank continued to register an impressive year-on-year improvement in earning

During the year, the total income has increased by 30.10% to Rs 2679.24 crores from Rs 2059.54 crorein the previous year.

NET INTEREST INCOME / OTHER INCOME

During the year our Net Interest Income increased to Rs 810.44 registering a growth of 5.55%

The other income of the Bank has incraged by 04.80 crores, thereby regarding a healthing growth o53%. Other income earned by the bank during this fiscal is Rs 245.01 crores. as against 160.21 crorefor the previous year.

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To catalyse economic transformation and capitalize on growth. Our vision is to engender

and catalyse economic transformation of Jammu and Kashmir and capitalize from the

growth induced financial prosperity thus engineered. The bank aspires to make Jammu

and Kashmir the most prosperous state in the country, by helping create a new financial

architecture for the J&K economy, at the center of which will be the J&K Bank.

To provide the people of J&K international quality financial service and solutions and to

be a super-specialist bank in the rest of the country.

INTRODUCTION OF THE STUDY

Executive Summary :

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MISSIO

N


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The project was done to know the compatibility between J&K bank & SSIs regarding financing

of SSIs.

The project was done to know the present expectations of SSIs from J&K bank .

The project was done to know the current arrangements/ schemes made by the bank to help

SSIs

RESEARCH METHODOLOGY

TOOLS FOR CONDUCTING STUDY1. Primary Data

Questionnaires

Direct interaction with SSI unit employees

Structural observation

Projective Techniques

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2. Secondary data

Company broachers

Pamphlets

Internet

Research Instrument:

A structured interview type of questionnaire was used containing the following mix of questions.

Close end questions

a. Dichotomous type

b. Multiple choices

Close-end questions specify all possible answers and provide answers that are easier to interpretand tabulate. They can be grasped quickly and answered rapidly requiring the minimum possible

time of the respondents.

Open end questions : Open-end questions allow respondents to answer in their own

words and often reveal more about how people think. They were used to determine reasons for

prior chances or to obtain suggestions.

Research Design

A research design is the detailed blue print used to guide a research study towards its objectives.

It helps to collect, measure and analysis of data.

Type Of Research

The study undertaken is ofExploratory Researchin nature.

Exploratory research studies are those which are concerned with new hypothesis.

Nature Of Research

The study undertaken is of Quantitative in nature.

It is structured, standardized, question based interviews.

Type Of Question

The type of questions asked during the study are Straight forward and limited

probing.

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Type Of Questionnaire

The type of questionnaire used during the study is Structured and Formalized.

Type Of Analysis: The type of analysis carried out during the study is

Statistical Analysis.

Sampling Plan:

1. Population:

The populations interviewed in the research are employers (also employees) of SSIs

b) Sample Size:

Owing to the constraints of time & budget, the sample size was restricted to 60Industrialists of SSIs

c) Sample Extent:

The sample extent is limited to Baramulla city.

f) Sample Duration:

The sample duration was betweenJune 13 and 20TH AUG 2011

g) Sampling Technique:

The sampling technique wasSimple Random sampling.

i) Statistical Tool Used for Data Analysis

Pi-chart Bar-char Mean

Objectives of the Research:

Primary objectives:

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1. To know how J&K bank finances for SSIs.

2. To know the level of satisfaction of SSIs holders with J&K bank regarding the

financial help

provided by the bank.

3. To find out the present requirements of financing products by SSIs.

Secondary objectives:

1. To know what does SSI means.

2. To know about RBI guidelines to bank's regarding financing SSIs.

3. To know about the awareness of employers of SSIs regarding financing

products of the bank.

INTRODUCTION TO SMALL SCALE INDUSTRIES

SMALL SCALE INDUSTRIES

Small scale industrial units are those engaged in the manufacture, processing or

preservation of goods and whose investment in plant and machinery (original cost) does not

exceed Rs. 1 crore. (except in respect of certain specified items under hosiery, hand tools, drugs

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and pharmaceuticals, stationery items and sports goods where this investment limit has been

enhanced to Rs.5.00 crore. However loan to SSI sector will be categorized under priority sector.)

Subject to the condition that the unit is not owned, controlled or subsidiary of any

other industrial undertaking)

Explanation: For the purpose of this note:- the expression "controlled by any other

industrial undertaking" means as under:-

i. where two or more industrial undertakings are set up by the same person as a

proprietor, each of such industrial undertakings shall be considered to be controlled by

the other industrial undetaking or undertakings,

ii. where two or more industrial undertakings are set up as partnership firms under

the Indian Partnership Act, 1932 (1 of 1932) and one or more partners are common

partner or partners in such firms, each such undertaking shall be considered to becontrolled by other undertaking or undertakings,

iii. where industrial undertakings are set up by companies under the Companies Act,

1956 (1 of 1956), an industrial undertaking shall be considered to be controlled by other

industrial undertaking if:-

a. the equity holding by other industrial undertaking in it exceeds twenty four

percent of its total equity; or

b. the management control of an undertaking is passed on to the other industrial

undertaking by way of the Managing Director of the first mentioned undertaking being

also the Managing Director or Director in the other industrial undertaking or the majority

of Directors on the Board of the first mentioned undertaking being the equity holders inthe other industrial undertaking in terms of the provisions of the following items (a) and

(b) of sub-clause (iv);

(iv) the extent of equity participation by other industrial undertaking or undertakings in the

undertaking as per sub-clause (iii) above shall be worked out as follows:-

a. the equity participation by other industrial undertaking shall include both foreign

and domestic equity;

b. equity participation by other industrial undertaking shall mean total equity held in

an industrial undertaking by other industrial undertaking or undertakings, whether small

scale or otherwise, put together as well as the equity held by persons who are Directors

in any other industrial undertaking or undertakings even if the person concerned is a

Director in other Industrial Undertaking or Undertakings;

c. equity held by a person, having special technical qualification and experience,

appointed as a Director in a small scale industrial undertaking, to the extent of

qualification shares, if so provided in the Articles of Association, shall not be counted in

computing the equity held by other industrial undertaking or undertakings even if the

person concerned is a Director in other industrial undertakings or undertakings;

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(v) where an industrial undertaking is a subsidiary of, or is owned or controlled by, any other

industrial undertaking or undertakings in terms of sub-clauses (i); (ii); or (iii) and if the total

investment in fixed assets in plant and machinery of the first mentioned industrial undertaking

and the other industrial undertaking or undertakings clubbed together exceeds the limit of

investment specified in paragraphs (1) or (2) of this notification as the case may be, none of these

industrial undertakings shall be considered to be a small scale or ancillary industrial undertaking.

Tiny Enterprises:

The status of Tiny Enterprises is given to all small scale units whose investment in

plant & machinery is upto Rs. 25 lakhs, irrespective of the location of the unit.

Ancillary Industrial undertaking:

An industrial undertaking which is engaged or is proposed to be engageg in the

manufacture or production of parts , components , sub-assemblies , tooling or intermediates , orthe rendering of services is termed as Ancillary industrial undertaking. The Ancillary industrial

undertaking has to supply or render or propose to supply or render not less than 50% of

production or services , as the case may be , to one or more other industrial undertakings. The

investment in plant and machinery , whether held on ownership terms or on lease or on hire

purchase, should not exceed Rs10 million .

Small Scale Service & Business Enterprises (SSSBEs):

Industry related service and business enterprises with investment upto Rs. 10 lakhs infixed assets, excluding land and building will be given benefits of small scale sector. Forcomputation of value of fixed assets, the original price paid by the original owner will beconsidered irrespective of the price paid by subsequent owners.

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SASIIT&R MOHALI

Small Scale Industries may sound small but actually plays a very important part in theoverall growth of an economy. Small Scale Industries can be characterized by the unique featureof labor intensiveness. The total number of people employed in this industry has been calculated

to be near about one crore and ninety lakhs in India, the main proponents of Small scaleindustries.

The importance of this industry increases manifold due to the immense employment generatingpotential. The countries which are characterized by acute unemployment problem especially putemphasis on the model ofSmall Scale Industries. It has been observed that India along with thecountries in the Indian continent have gone long strides in this field.

In calculating the value of plant and machinery, thefollowing shall be excluded, namely:- (i) the cost of equipments such astools, jigs, dies moulds and spare parts for maintenance and the cost of consumable stores; (ii)

the cost of installation of plant and machinery; (iii) the cost of research and developmentequipment and pollution control equipment; (iv) the cost of generation sets and extra transformerinstalled by the undertaking as per the regulations of the State Electricity Board; (v) the bankcharges and service charges paid to the National Small Industries Corporation or the State SmallIndustries Corporation; (vi) the cost involved in procurement or installation of cables, wiring,bus bars, electrical control panels(not those mounted on individual machines), oil circuitbreakers or miniature circuit breakers which are necessarily to be used for providing electricalpower to the plant and machinery or for safety measures; (vii) the cost of gas producers plants'(viii) transportation charges(excluding of sales-tax and excise) for indigenous machinery

Advantages associated with Small Scale Industries

This industry is especially specialized in the production of consumer commodities. Small scale industries can be characterized with the special feature of adopting the laborintensive approach for commodity production. As these industries lack capital, so they utilizethe labor power for the production of goods. The main advantage of such a process lies in theabsorption of the surplus amount of labor in the economy who were not being absorbed by thelarge and capital intensive industries. This, in turn, helps the system in scaling down the extentof unemployment as well as poverty.

It has been empirically proved all over the world that Small Scale Industries are adept indistributing national income in more efficient and equitable manner among the various

participants in the process of good production than their medium or larger counterparts. Small Scale Industries help the economy in promoting balanced development ofindustries across all the regions of the economy. This industry helps the various sections of the society to hone their skills required forentrepreneurship. Small Scale Industries act as an essential medium for the efficient utilization of the skillsas well as resources available locally.

Small Scale Industries enjoy a lot of help and encouragement from the government through protecting these industries from the direct competition of the large scale ones, provision ofsubsidies in the form of capital,lenient tax structure for this industry and many more


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RBI Guidelines To Banks For Financing SSIs

Brief introduction on Priority Sector Lending:

At a meeting of the National Credit Council held in July 1968, it was emphasised that

commercial banks should increase their involvement in the financing of priority sectors, viz.,

agriculture and small scale industries. The description of the priority sectors was later formalised

in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to

advances to the Priority Sectors constituted by the Reserve Bank in May 1971. On the basis of

this report, the Reserve Bank prescribed a modified return for reporting priority sector advances

and certain guidelines were issued in this connection indicating the scope of the items to be

included under the various categories of priority sector. Although initially there was no specific

target fixed in respect of priority sector lending, in November 1974 the banks were advised toraise the share of these sectors in their aggregate advances to the level of 33 1/3 per cent by

March 1979.The need for primary (urban) co-operative bank (UCBs) for providing credit to

priority sectors had been examined by the Standing Advisory Committee for UCBs constituted

by Reserve Bank in May 1983. The recommendations of the committee were accepted by

Reserve Bank and accordingly the targets for lending to priority sector and weaker sections by

the UCBs were stipulated. 2. On the basis of the recommendations made in September 2005 by

the Internal Working Group (Chairman: Shri C. S. Murthy), set up in Reserve Bank to examine,

review and recommend changes, if any, in the existing policy on priority sector lending including

the segments constituting the priority sector, targets and sub-targets, etc. and the

comments/suggestions received thereon from banks, financial institutions, public and the Indian

Banks Association (IBA), it has been decided to include only those sectors as part of the priority

sector, that impact large sections of the population, the weaker sections and the sectors which are

employment-intensive such as agriculture, and tiny and small enterprises. Accordingly, the broad

categories of priority sector for UCBs will be as under:

Under a scheme to be drawn up by the RBI, banks will be encouraged to establish

mechanisms for better co-ordination between their branches and branches of SIDBI which are

located in 50 clusters that have been identified by the Ministry of Small Scale Industries,

Government of India. Under the scheme of strategic alliance (i) the existing branches of SIDBIredesignated as 'Small Enterprises Financial Centres' (SEFC) will take up co-financing of term

loan requirements of SSI units along with the bank branches and the working capital

requirements of these units will be met by the banks; (ii) the expertise of the SIDBI in appraisal

of credit requirements of SSI units will be leveraged by the branches of commercial banks, by

payment of a nominal fee; (iii) SIDBI will provide other expert services to help the banks in

simplifying the application forms, documentation and disbursement procedures, etc.; and (iv) the

working of the scheme may be monitored and modified to suit the local conditions by the State

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Level Bankers Committee (SLBC) and, depending on the experience, the coverage of the

scheme may be extended to more clusters. The services of SEFCs will be available for tiny

industrial units also.

I. CATEGORIES OF PRIORITY SECTOR

(I) Agriculture (Direct and Indirect finance): Direct finance to agriculture shall include

short, medium and long term loans given for agriculture and allied activities (dairy, fishery,

piggery, poultry, bee-keeping, etc.)directly to individual farmers without limit for taking up

agriculture/allied activities. Direct finance may be limited to regular members and not to nominal

members or to agencies like primary agriculture credit societies (PACS), primary land

development banks etc. Indirect finance to agriculture shall include loans given for

agriculture and allied activities as specified in Section I appended.

(ii)Small Enterprises (Direct and Indirect Finance): Direct finance to small enterprises

shall include all loans given to micro and small (manufacturing) enterprises engaged in

manufacture/ production, processing or preservation of goods, and micro and small (service)

enterprises engaged in providing or rendering of services, and whose investment in plant and

machinery and equipment (original cost excluding land and building and such items as

mentioned therein) respectively, does not exceed the amounts specified in Section I, appended.

The micro and small (service) enterprises shall include small road & water transport operators,

small business, professional & self-employed persons, and all other service enterprises, as per

the definition given in Section I appended.

Indirect finance to small enterprises shall include finance to any person providing inputs to or

marketing the output of artisans, village and cottage industries, handlooms and to cooperatives of

producers in this sector.

(iii) Retail Trade shall include retail traders/private retail traders dealing in essential

commodities (fair price shops) as per the definition given in Section I appended.

(iv) Micro Credit: Provision of credit and other financial services and products of amounts not

exceeding Rs. 50,000 per borrower or the maximum permissible limit on unsecured advances

whichever is lower.

(v) Education loans: Education loans include loans and advances granted to only individuals

for educational purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad,

and do not include those granted to institutions;

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(vi) Housing loans: Loans up to Rs. 20 lakh to individuals for purchase/construction of

dwelling unit per family, (excluding loans granted by banks to their own employees)and loans

given for repairs to the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-

urban areas and up to Rs. 2 lakh in urban and metropolitan areas

.

* Family for this purpose means and includes the spouse of the member and the children,

parents, brothers and sisters of the member who are dependent on such member, but shall not

include legally separated spouse. .

II OTHER IMPORTANT FEATURES OF GUIDELINES

The targets under priority sector lending would be linked to Adjusted Bank Credit

(ABC) (total loans and advance plus investments made by UCBs in non-SLR bonds) or CreditEquivalent amount of Off-Balance Sheet Exposures (OBE), whichever is higher, as on March 31

of the previous year. Existing investments, as on the date of this circular, made by banks in non

SLR bonds held in HTM category will not be taken into account for calculation of ABC.

However, fresh investments by banks in non-SLR bonds will be taken into account for the

purpose. For the purpose of calculation of credit equivalent of off-balance sheet exposures,

banks may use current exposure method. Inter-bank exposures will not be taken into account for

the purpose of priority sector lending targets/sub-targets.

III.TARGETS/SUB-TARGETS

(i) The targets and sub-targets set under priority sector lending for UCBs are furnished below:

Targets and sub-targets set

under priority sector lending

Total Priority

Sector advances

60 per cent of Adjusted Bank Credit (ABC) or creditequivalent amount of Off-Balance Sheet Exposure,whichever is higher.

Agriculture

Advances

No target.

Small Enterpriseadvances

Advances to small enterprises sector will be reckoned incomputing performance under the overall priority sectortarget of 60 per cent of ABC or credit equivalent amount ofOff-Balance Sheet Exposure, whichever is higher.

Micro

enterprises

within Small

Enterprises

(i) 40 per cent of total advances to small enterprises sectorshould go to micro (manufacturing) enterprises havinginvestment in plant and machinery up to Rs 5 lakh andmicro (service) enterprises having investment in equipment

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sector up to Rs.2lakh;

ii) 20 per cent of total advances to small enterprises sectorshould go to micro (manufacturing) enterprises with

investment in plant and machinery above Rs 5 lakh and upto Rs. 25 lakh, and micro (service) enterprises withinvestment in equipment above Rs. 2 lakh and up to Rs. 10lakh. (Thus, 60 per cent of small enterprises advancesshould go to the micro enterprises).

Advances to

weaker sections

Of the stipulated target for priority sector advances, at least25% (or 15% of the ABC or credit equivalent amount ofOff-Balance Sheet Exposure, whichever is higher) shouldbe given to weaker sections.

Advances to

Minorities.

Within the overall target for priority sector lending and thesub- target of 25 per cent for the weaker sections, sufficient

care may be taken to ensure that the minority communitiesalso receive an equitable portion of the credit.

Salary Earners' Banks: The stipulation regarding priority sector lending is not applicable to

the Salary Earners' Banks.

Credit Flow to Minorities: UCBs should initiate steps to enhance/ augment flow of credit

under priority sector to artisans and craftsmen as also to vegetable vendors, cart pullers, cobblers,

etc. belonging to minority communities. The minority communities notified in this regard are

Sikhs, Muslims, Christians, Zoroastrians and Buddhists. Within the overall target for priority

sector lending and the sub- target of 25 per cent for the weaker sections, sufficient care may betaken to ensure that the minority communities also receive an equitable portion of the credit.

IV. REPORTING /MONITORING UNDER PRIORITY SECTOR:

UCBs should take effective steps to achieve the above recommended targets and monitor

the priority sector lending, keeping in view the quantitative as well as qualitative aspects. In

order to ensure that due emphasis is given to lending under priority sector, it is considered

desirable that the performance is reviewed periodically. For this purpose, apart from the usual

reviews, which the banks are periodically undertaking, specific reviews by the Board of

Directors of the respective banks may be made on half-yearly basis. Accordingly, amemorandum may be submitted to the Board of Directors at half-yearly intervals i.e. as on

September 30 and March 31 of each year giving a detailed critical account of the performance of

the bank during the period showing increase/decrease over the previous half-year (Statement I).

Further, annual review of the performance under priority sector advances as on March 31 may

also be placed before the Board.

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A copy of the annual review as on March 31 may be forwarded to the concernedRegional Office of the Reserve Bank with the Board's observations, indicating the stepstaken/proposed to be taken for improving the bank's performance. The report should reach theRegional Office within a month from the end of the period to which it relates.

The banks should submit a half yearly statement as on March 31/ September 30 within 15days of the close of the relevant half year, showing the progress made in deployment of credit toMinority communities, to the concerned Regional Office of this department under whosejurisdiction they function, in the given format.

In order to facilitate compilation of the relative figures, banks may maintain a register toindicate all the items of priority sector advances and also another register for weaker sectionadvances showing particulars, with separate folios to each activity so that the total of advances topriority sector and weaker sections under each activity and to each type of beneficiary may beavailable at any given point of time. The proforma of these registers may be on the lines of the

annual return to be submitted to RBI.

THE DETAILED GUIDELINES IN THIS REGARD ARE GIVEN AS

UNDER.

Small ENTERPRISES

DIRECT FINANCE

1 Direct Finance in the small enterprises sector will include credit to:

1.1 Manufacturing Enterprises

(a) Small(manufacturing) Enterprises

Enterprises engaged in the manufacture/production, processing or preservation of goods andwhose investment in plant and machinery [original cost excluding land and building and theitems specified by the Ministry of Small Scale Industries vide its notification no. S.O. 1722 (E)

dated October 5, 2006]does not exceed Rs. 5 crore.(b) Micro (manufacturing) Enterprises

Enterprises engaged in the manufacture/production, processing or preservation of goods andwhose investment in plant and machinery [original cost excluding land and building and suchitems as in 2.1.1 (a)]does not exceed Rs. 25 lakh, irrespective of the location of the unit.

1.2 Service Enterprises

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(a) Small (service) Enterprises

Enterprises engaged in providing/rendering of services and whose investment in equipment

(original cost excluding land and building and furniture, fittings and other items not directlyrelated to the service rendered or as may be notified under the MSMED Act, 2006) does notexceed Rs. 2 crore.

(b) Micro (service) Enterprises

Enterprises engaged in providing/rendering of services and whose investment in equipment[original cost excluding land and building and furniture, fittings and such items as in 2.1.2 (a)]does not exceed Rs. 10 lakh.

(c) The small and micro (service) enterprises shall include small road & water transportoperators, small business, professional & self-employed persons, and all other service enterprises.

1.3 Khadi and Village Industries Sector (KVI)All advances granted to units in the KVI sector, irrespective of their size of operations, locationand amount of original investment in plant and machinery. Such advances will be eligible forconsideration under the sub-target (60 per cent) of the small enterprises segment within thepriority sector.

INDIRECT FINANCE

2 Indirect finance to the small (manufacturing as well as service) enterprises

sector will include credit to:2.1 Persons involved in assisting the

decentralized sector in the supply of inputs to

and marketing of outputs of artisans, villageand cottage industries.

2.2 Existing investments as on March 31, 2007,made by banks in special bonds issued by NABARD with the objective of financingexclusively non-farm sector may be classifiedas indirect finance to Small Enterprises sectortill the date of maturity of such bonds orMarch 31, 2010, whichever is earlier.Investments in such special bonds madesubsequent to March 31, 2007 will, however,

not be eligible for such classification.2.3 Loans granted by scheduled UCBs to

NBFCs for on-lending to small and microenterprises (manufacturing as well asservice).

I ndirect finance in the small-scale industrial sector include:

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Indirect finance to SSI includes the following important items:

i. Financing of agencies involved in assisting the decentralised sector in the supply of

inputs and marketing of outputs of artisans, village and cottage industries.

ii. Finance extended to Government sponsored Corporation/organisations providing funds tothe weaker sections in the priority sector.

iii. Advances to handloom co-operatives.

iv. Term finance/loans in the form of lines of credit made available to State Industrial

Development Corporation/State Financial Corporations for financing SSIs.

v. Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills

vi. Subscription to bonds floated by SIDBI, SFCS, SIDCS and NSIC exclusively for

financing SSI units.

vii. Subscription to bonds issued by NABARD with the objective of financing exclusively

non-farm sector.

viii. Financing of NBFCS or other intermediaries for on-lending to the tiny sector.

ix. Deposits placed with SIDBI by Foreign Banks in fulfilment of shortfall in attaining

priority sector targets.

x. Bank finance to HUDCO either as a line of credit or by way of investment in special

bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc. under tiny

sector may be treated as indirect lending to SSI (Tiny) Sector.

Type of investments made by banks are reckoned under priority sector:

Investments made by the banks in special bonds issued by the specified institutions could bereckoned as part of priority sector advances, subject to the following conditions:

i. State Financial Corporations (SFCs)/State Industrial Development Corporations

(SIDCs)

Subscription to bonds exclusively floated by SFCs & SIDCs for financing SSIunits will be eligible for inclusion under priority sector as indirect finance to SSI.

ii. Rural Electrification Corporation (REC)

Subscription to special bonds issued by REC exclusively for financing pump-setenergisation programme in rural and semi-urban areas and the System ImprovementProgramme under its Special Projects Agriculture (SI-SPA) will be eligible for inclusionunder priority sector lending as indirect finance to agriculture.

iii))NABARD : Subscription to bonds issued by NABARD with the objective offinancing exclusively agriculture/allied activities and the non-farm sector will be eligible

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for inclusion under the priority sector as indirect finance to agriculture/ SSI, as the casemay be.

iii. Small Industries Development Bank of India (SIDBI)

Subscriptions to bonds exclusively floated by SIDBI for financing of SSI unitswill be eligible for inclusion under priority sector as indirect finance to SSIs.

iv. The National Small Industries Corporation Ltd. (NSIC)

Subscription to bonds issued by NSIC exclusively for financing of SSI units will

be eligible for inclusion under priority sector as indirect finance to SSIs.

National Housing Bank (NHB)

Subscription to bonds issued by NHB exclusively for financing of housing,irrespective of the loan size per dwelling unit, will be eligible for inclusion under prioritysector advances as indirect housing finance.

v. Housing & Urban Development Corporation (HUDCO)

a. Subscription to bonds issued by HUDCO exclusively for financing ofhousing, irrespective of the loan size per dwelling unit, will be eligible forinclusion under priority sector advances as indirect housing finance.b. Investment in special bonds issued by HUDCO for on-lending to artisans,handloom weavers, etc. under tiny sector will be classified as indirect lending to

SSI (Tiny) sector.

Actions taken in the case of non-achievement of priority sector lending target

by a bank :

i. Domestic scheduled commercial banks having shortfall in lending to priority sector /

agriculture are allocated amounts for contribution to the Rural Infrastructure

Development Fund (RIDF) established in NABARD. Details regarding operationalisation

of the RIDF such as the amounts to be deposited by banks, interest rates on deposits,

period of deposits etc., are decided every year after announcement in the Union Budget

about setting up of RIDF.

ii. In the case of foreign banks operating in India which fail to achieve the priority sector

lending target or sub-targets, an amount equivalent to the shortfall is required to be

deposited with SIDBI for one year at the interest rate of 8 percent per annum.

Rate of interest for loans under priority sector :

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As per the current interest rate policy, in the case of loans upto Rs 2 lakh, the interest rate shouldnot exceed the prime lending rate (PLR) of the bank, while in the case of loans above Rs 2 lakh,banks are free to determine the interest rate

J&K Bank Financing For SSI

Guidelines for financing of Small & Medium Enterprises (SMEs)

The small-scale industries produce about 8000 products, contribute 40% of the industrial

output and offer the largest employment after agriculture. The sector presents an opportunity to

the nation to harness local competitive advantages for achieving global dominance. In

recognition of these aspects Govt. of India has decided to give greater technological, investment

and marketing support to small-scale industry. A comprehensive legislation, which would enable

the paradigm shift from small-scale industry to small and medium enterprises is under

consideration of Parliament. The Honble Finance Minister Government of India has announced

certain measures in the Parliament on August 10, 2005 for stepping up of credit to small and

medium enterprises. Accordingly the Reserve Bank of India has issued detailed guidelines to the

banks for increasing finance, debt restructuring mechanism and one time settlement (OTS) for

the SME sector. Up till now there was no definition of Medium Enterprises. In order to segregate

the small and medium enterprises the Reserve Bank of India has come out with a definition of

Medium Enterprises till enactment of Small and Medium Enterprises Development bill. As per

the definition given by RBI, the units with investment in plant and machinery in excess of SSI

limit and upto Rs.10.00 crore shall be treated as Medium Enterprises (ME). Till out come of

parliamentary bill definition of SSI will remain unchanged. At present, a small-scale industrial

unit is an industrial undertaking in which investment in plant and machinery does not exceed

Rs.1.00 crore except in respect of certain specified items under hosiery, hand tools, drugs and

pharmaceuticals, stationery items and sports goods where this investment limit has beenenhanced to Rs.5.00 crore. However loan to SSI sector will be categorized under priority sector.

In order to increase the outreach of formal credit to SME sector, RBI has issued policy package

for financing, debt restructuring and one time settlement in respect of SMEs. RBI has advised the

Banks as under:

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1. To initiate necessary steps to rationalize the cost of loans to SME sector by adopting a

transparent rating system with cost of credit being linked to the credit rating of

enterprise. SIDBI has developed a Credit Appraisal and Rating Tool as well as a Risk

Assessment Model and a comprehensive rating model for risk assessment of proposals

for SMEs. The banks have been advised to consider to take advantage of these models as

appropriate and reduce their transaction costs.

National Small Industries Corporation has recently introduced credit rating scheme for

encouraging SME units to get themselves credit rated by reputed agencies. Banks may consider

these rating models for rating the SME borrowers.

2. To make concerted efforts to provide credit cover on an average to at least 5 new

small/medium enterprises at each of their semi urban/ urban branches per year.

3. To formulate a comprehensive and more liberal policy with the approval of their Board of

Directors in respect of loans to SME sector.

4. To consider cluster based approach for financing SMEs as it offers possibilities of reduction

in transaction cost, mitigation of risks and also provide an appropriate scale for improvement in

infrastructure.

PROCESSING OF APPLICATIONS:

Viability:The borrowers should invariably provide a detailed project report prepared by a reputed

project Consultant covering all aspects of its viability. The borrower should provide all the

necessary details and required information regarding the proposal.

Issue of Acknowledgement of Loan Applications:Branches should give acknowledgement for loan applications received from the Borrowers.

Disposal of Applications:

All loan applications received under SME Sector shall be disposed Off by the branches

within a maximum period of 4 weeks provided the loan applications are complete in all respects.

In case the proposal of the borrower does not fall within the competence of branch, the branch

should send one advance copy of the proposal to the sanctioning authority followed by final copy

with recommendations from the branch.

Proposal received register:

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A register should be maintained at branch wherein the date of receipt,

sanction/rejection/disbursement with reasons therefore etc., should be recorded. The register

should be made available to all inspecting agencies.

i) Rejection of applications for fresh limits/enhancement of existing limits should

not be done without the approval of the next higher authority.ii) Sanction of reduced limits should be reported to the next higher authority immediately

with full details for review and confirmation.

Security:

Branches should not insist for any tangible collateral security for limits upto Rs 5.00 lacs.

For limits beyond Rs 5.00 lacs branches may obtain adequate tangible collateral security.

Debt Equity ratio:

Debt equity ratio of 2:1 is desirable. However in well-managed SME units ratio of 3:1

can be considered on merits.

Rate of Interest:

Sector Rate of Interest

Agriculture &

Allied activities

1% below the rate prescribed for each RatingGrade

SMEs 0.50% below the rate prescribed for each Rating

GradeLoans and Advances W.E.F. 01.08.2008

PRIME LENDING RATE (PLR) 12.75% W.E.F. 01.05.2009

13.

SASIIT&R MOHALI

B.

Interest rate structure for loans and advances withaggregate limits up to Rs.20.00 lacs and those underSpecial Schemes.

Rate of Interest (% p.a.)w. e. f.01.05.2010


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Disbursement:

The borrower shall provide an implementation schedule before hand and all the

disbursement of term loans shall be made as per the progress of implementation. As far as

possible the payments shall be made directly to the suppliers/contractors. In respect of working

capital loans, the branches shall first ensure completion/commissioning of unit. \

TYPES OF LOANS:

1)Term loans :

The bank loan to the industry , with a fixed maturity and often featuring amortization ofprincipal.

2) Working capital loans:

The bank provides loan whose purpose is to finance everyday operations of a company.

SASIIT&R MOHALI

01. Micro & Small Enterprises (Manufacturing)

a) Up to Rs.0.50 lacs XXX

b) Above Rs.0.50 lacs & upto Rs.2.00 lacs XXX

c) Up to Rs.2.00 lacs PLR- 2.00

d) Above Rs.2.00 lacs & up to Rs.5.00 lacs PLR- 1.50

e) Above Rs.5.00 lacs & uptoRs.20.00 lacs PLR- 1.00

Loans under Craft Development Scheme

a) Up to Rs.0.25 lacs XXXb) Above Rs.0.25 lacs & up to Rs.0.50 lacs XXX

c) Up to Rs.0.50 lacs 10.00

d) Above Rs.0.50 lacs & up to Rs.1.00 lacs 11.00

02. Other Micro and Small Services Sector

a) Up to Rs.0.50 lacs XXX

b) Above Rs.0.50 lacs & up to Rs.2.00 lacs XXXc) Up to Rs.2.00 lacs PLR- 2.00

d) Above Rs.2.00 lacs & up to Rs.5.00 lacs PLR-1.50

e) Above Rs.5.00 lacs & uptoRs.20.00 lacs PLR-1.00


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Our _____________ Banks ,We______________Bank ,You

____________SMEs

1.1 Objectives Of The Code

The Code has been developed to

a.Give a positive thrust to the MSE sector by providing easy access to

efficient banking services.

b. Promote good and fair banking practices by setting minimum standards in dealing with you.

c. Increase transparency so that you can have a better understanding of what you can reasonably

expect of the services.

SASIIT&R MOHALI

1 1.1 Objectives Of The Code

2 Key Commitments

2.1 Our Key Commitments To You

3 Information

3.1 If You Want To Become Our Customer

3.2 Interest Rates

3.4 Terms And Conditions

4 Privacy And Confidentiality

5 Lending

5.1 Application

5.2 Credit Assessment

5.3 Post Disbursement

5.4 Nursing Sick MSEs And Debt Restructuring

6 Collection of Dues

11 Advertising, Marketing And Sales

12 Monitoring


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d. Improve our understanding of your business through effective communication.

e. Encourage market forces, through competition, to achieve higher operating standards.

f. Promote a fair and cordial relationship between you and us and also ensure timely and quick

response to your banking needs.

g. Foster confidence in the banking system.

2. KEY COMMITMENTS

2.1 Our Key Commitments To You

2.1.1 To Act Fairly And Reasonably In All Our Dealings With You By

a. Providing minimum banking facilities of receipt and payment of cash/cheques at the bankscounter.

b. Providing speedy and efficient credit and service delivery.

c. Meeting the commitments and standards in this Code, for the products and services we offer,

and in the procedures and practices our staff follow.

d. Making sure our products and services meet relevant laws and regulations in letter and spirit.

e. Ensuring that our dealings with you rest on ethical principles of integrity and transparency.

f. Operating secure and reliable banking and payment and settlement systems.

g. Considering cases of financial difficulty sympathetically

2.1.2 To Help You Understand How Our Financial Products And Services

Work By

a. Giving you information about them in any one or more of the following languages: Hindi,

English or the appropriate local language.

b. Ensuring that our advertising and promotional literature is clear.

c. Ensuring that you are given clear information about our products and services, the terms and

conditions and the interest rates/service charges, which apply to them.

d. Ensuring that there is no mis-selling of our products.e. Giving you information on what are the facilities provided to you and how you can avail

of these.what are their financial implications and whom you can contact for addressing your

queries.

2.1.3 To Help You Use Your Account Or Service By

a. Providing you regular appropriate updates.

b. Keeping you informed about changes in the interest rates, charges or terms and conditions.

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e. Tell you what information we need from you to prove your identity and address, for us to

comply with legal, regulatory and internal policy requirements.

3.2 Interest Rates

We will inform you of the change in interest rates on our products within seven days of the

decision by

a. Writing to you.

b. Notice at the branch.

c. Placing on website.

3.3 Terms And Conditions

a. When you become a customer or avail of a product/ service for the first time, we will advise

you the relevant terms and conditions for the service you have asked us to provide.

b. All terms and conditions will be fair and will set out respective rights especially with regard

to nomination facility, wherever applicable and liabilities and obligations clearly and as far as

possible in plain and simple language.

Changes to Terms and Conditions

a. When you become a customer, you can get information of changes to terms and conditions

through any of the following channels

i) Account statements

ii) ATMs

iii) Written communication

iv) Notice Board at each branch

v) Email/ website/ SMS

b. If we have made any change without notice we will notify the change within 30 days. If such

change

is to your disadvantage, you may within 60 days and without notice close your account or

switchit without having to pay any extra charges or interest.

c. If we have made a major change or a lot of minor changes in any one year, we will, on requestgive you a copy of the new terms and conditions or a summary of the changes.

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4. PRIVACY AND CONFIDENTIALITY

We will treat all your personal and business information as private and confidential [even

when you are no longer a customer], and shall be guided by the following principles and policies.

We will not reveal information or data relating to your accounts, whether provided by you or

otherwise, to anyone, including other companies/entities in our group, other than in the following

exceptional cases :

a. If we have to give the information by law.

b. If there is a duty towards the public to reveal the information.

c. If our interests require us to give the information (for example, to prevent fraud) but we will

not use this as a reason for giving information about you or your accounts [including your

name and address] to anyone else, including other companies in our group, for marketing

purposes.

d. If you ask us to reveal the information, or if we have your permission.

e. If we are asked to give a bankers reference about you, we will need your written permission

before we give it.

We will explain to you the extent of your rights under the existing legal framework for

accessing the personal records that we hold about you.

We will not use your personal and business information for marketing purposes by anyone

including ourselves unless you specifically authorize us to do so.

5.LENDING

Our loan policy dealing with your application for loan or any financial assistance will be

reflective of the objectives and spirit of the national policy and the regulatory prescription. We

shall place the policy relating to Micro and Small Enterprises on our website and also make it

available to you at the branch for perusal. On request we will make available a copy at a nominal

charge. We will endeavour to provide facilities through a Single Window Mechanism.

5.1 Application

We will

a. Make available, free of cost, simple standardized, easy to understand, application form for

loans.

b. Provide you with a checklist (compliant with legal and regulatory requirements) along with

the loan application form to enable you to submit the application complete in all respects. If

required, we will assist you in filling up your loan application form.

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c. At the time of making available application form also provide you information about the

interest rates applicable, and the fees/charges, if any, payable for processing, pre-payment

options and charges, if any, and any other matter which affects your interest, so that a

meaningful comparison with those of other banks can be made and informed decision can be

taken by you.

d. Acknowledge in writing the receipt of your loan application.

e. Normally collect all particulars required for processing the application for credit facility at the

time of application. In case we need any additional information, we will contact you within

seven working days from receipt of application.

f. Endeavour to enable you to know online the status of your application.

g. Not charge any processing fee for loans up to Rs.5 lakh if the loan is not sanctioned.

h. Dispose of your application for a credit limit or enhancement in existing credit limit up to Rs

2 lakh within two weeks; and for credit limit up to Rs 5 lakh within 4 weeks from the date of

receipt provided your application is complete in all respects and is accompanied by documents asper check list provided and dispose of loan applications for amounts exceeding Rs 5 lakh,

within a reasonable time frame.

J&K Bank - SME SMART SCORE LOAN APPLICATIONFORM

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SASIIT&R MOHALI

K Bank - SME SMART SCORE LOAN APPLICATION

AN IS APPLICABLE FOR SSI UNITS 10 LACS TO 50 ADE AND SERVICES 10 LACS TO 25 LACS

lds marked with * are mandatoryWhether the chief promoter / Chief executive is between 18 and 65 yea

age *

General

Nearest SME Center *

Name of the Company /

Constitution *

Brief details of sting/proposed activity

Office Address

Addr

City *

State

Pin *

PHONO. *

Factory Address Same as office address.

Address

City

State

Pin

PHONE NO.

Email *

Gender of the keymoter *

LOAN APPLIED FOR

Term Loan * (Rs in Lacs)

Working Capital

* (Rs in Lacs)Total Loan

quired * (Rs in Lacs)

Purpose of the

RSONAL DETAILS OF THE CHIEF PROMOTER / CHIEF EXECUTIVE

me * PHONENO. *

sidentialdress *

MOBILENO.


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APPLICATION FOR CASH CREDIT/ TERM LOAN UNDER SMECREDIT CARD

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SASIIT&R MOHALI

APPLICATION FOR CASH CREDIT/ TERM LOAN UNDER SME CREDIT CARD(Loans upt

Rs. 10 lacs only)

Fields marked with * are mandatory

1Name of

the Unit *

Names ofthe keypromoters/partners/

Directors *

Category ofUnit

Constitution

Business

Address *

City * Pin Code *

State *Telephone

*

2PERSONAL DETAILS OF THE KEY PERSON

Name of the KeyPromoter

Age incompleted

years *years

Owning a

House *

AcademicQualificatio

n *

SpouseEmployment Details

Whether ITAssesseeunder

Incometax *

PAN NO

TakenLife Insurance

Policy *

Whetherbelongs to

Gender *

3BUSINESS DETAILS

Descriptionof

Activity *

PROJECT DETAILS IF TERM LOAN IS REQUIRED

Details ofCost of

Project

Cost of ItemMeans of

Finance

Amount

LandRs lacs

Promoter'sEquity

Rsacs

BuildingRs lacs

Bank Loan Rsacs

MachineryRs lacs

Loan fromFriends &Relatives

Rsacs

OthersRs lacs

Others Rs

acs

Total Total Rs


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5.2 Credit Assessment

a. We will

i) Verify the details mentioned by you in your application by contacting you through our staff /

agencies appointed by us for this purpose at your business address/ residence.

ii) Before lending you any money, or increasing youroverdraft or borrowing limit/s,assess

whether you will be able to repay it. We shall carry out proper assessment of your loan

application by carrying out detailed due diligence and appraisal.

iii) Satisfy ourselves about the reasonableness of the projections made by you.

b. This assessment may include looking at the following :

i) Information you give us, including the purpose of borrowing.

ii) Your business plan.iii) Your businesss cash flow, profitability and existing financial commitments

supplemented, if necessary, by account statements.

iv) Your personal financial commitments.

v) How you have handled your finances in the past.

vi) Information we get from credit reference agencies.

vii) Ratings assigned by reputed credit rating agencies, if any.

viii) Information from others, such as other lenders /creditors.

ix) Market reports.

x) Any security provided.

c. We will

i) Not insist on collateral for credit limits upto Rs 5 lakh.

ii) Consider providing collateral free credit limits upto Rs 25 lakh if we are satisfied about

your track record and financial position being good and sound.

iii) Provide micro and small enterprises (manufacturing) working capital limits computed on

the basis of a minimum of 20 per cent of your projected annual turnover.

iv) Consider your request for suitable enhancement in the working capital limits in cases

where the output exceeds the projections or where the initial assessment of working

capital is found inadequate and you have provided necessary evidence.

d. Guarantees

If you want us to accept a guarantee or other security from someone else for your liabilities, we

will ask you for your permission to give confidential information about your finances to them or

to their legal adviser. We will also

i) Encourage them to take independent legal advice to make sure that they understand their

commitment and the possible consequences of their decision (where appropriate, the documents

we ask them to sign will contain this recommendation as a clear and obvious notice).

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ii) Tell them that by giving the guarantee or other security they may become liable as well

as you.

5.3 Post Disbursement

We will

a. Assure that we refrain from interference into your business affairs except on what is in terms

of sanction of loan, loan agreement or when new information comes to banks knowledge.

b. Endeavour to be constructive in our monitoring process and sympathetically deal with

genuine difficulties that you may face in your dealings with us.

c. Obtain following information from you on an ongoing basis

i) A comparison of the forecasts in your business plan with the actual results.

ii) Progress on important aspects of your business plan.

iii) Annual accounts such as Balance Sheet and Profit and Loss Account and other

supporting documents.iv) Age-wise break up of your creditors and debtors and the amounts involved.

d. Allow drawals against your limits as per usual safeguards.

e. If your circumstances change, talk to you about any new information we will need from you.

f. Convey our consent or otherwise within two weeks of receipt of a request for transfer of the

borrowal account, either from you or from the bank / financial institution that proposes to take

over the account.

g. Release all securities on receiving repayment of loan immediately and in any case not later

than one week subject to any legitimate right or lien for any other claim we may have against

you.

h. Give notice in case we exercise such right of set off, with full particulars of our remainingclaims against you as also of the documents under which we are entitled to retain the

securities till the relevant claim is settled/ paid by you.

i. Effect pledges/deliveries on the same day of receiving your request.

j. Grant you increase in the drawing power within 24 hours of lodgment of security.

k. Inform you of debits to your account arising out of interest application, fees and charges.

l. Monitor the progress made by you through any or more of the following modes

i) Scrutinising periodic statements of stocks you hold.

ii) Watching the transactions in your account with us.

iii) Visits by either our staff or authorised representative to your premises for verification of

the stocks and/or assets financed.

iv) Obtain wherever necessary market reports on how your business is going on.

5.4 Nursing Sick MSEs And Debt Restructuring

We will consider a nursing/ debt restructuring programme in case your borrowal account remainssubstandard for over six months, or your unit is considered to be sick.

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For examining your request for rehabilitation /debt restructuring we will

a. First see whether you are viable/potentially viable.

b. If you are found to be viable/potentially viable initiate corrective action for your revival.

c. In case your unit is potentially viable and is under consortium / multiple banking arrangement,and if we have maximum share of outstanding, work out the restructuring package.

6. COLLECTION OF DUES:

Whenever we give loans, we will explain to you the repayment process by way of

amount, tenure and periodicity of repayment. However if you do not adhere to repayment

schedule, a defined process in accordance with the laws of the land will be followed for recovery

of dues which will be given to you at the time of sanction of loan. The process will involve

reminding you by sending you notice or by making personal visits and/or repossession of

security, if any. In case of default, we may refer the case to the recovery agent. We will inform

you that recovery proceedings have been initiated. On initiating recovery proceedings we will

also tell you that in case you have a complaint to make in this regard you may contact our

helpline number. We will investigate your complaints about unfair practices by our recovery

agents. Our collection policy is built on courtesy, fair treatment and persuasion. We believe in

fostering customer confidence and long-term relationship.

We will provide you with all the information regarding dues and will endeavor to give

sufficient notice for payment of dues. Our staff deputed for collection of dues or/and security

repossession will identify himself/herself. Any person authorised to represent us for thesepurposes will dentify himself/herself and also display the authority letter issued by us.

All the members of the staff or any person authorised to represent our bank in collection

or/and security repossession would be subjected to due diligence and they would follow the

guidelines set out below :

a. You would be contacted ordinarily at the place of business/occupation and if unavailable at the

place of your business/ occupation at the place of your residence or in the absence of any

specified place at the place of your authorised representatives choice.

b. Identity and authority to represent would be made known to you at the first instance.

c. Your privacy and dignity would be respected.

d. Interaction with you would be in a civil manner.

e. Normally our representatives will contact you between 0700 hrs and 1900 hrs, unless the

special circumstances of your business or occupation require otherwise.

f. Your requests to avoid calls at a particular time or at a particular place would be honored as

far as possible.

g. Time and number of calls and contents of conversation would be documented.

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h. All assistance would be given to resolve disputes or differences regarding dues in a mutually

acceptable and in an orderly manner.

i. During visits to your place for dues collection, decency and decorum would be maintained.

j. Inappropriate occasions such as bereavement in the family or such other calamitous occasions

would be avoided for making calls/visits to collect dues.

7. ADVERTISING, MARKETING AND SALES

a. We will make sure that all advertising and promotional material is clear.

b. In any advertising in any media and promotional literature that draws attention to a banking

service or product and includes a reference to an interest rate, we will also indicate whether other

fees and charges will apply and that full details of the relevant terms and conditions are available

on request.

c. If we avail of the services of third parties for providing support services, we will require that

such third parties handle your personal and business information (if any available to such third

parties) with the same degree of confidentiality and security as we would.

d. We may, from time to time, communicate to you new features of our products availed by you.

Information about our other products or promotional offers in respect of our products/services,

will be conveyed to you only if you have given your consent to receive such information/ service

either by mail or by registering for the same on our website or on our phone banking/customer

service number.

e. We have prescribed a code of conduct for our Direct Selling Agencies (DSAs) whose services

we may avail to market our products/ services which amongst other matters requires them to

identify themselves when they approach you for selling our products personally or throughphone.

f. In the event of receipt of any complaint from you that our representative/courier or DSA has

engaged in any improper conduct or acted in violation of this Code, we shall take appropriate

steps to investigate and to handle the complaint and to make good the loss.

1. MONITORING

2. We have a 'Nodal Officer' to ensure compliance of the Code. Our internal auditing

procedures make sure we meet the Code. Our Nodal officer is :

General Manager( I&V)Corporate HeadquartersM.A.Road Sinagar 190001Tel.No.0194-2481947

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BANKS STEPS TOWARDS THE IMPROVEMENT OF SMEs

FCIK hails J&K banks rate cut

Srinagar, May 07: The Federation

Final Copy Samiullah

Documents

Transcript of Final Copy Samiullah