A

PROJECT REPORT

ON

"STUDY OF THE SME MANUFACTURING UNIT IN RAJKOT

WITH SPECIAL FOCUS TO MARKETING OF SBI’S SME

PRODUCTS."

PREPARED BY:

Mr.DIPAK CHAVDA

(AES POSTGRADUATE INSTITUTE FOR BUSINESS MANAGEMENT-AHMEDABAD)

As a part of partial fulfillment of MBA Programme.

SUBMITTED TO:

Mr.R.Khiyani-AGM

RBO-Rajkot

ACKNOWLEDGEMENTS

At the outset, we would like to express our deep gratitude to Mr. R. Khiyani for allowing us

to work under his guidance, thereby, giving us an opportunity to gain tremendous knowledge

and skills in banking sector.

We are also grateful to Mr. Menon & Mr. Pradeep Chhabra without whose help, guidance,

valuable inputs and constant monitoring, our learning would have been incomplete. We are

also thankful to Miss. Kosha Nair and Miss. Urvi Mehta for extending helping hand in

completing our project successfully.

We are also sincerely thankful to our Director and faculty members for their guidance and

valuable suggestions prior to and during the entire course of training.

Our acknowledgement would be incomplete if we do not extend our sincere thanks to all the

executives & staff of REGIONAL BUSINESS OFFICE & SBI COMMERCIAL

BRANCH, specially, Mr. Ramesh Rathod and Mr. Vipul Raj-yadav for their help and

guidance.

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PREFACE

As a part of partial fulfillment of MBA program we are supposed to undertake

SUMMER INTERNSHIP PROGRAM in any organization for a period of two months. In

order to gain practical knowledge as well as to access applicability of different aspects of

organization. This kind of training enables us to face the real life situation of the market and

allows better insight to take the practical industrial problem.

We have undertaken this training at STATE BANK OF INDIA. The aim of the

training is to utilize the knowledge and fell about the theories we studied in MBA. It will

increase our ability to perform specific job systematically in a new way in business

environment when we will come out into the market.

We have studied the SME MANUFACTURING UNITS in RAJKOT DISTRICT

and undertook research on the requirement of different manufacturing units in Rajkot district.

On the basis of the research we came to know about different financial needs of the Small and

Medium Manufacturing enterprises in Rajkot District.

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TABLE OF CONTENTS

Executive Summary……………………………………………………………………….

Introduction of SME………………………………………………………………………

About The SBI……………………………………………………………………………

SME Products of SBI…………………………………………………………………….

Survey…………………………………………………………………………………….

Survey of Industry (Questionnaire)………………………………………………………

Rajkot district’s GIDC map………………………………………………………………

Field Work………………………………………………………………………………..

Analysis on the basis of ‘Forms of Industry’………………………… ………………..Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Market Share’……………………………………………….. Findings and Recommendations………………………………………………………….

Analysis on the basis of ‘Facilities Used By Units’…………………………………….Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Turn Over’……………………………………………………Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Export and Domestic Market’……………………………… Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Prefrence To Public And Private Sector Bank’…………… Findings and Recommendations…………………………………………………………

Perception about SBI…………………………………………………………………….

Learning from the project………………………………………………… …………….

Conclusion……………………………………………………………………………….

Bibliography……………………………………………………………………………..

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EXECUTIVE SUMMARY

The project was aimed at understanding the various SME products offered by

banks to the SMALL AND MEDIUM SCALE MANUFACTURING ENTERPRISE.

An attempt was also made to get information about the present banking services

availed to the SMALL AND MEDIUM SCALE MANUFACTURING

ENTERPRISE, their further requirements and the ability of the banks to provide those

services.

The survey was undertaken for SBI BANK, Rajkot Branch. Hence, the region

surrounding it i.e. AJI, ATIKA, HADAMTALA, KUVADVA, METODA,

PADADHARI, SHAPAR (VERAVAL), SAMRAT, TANKARA & TARGHADI

was considered. The outcome of the survey showed that the financial needs of the

SMALL AND MEDIUM SCALE MANUFACTURING ENTERPRISE are very

limited due to which majority of the enterprises were not aware of the various SME

products offered by the SBI bank. This had been observed mainly in the Rajkot

region. But it is also a fact that the enterprises showed great interest in the additional

SME products provided by banks when they were explained the functions of the SME

products

The training was a great learning experience resulting in a better

understanding of the banking sector. We found that in spite of so many private sector

banks coming in, there are still a large number of companies who still prefer to carry

out their transactions with the public sector banks. The security aspect is perhaps

playing its part in this case.

The findings of the project suggest that SBI BANK should pitch into the

SMEs sector as fast as possible in order to cope up with the competition from other

private sector as well as public sector banks & co-operative and commercial banks

such as BOB, IDBI, BOI, ICICI, HDFC, RAJKOT PEOPLE, RAJ BANK etc. Which

have started penetrating aggressively.

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The report, which follows, is an outcome of our effort, which is prepared in

partial fulfillment of the MBA program. The facts and figures mentioned in the report

are absolutely true to us knowledge. Reader of this report is hence requested to keep

the information confidential and not use it for any other purpose.

Mr. BHAVIK MAKWANA

Mr. DIPAK CHAVDA

Miss. JALPA GOHEL

Mr. PRAJI NAIR

Mr. VARUN SOMAIYA

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INTRODUCTION TO SMALL AND MEDIUM ENTERPRISE

SMEs are major contributors to GDP, and an even larger contributor to exports and employment. Given this background, banks will find SME financing an attractive business opportunity rather than a compulsion, of lending to the priority sector. SIDBI and banks jointly have to play a pivotal and proactive role in financing the SMEs.

ROLE OF SMEs:

World over, the potential of SMEs has been realized. The following statistics make it apparent:

There are 8 million SMEs in China that account for more than 99% of all the enterprises in the country. Both industrial output and export volume of these enterprises made up 60% of China’s total. The government has set up various agencies to promote SME developed in China as SMEs play an important role in easing unemployment opportunities in Chinese cities.

In a city-state like Singapore, there are 1,05,000 successful SMEs

Of the 18.6 million enterprises in the European Union, 99.7% are SMEs. There are only 35000 enterprises with more than 250 employees, but 18 million enterprises employ less than 10 people.

In USA of the total number of firms, at least around 95% are SMEs.

Likewise, the role played by SMEs in Indian economy is indelible. Here are some figures. 3.37 million SSIs in India provide jobs to 16.56 million people. The output of SSIs is around 40% of the total manufacturing sector. Over one third of national exports, excluding the handicraft sector, come from the SSIs.

However, the post liberalisation period has been unkind for the small-scale industries because of increased internal and external competition. Further, the various WTO agreements have affected the fortunes of SSIs. In the absence of adequate infrastructure support and want of technological upgradation, small-scale industries have taken the beating of globalisation resulting in the hike of industrial sickness.Seeing from another perspective, the modern day economic priorities have in a way augmented the role of SMEs, particularly in the services sector. Current day strategies like business process outsourcing and supply-chain management is built around SMEs and are tailor-made to small business houses. The advantage of lean institutional structure and close and personal supervision, which the SMEs are inherently endowed with, have enabled them to reposition themselves in the competitive services sector.

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DEFINITION OF SME SECTOR

(a) At present small scale industry is defined as one having original investment in plant and machinery not exceeding Rs.1 crore. While recognizing need of larger investment in some of the more important segments of SSI, the Government of India has enhanced this to Rs.5 crore in respect of certain specified industries. A process of graduation of several SSIs into medium enterprises, having larger investment is a natural progression of successful units. Therefore, it was agreed that a separate category of medium enterprises (ME) needs to be recognized. While ME may not qualify for priority sector lending, it must be seen as contiguous with SSI.

(b) The SME definition, adopted by other countries is generally based on number of employees, capital investment or turnover. The existing definition of SSI adopted in India, based on investment in plant and machinery, excludes the rapidly growing service sector. The past decade has witnessed the services sector contributing almost half of the GDP. The Working Group strongly recommends the adoption of turn over as a measure for defining the SME sector. Based on turn over, Tiny, Small and Medium enterprises may be redefined as under:

Tiny :Turn over up to the financial limit of Rs.2 Crore,

Small: Turn over up to the financial limit of above Rs 2 Crore and Up to Rs.10 Crores,

Medium: Turn over above the financial limit Rs.10 Crores and up to Rs. 50 Crores.

Till the Government of India takes a view regarding turnover as suggested above, the Working Group recommends that a medium enterprise may be defined as a undertaking where the original investment in plant and machinery is more than Rs.1 crore but less than Rs.10 crore.

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INTRODUCTION ABOUT SBI

Board Of Directors

Central Board Of State Bank Of India (As on 1st April 2008)

Sl.No. Name of Director Sec. of SBI Act, 1955

1.Shri O.P. BhattChairman

19(a)

2.Shri S.K. BhattacharyyaMD & CC&RO

19(b)

3. Shri Suman Kumar Bery 19(c)4. Dr. Ashok Jhunjhunwala 19(c)5. Dr. Deva Nand Balodhi 19(d)6. Prof. Mohd. Salahuddin Ansari 19(d)7. Dr.(Mrs.) Vasantha Bharucha 19(d)8. Shri Arun Ramanathan 19(e)9. Smt. Shyamala Gopinath 19(f)

Evolution of SBI

The 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.

Primarily 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 modernise 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.

 

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Bank of Bengal H.O.

Business

The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

Old Bank of Bengal

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India. The task of management and circulation of the new

9

currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.

 Bank of Madras Note Dated 1861 for Rs.10

Presidency Banks Act

The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right.

 Bank of Madras

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The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency.

India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.

Bank of Bombay

Presidency Banks of Bengal

The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been

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transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.

But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank.

The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.

The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.

Imperial Bank

The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.

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 Stamp of Imperial Bank of India

When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.

Birth of SBI name

In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in

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1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development.

Recent Development

Today SBI is the leading bank in the country with more than 10,000 branches. SBI has also seven subsidiaries; if we count all these there are more than 35,000 branches. Since the evolution of SBI, it has played a vital role in the development of the Indian economy.

SBI is also working in the field of mutual fund industries & life insurance business. SBI mutual fund is the India’s first public sector mutual fund established in 1987. Today in insurance industry SBI has also achieved renowned name within short time.

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SME PRODUCTS OF STATE BANK OF INDIA

SMALL AND MEDIUM ENTERPRISE

State Bank of India has been playing a vital role in the development of small-scale industries since 1956.The Bank has financed over 8 lacs SSI units in the country. It has 55 specialised SSI branches, 99 branches in industrial estates and more than 400 branches with SIB divisons.

The Bank finances for Small Business activities, which are of special significance to a large number of people as many of these activities, can be started with relatively lower investment and with no special skills on the part of the entrepreneurs.

In recent time bank has come out with new products for the promotion of SMALL AND MEDIUM ENTERPRISE. It has also made changes in the interest rates of the existing facilities like CASH CREDIT & TERM LOAN.

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1. BUSINESS CURRENT ACCOUNTS

Powerful Business Current Accounts to suit Powerful SME Business

Accounts Quarterly Average BalanceSahaj Rs. 1,000Standard Rs. 10,000 *Power Gain Rs. 1,00,000Power Pack Rs. 5,00,000

* daily minimum balance

SME Sahaj Current Accounts

A business current account to provide basic banking facilityATM cum Debit Card facility – Limit Rs. 15000Transfer of funds through internet banking facility – free upto Rs. 20,000No cheque book facilityCollection of outstation chequesHandling of bills

Standard Current Accounts

Inter-core transaction facility (across over 4500 branches)Internet Banking facilityRemittance through DD/TT/electronic transferUnlimited cash deposits (cash handling charges applicable)Collection of outstation chequesHandling of bills

SME Power Gain Current Accounts

Unlimited free cash depositFree domestic ATM cum Debit CardFreeInternet Banking facilityCheque Return Protection facility – upto Rs.25,000Multicity cheque facility at nominal ratesInter-core transaction facility (roaming account across over 4500 branches) Remittance through drafts/TTs/Electrnoic transfer -at nominal chargesFreeBankers ChequesFree local cheque booksFree duplicate statement of accountsPre-approved car loansPart waiver of processing charges for loans.

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SME Power Pack Current Accounts

Unlimited free cash depositFree International ATM cum Debit CardFreeInternet Banking facilityCheque Return Protection facility – upto Rs.1,00,000Free Multicity cheque facility Free Inter-core transaction facility (roaming account across over 4500 branches) Free Remittance through drafts/TTs/Electrnoic transfer FreeBankers ChequesFree cheque booksFree duplicate statement of accountsPre-approved car loansPart waiver of processing charges for loans.

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2. TERM LOAN

The types of term assistance extended by the Bank can be broadly classified into

(i) Term Loans (including foreign currency loans),

(ii) Deferred Payment Guarantees (DPGs),

(iii) Underwriting of Shares/ Debentures.

The salient features of term loans are given below:

(a) A term loan is an advance, usually against security of the borrowers’ fixed assets,

for a fixed period to a business or an industrial undertaking whether a firm, company

or co-operative society and may be drawn by the borrower either in a lump sum or in

installments. A term loan may be granted for any period in excess of three years but

normally not exceeding seven years for the purpose of acquisition of fixed assets,

viz., land, buildings and plant and machinery for setting up new industrial units or

expansion or modernization of existing undertakings.

(b) While loans with deferred payment period up to three years will be termed as

short-term loans (STLs), loans with maturity exceeding three years but up to seven

years will be termed as medium term loans (MTLs) and those with longer maturity

will be known as long term loans or simply term loans (TLs).

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3. CASH CREDIT

Cash credit may be given against

(a) Pledge of goods or produce or documents of title thereto,

(b) Pledge of goods or produce or documents of title thereto, with the additional security of demand promissory notes bearing two or more names,

(c) Demand promissory notes bearing two or more names,

(d) Demand promissory notes bearing two or more names, collaterally secured by:

Hypothecation of stocks of goods or produce (sometimes supported by hypothecation of other assets), debentures or fully paid shares of limited liability companies, or immovable property or documents of title thereto;

(e) Hypothecation of book debts and other assets.

A cash credit account is a drawing account against credit granted by the Bank and is operated in exactly the same manner as a current account on which an overdraft has been sanctioned. The distinction between an overdraft and a cash credit advance is that the nature of the security against which the latter is granted necessitates certain documents being taken in evidence of an agreement between the borrowers (and guarantors, if any) and the Bank.

When the advance is secured by the pledge or hypothecation of goods or produce, the security may change from time to time according to the borrower’s business requirements. However, branches should ensure that the balance outstanding in the account is always fully covered by the value of security, with the stipulated margin.

Where loans are given for seasonal operations, those must be repaid on completion of the purpose for which they were given; borrowings on cash credit accounts must ordinarily be cleared at the end of the season for which they were allowed and the accounts should not be overdrawn again until the next season begins. Branches must take the utmost care that cash credit accounts do not run block, i.e., remain permanently overdrawn to their limit regardless of the season and current market conditions.

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4. COMMODITY BACKED WAREHOUSE RECEIPT FINANCING

Purpose:

To finance traders/owners of goods against warehouse receipts of warehouses

managed by Central Warehousing Corporations/ State Warehousing Corporation and

warehouse accredited by MCX by way of Demand Loan/Cash Credit

Eligibility:

Any trader dealing in commodities

Eligible Amount of Finance:

Demand Loan: 75 % of the value of the warehouse receipt, valued at the market value

OR

80% of the minimum support price declared by State/Central Government

Whichever is lower.

Cash Credit: 70 % of the value of the warehouse receipt, valued at the market value

OR

75% of the minimum support price declared by State/Central Government, whichever

is lower

Processingcharges:

CashCredit:

Rs.300/-per lac for the facility sanctioned

Demand Loan:

Nil where loan is sanctioned and disbursed Rs. 300 per lac in case the loan is

sanctioned but the borrower does not avail.

Margin:Demand Loan: 25% (minimum) of the value of the warehouse receipt, valued at the market valueOR20% (minimum) of the minimum support price declared by State/Central Government, whichever is higher

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5. SME FUNDING

State Bank of India provides several financing options for SSIs.

GENERAL PURPOSE 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, shoring 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.

What are the eligibility criteria for these term loans? 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 lakhs ) .

What is the type of security/guarantee required for the loan? 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 lakh 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.

What are the margins applicable? 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.

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6. OPEN TERM LOAN

SBI OPEN TERM LOAN - the easy and hassle-free way to get finance

Hassle free pre-approved line of credit

Max Loan Amount: Rs. 250 lacs (for Manufacturing), Rs.100 lacs (for Trade

and Services)

Validity of sanction - 12 months

Freedom to avail the facility at your own convenience, within the validity of

sanction.

Multiple disbursements allowed.

No penalty on the unutilized amount (even if completely unutilized)

The loan can be utilized for any genuine commercial purposes in line with the

regular business activity of the customer. These would include term loans for:

a. Expansion and modernization.

b. Substitution of high cost debts / high cost term debts of other banks/FIs.

c. Design and introduction of new layouts in the factory to enhance

productivity.

d. Up gradation of technology& energy conservation schemes/ machinery.

e. Acquisition of software, hardware, consumable tools, jigs, fixtures etc.

f. Acquisitions of ISO & other similar certifications.

g. Visits abroad for acquiring technology, finalizing business deals, participating in exhibitions/ fairs for market promotion etc.

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7. RETAIL TRADE

Business activities that can be started with relatively lower investment and with no special skills on the part of the entrepreneurs.

In this category, the SBI extends loans to retail traders who act as a vital link between the manufacturers of goods or commodities and the consumer.

The bank offers working capital products as well as loans for purchase, renovation and repairing of equipment.

Retail trade finance is normally capped at Rs 5 lakh. Any individual or a firm (partnership or proprietorship) engaged primarily in buying and selling mercantile goods is eligible for this mode of finance.

For requirements up to Rs 25,000, no margins are involved. For needs ranging from Rs 25,000 to Rs 50,000, the margin is set at 20 per cent. In other words, the quantum of the loan will be restricted to 80 per cent of the unit's expenditure. For fund needs above Rs 50,000, a 25 per cent margin may be applied.

Security

Primary Collateral

Loan uptoRs.25000/-

Charge over the assets purchased out of Banks finance.

Nil

AboveRs.25,000/-

Charge overthe assets purchased out of Banks finance.

Charge Over the immovable/movable assets/third party guarantee as per RBI guidelines.

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8. DOCTOR PLUS

Purpose

To finance qualified medical practitioners of any discipline

For buying medical equipments (For dentists, the loan also covers dental implants besides equipments; for orthopaedists, the loan also covers various replacements/ implants for hip/knee/shoulder/spine etc)

Setting up clinic, X-ray lab, nursing home, pathological lab, drug stores etc For purchase of vehicles, ambulance, computers, etc Expansion/renovation/modernisation of existing premises For marketing exercises, business trips Any other activities related to medical profession

Eligibility

Individuals/ partnerships / Corporate /Trusts (with powers to borrow) Promoters should be registered practitioners and possess minimum

qualification such as MBBS / BAMS / GAMS / BDS / BHMS Key promoters should be qualified doctors.

Loan Amount

Maximum of Rs 5 crores of which a sub ceiling for Working Capital limits at 10% of total loan amount for up to Rs 1 crore

5% of total loan amount for above Rs 1 crore

Repayment

Maximum period up to 7 yearsMaximum moratorium 12 months, except for construction purpose, for which moratorium can be upto 24 months

Primary Security

Hypothecation of Assets financed by the Bank

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Collateral Security

No need for tangible collateral security for loan amounts up to Rs 15 lacs for Allopathic professionals and up to Rs 10 lacs for other professionals (Homeopathic, Ayurvedic, Unani etc)

Above Rs 10/15 lacs: Tangible collateral security of at least 25% and Personal guarantee of promoters

*There is provision for concession on collateral security

Margin

Upto Rs 5 lacs: 10%Above Rs 5 lacs: 15%

* There is provision for concession on margin

Interest rates

Based on score obtained on simplified credit scoring model

*There is provision for concession on interest rates

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9. SME CREDIT PLUS

Eligibility

The unit should be enjoying a good track record (standard assets for at least two years) Units with CRA rating of SB4 and above

Purpose

For meeting bulk orders Repairs to machinery Tax payments Any other contingency

The idea behind the product designed is to meet the unforeseen and sudden expenditure of SMEs.

Nature of facility

Clean Cash credit

Margin NIL

Tenure of Loan

Each amount with drawn should be repaid within 2 months There should be a gap of 15 days between the last date of repayment of outstanding and for the next withdrawal

Primary security NIL

Collateral security

Existing collateral to be extended to cover this limit and additional collateral to be obtained only if considered necessary by the sanctioning authority

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10. SMALL BUSINESS CREDIT CARD

A 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.

Quantum

Up to Rs.5 lacs.

Assessment

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.

Interest

As applicable [For details Contact your nearest Branch].

Validity

3 years subject to satisfactory conduct of the account. Annual review based on conduct / operation of the account.

Margin

Upto Rs.25,000- NILRs.25,000/- to Rs.5 lacs

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Collateral Security

SSINo Collateral Security

SBFCharge over movable / immovable property / third party guarantee, if limit is over Rs.25, 000/-.

Attractive 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 upto 5 years.

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11. LETTER OF CREDIT

A country rarely, if ever, produces everything it needs. This means that countries are dependent upon one another for those products that they need but which they themselves do not produce. The various steps covering the movement of goods between countries the payment for such goods and the relationship between the parties involved form the basis of international trade.

Following are the recognized methods of effecting payments under international trade.

Advance Payment

When the buyer’s credit is doubtful or the political or economic environment in the buyer’s country is unstable seller may demand advance payment, which will be to his advantage.

Without any assurance for supply of goods, blocking his capital prior to receipt of goods or services the buyer will be at a disadvantageous position.

Open Account

By an arrangement between the buyer and the seller manufactured goods will be delivered to the buyer directly or to his order and the buyer will pay at the end of the agreed period.

This type of trading requires a high degree of trust between buyer and seller and it will be more advantageous to the buyer.

Bills On Collection Basis

It is an arrangement by which the seller after shipping the goods submits the documents to his bank as agent for collection.

Documents are presented to the buyer through the correspondent bank of the seller’s bank, which will be released upon buyer’s payment of the amount specified.

Documentary Credits (Letters Of Credit)

It is one of the most convenient methods of settling payments in international trade.

It provides complete financial security to the seller of goods.

The seller may not know the credit worthiness of the buyer and the prevailing regulations in the country of the buyer.

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But once a Letter of Credit is established by the buyer’s bank on behalf of the buyer in favour of the seller and the seller submits the set of required documents to the opening bank or the nominated bank, seller is assured of payment.

Buyer also gets the advantage of his banker’s assistance in closely scrutinizing the documents and only after receiving the relevant documentary evidence from the seller by the banker nominated in the credit the nominated banker releases payment.

Operation Of Letter Of Credit

Based on the agreement entered into between buyer and seller, buyer approaches his bank to open a letter of credit in favor of the seller of the goods in the other country.

As per the terms of the contract and the application given by the applicant to the opening bank establishes the Letter of Credit and forwards the same to its correspondent in the seller’s country which advises the Letter if Credit to the beneficiary.

At times at the insistence of the seller the buyer requests his bank to make available the confirmation of a bank in the seller’s country.

In such a case, the bank, which adds its confirmation, becomes a confirming bank.

The bills received under the Letter of Credit will be negotiated by this bank which will claim reimbursement from the bank mentioned in the Letter of Credit for this purpose.

The documents will then be sent to the opening bank which will hank over the documents to the opener after recovering the value from him.

TYPES OF LETTER OF CREDIT

Revocable – Irrevocable Credit

A letter of credit may be revocable or irrevocable. If there is no indication of this reference the credit will be deemed as irrevocable.

A Revocable Credit may be amended or cancelled at any moment without prior notice to the beneficiary. However, the issuing bank is bound to reimburse the negotiating bank for the negotiations made prior to receipt of such notice.

The Irrevocable Credit is a definite undertaking of the issuing bank an dcannot be amended or cancelled without the agreement of the issuing bank, the confirming bank and the beneficiary.

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Confirmed Credit

When another bank adds its confirmation on the irrevocable letter of credit at the specific request of the issuing bank, it becomes a confirmed credit and it constitutes a definite undertaking of the confirming bank in addition to the issuing bank.

All credits need not be confirmed credits.

Transferable Credit

A letter of credit is transferable only if the issuing bank expressly designates it.

The beneficiary in such credit has the right to request the nominated bank to transfer the credit in full or parts in favor of one or more second beneficiaries into another party or more than one party if partial shipment is permitted.

The transferable credit can be transferred once unless otherwise stated.

Red Clause Credit

This credit bears a clause in red color authorizing the nominated bank to allow advance to the beneficiary/seller prior to shipment to meet his pre-shipment credit requirements.

GREEN clause credits in addition to permitting pre-shipment advance also provides expenses relating to storage charges before shipment.

Back To Back Credit

In case it the exporter is not the actual manufacture and he gets his work done by the sub-suppliers and if the sub-suppliers demand letter of credits in their favour, the exporter who has received a letter of credit for export, approaches his banker to establish second set of letters of credit on the basis of the export letter of credit received by him.

The second set of credit opened by a bank at the request of the exporter is known as back to back credit.

The beneficiary of the original letter of credit will become the applicant for the second set of credit.

Revolving Credit

In a revolving credit the amount of drawing is re-instated and made available to the beneficiary again up to the agreed period of time on notification of payment by the applicant or merely on submission of documents.

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The maximum value and period up to which the credit can be revolved will be specified in the revolving credit.

The re-instatement clause and the maximum amount of drawings under the credit should always be incorporated in revolving credit.

Deferred Payment Credits And Acceptance Credits

Under deferred payment credit the amount is payable in installments for a stipulated longer period.

Usually a part is paid in advance and the balance is payable in agreed installments in terms of conditions of the letter of credit

FINANCING EXPORTS

Commercial banks, the major source of export finance in India, provide finance before shipment of goods as well as after shipment of goods.

Pre-Shipment Finance

The pre-shipment finance typically is in the form of packing credit facility.

Packing credit is bank advance provided to an exporter for the purpose of buying/manufacturing/packing/shipping goods to foreign buyers.

Packing credit, a short-term credit, is normally required to be liquidated within 180 days by negotiation of export bills or receipt of proceeds for exports.

There are three broad types of packing credit

Clean Packing Credit

This represents an advance made to the exporter on the basis of a firm export order or a letter of credit, without any control over raw materials or goods.

Each proposal is decided on the basis of particular requirement of the trade and the creditworthiness of the exporter.

Packing Credit Against Hypothecation Of Goods

Under this arrangement, the goods meant for export are hypothecated to the bank as security.

When the bank advance is to be utilized, the exporter is required to furnish stock statements and continue to do so whenever there is stock movement.

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Packing Credit Against Pledge Of Goods

Under this arrangement, the goods meant for export are pledged to the bank with an approved clearing agent who ships the same on the advice of the exporter.

Post-Shipment Finance

The finance provided after the shipment may be in the following forms

Purchase/Discounting Of Documentary Export Bills

A commercial bank may purchase export bills drawn payable at sight or discount usance export bills covering confirmed sales and supported by relevant documents like the bill of lading, post parcel receipts etc.

Advance Against Export Bills Sent For Collection

A commercial bank may provide finance by way of advance against export bills forwarded through it for collection after taking into account appropriate margin.

Advance Against Duty Drawbacks, Cash Subsidy, Etc.

To help exporter banks advance against duty drawbacks, cash subsidy, etc., receivable by them against their exports.

EXIM BANK FINANCE

The export import bank of India (EXIM bank) was set up in 1982 to provide export and import finance, to coordinate with others providing such finance, and to promote the country’s foreign trade.

The authorized capital of the EXIM bank is Rs 200 crores and the paid-up capital is Rs 76 crores.

The EXIM bank has some borrowings from the central government at a concessional rate of interest.

To augment its resources, it may also issue bonds and debentures

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SURVEY

PURPOSE:

To study the financial needs of the small and medium enterprises.

To know the services availed by the enterprises from their present banks.

To assess their further requirements from the banks.

To find out the level of satisfaction from their present bank.

METHODOLOGY:

Preparation of questionnaire: After having a healthy discussion with our

project guide Mr.Menon and Mr. Pradip chhabra we prepared the

questionnaire. The copy of the same is attached on the next page.

Database collection: The industries involved in manufacturing, export &

import

Selection of area: The region for conducting the survey was selected on the

basis of proximity of the SBI, commercial branch, Rajkot. Thus, following

regions are selected.

1. Aji Industrial Area

2. Atika & Samrat Industrial Area

3. Metoda GIDC

4. Shapar Industrial Area

5. Kuvadva GIDC

6. Targhadi Industrial Area

7. Padadhri Industrial Area

8. Tankara Industrial Area

9. Hadamtala Industrial Area

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QUESTIONNAIRE

State Bank of India, Commercial Branch, Rajkot

1. Name of the Unit: _____________________________________________2. Year of Establishment: __________________________________________3. Address: _____________________________________________________

__________________________________________________________________________________________________________________________

4. Name of the Directors/Promoters & Ph No.: ___________________________________________________________________________________________________________________________________________________

5. Contact Person’s Name, designation & Ph No.: ____________________________________________________________________________________

6. Are you into Exports/Imports? Yes / NoExport/Import Turnover: ______________ (in crores)

7. Annual Turnover: ________________ (in crores)8. Products: _____________________________________________________

__________________________________________________________________________________________________________________________

9. Associate Concerns:_____________________________________________Are they into Exports/Imports? Yes/NoExport/Import Turnover: _______________ (in crores)Annual Turnover: _____________ (in crores)

10. Banker’s Name: _______________________________________________11. Facilities available from the current bankers:

Facility Type Limit (in crores)

12. Future Requirement: ___________________________________________________________________________________________________________________________________________________________________________

13. Name of the Consultant: ___________________________________________14. Would you like to Bank with SBI? Yes / No15. What do you expect from SBI? ____________________________________

______________________________________________________________________________________________________________________________

16. Which Bank do you prefer do the most other than the current Bank? ______________________________________________________________

17. Are private sector banks better than public sector banks? Yes / No18. Reasons: ______________________________________________________

______________________________________________________________

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MAP REPRESENTING ROAD TO VARIOUS GIDC AREA

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FIELD WORK

1. ANALYSIS ON THE BASIS OF FORMS OF INDUSTRY

AJI INDUSTRIAL AREA

In Aji industrial Area, Majority of the industries are dealing with manufacturing of machine tools, agricultural equipments, casting and etc. the graph depicts that machine tools and oil and engine parts industries are more dominating with a market share of 24% each.

ATIKA & SAMRAT INDUSTRIAL AREA

In Atika and Samrat industrial Area, Majority of the industries are dealing with manufacturing of investment casting and spare parts. There are 3 units in investment casting and 9 units in spare parts.

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TARGHADI AND PADADHRI

In Targhadi and Padadhri Area, Majority of the industries are dealing in Ginning business, while remaining units are dealing with oil, food products, ayurvedic product, metals and polymers.

METODA AREA

In Metod Region, There are Different forms of industry like investment casting, forging, polymers, packaging, kitchen wear, granite, industrial gas and other.

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HADAMTALA AREA

In Hadamtala Area, Ginning sector is one that is having the majority hold of 72%. Out of 14 units in Hadamtala 10units belong to Ginning sector. TANKARA AREA

In Tankara region, there mainly oil and ginning industries which are more functional. Out of 20 units, 8units belong to oil, 5 units belong to Ginning and remaining 6 units are those of casting, forging, etc.

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SHAPAR AREA

In Shapar Area, there are different forms of industry like casting, cotton, bearing, forging, pipe, auto parts, polymers, machinery, metals and many others. All industrial units are into manufacturing of variety of products.

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FINDINGS AND RECOMMENDATIONS

FINDINGS

All industrial areas in Rajkot district are having huge number of manufacturing units. All this manufacturing units are dealing in variety of products like diesel machines, agricultural tools, investing casting, forging, Ginning, polymers, cement, food products, oil and so on.

But some regions like Tankara, Hadamtala and Targadi are the one, where most of the industries are found of GINNING industry.

Saurashtra region is also famous as it is having well established industries of diesel machines. Majority of the exports to other countries for diesel machines are carried out through these regions only.

Kadavani forge, situated at Metoda GIDC region is famous for producing spare parts for NANO car of TATA MOTORS. Apart from this, there are other manufacturing units also that are producing spare parts for the big automobile companies.

RECOMMENDATION

Bank can concentrate on industries like Ginning and diesel machine manufacturing units as these units are in constant requirement of working capital for their activity. Even the turnovers of these industries are also higher as compared other industries.

Some industrial sector like polymers, foundry, paints and casting are the one that are small in size and turnover. These industries are generally in need of funds for their business expansion and development; bank can take the advantage of these by providing expansion loans to these sectors

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2. ANALISIS BASED ON MARKET SHARE

AJI INDUSTRIAL AREA

In Aji industrial area,State banks have majority share i.e. 7 units are covered by State banks. Where as Dena bank and Bank Of India have covered 5 and 4 units respectively. Remaining market share is covered by other banks.

ATIKA AND SAMRAT INDUSTRIAL AREA

In Atika and Samrat region also State Banks have covered good market share compare to other banks. In this region there are 6 units, which are covered by State Banks, Bank Of India has also covered good market there are 5 units, which are banking with Bank of India.

TARGHADI AND PADADHRI:

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In Taraghadi and Paddhari State Banks have covered 10 units, which is highest compare to the other banks. Bank of India comes at second rank as far as market share in Targhadi and Paddhari is concern. It has covered 6 units in this region.

METODA GIDC REGION:

In Metoda region State Banks, Bank of India and Central Bank have nearly equal market share. There are 11, 9, and 10 units that are working with State Banks, Bank of India and Central Bank respectively.

HADAMTALA REGION :

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In Hadamtala region State Banks are not successful to cover major market share. Bank of India has highest market share in this region and 4 units are working with them. There are 3 units which are covered by HDFC bank. TANKARA REGION:

In Tankara region majority of market share is covered by Sate Banks and HDFC bank they have covered 6 and 7 units respectively.

SHAPAR REGION:

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In Shapar region major market share is covered by State Banks. State Banks have covered 44 units, 33 units are dealing with Bank of India, and 31 units are covered by HDFC BANK.

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FINDINGS AND RECOMMENDATION

FINDINGS:

In Rajkot district there are several banks like SBI, HDFC, BOB, BOI, CBOI, PNB, RAJKOT CO-OPERATIVE, SBS, CORPORATION BANK, KOTAK MAHINDRA, and many other banks are actively functioning.

All these Banks provide various facilities to the small and medium manufacturing units to performing their business activities smoothly.

Among all the banks market share of SBI is the highest. This is because its associate STATE Banks are also included. In Saurashtra region SBS is having majority hold over the other banks. HDFC and Bank of Baroda are the two banks, which also hold a good market share.

Market share of SBI is 20% in which other state banks hold 12% and SBI hold 8%. Whereas HDFC and Bank of Baroda holds 12% and 10% market share respectively.

Hadamtala and Tankara are the two region where the SBI is having a negligible market share. Whereas Padadhri and Metoda are the two regions where SBI is having a good number of customers.

RECOMMENDATION:

Followings are the major steps the SBI can undertake to attract the manufacturing units:

SBI should try to provide better services to the corporate customers as per their requirement.

SBI should concentrate on ginning industries and should try to fulfil their requirement for cash delivery on daily basis.

Hadamtala and Tankara are the areas where ginning industries are in majority; therefore it should focus on these regions and try to increase the market share in these regions.

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3. ANALISIS BASED ON FACILITIES USED BY UNITS

AJI INDUSTRIAL AREA:

In Aji industrial area, there are 15 units that avail the Cash credit facility, 9 units avail the Term loan facility and remaining 12 units are using other facilities like current a/c, demand draft, and etc. facilities only

ATIKA AND SAMRAT INDUSTRIAL AREA:

In Atika and Samrat industrial area, there are 7 units that avail the Cash credit facility, 3 units avail the Term loan facility and remaining 10 units are using other facilities like current a/c, demand draft, and etc. facilities only

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TARGHADI AND PADADHRI:

In Targhadi and Padadhri industrial area, Majority of the units avail both the facilities, that is, Term loan and Cash Credit. There are round about 23 units which take the facility of both T.L and C.C. and remaining 8 units use the other facilities that are provided by the bank.

METODA GIDC REGION:

In Metoda industrial area, there are 22 units that avail the Cash credit facility, 11 units avail the Term loan facility, 21 units are using both facilities and remaining 26 units are using other facilities like current a/c, demand draft, and etc. facilities only

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HADAMTALA REGION:

In Hadamtala industrial area, there are 4 units that avail the Cash credit facility, 1 units avail the Term loan facility, 7units avail both the facilities and remaining 2 units are using other facilities like current a/c, demand draft, and etc. facilities only

TANKARA REGION:

In Tankara industrial area, there are 9 units that avail the Cash credit facility, 5 units avail the Term loan facility, 2 units are availing both facilities and remaining 3 units are using other facilities like current a/c, demand draft, and etc. facilities only.

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SHAPAR REGION:

In Shapar industrial area, there are 101 units that avail the Cash credit facility, 5 units avail the Term loan facility, 59 units are taking both the facilities and remaining 55 units are using other facilities like current a/c, demand draft, and etc. facilities only

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FINDINGS AND RECOMMENDATIONS

FINDINGS:

In Rajkot district, various banks are providing different facilities to the small and medium enterprises. There is always a battle between the banks to attract the corporate client by providing different facilities better than other banks.

Most manufacturing units in Rajkot district avail the facilities like current account, cash credit, term loan and EPC from the banks. Banks generally concentrate on providing these facilities to corporate clients at competitive rates.

Out of 420 units surveyed, 184 units are availing the facility of cash credit from different banks. Whereas there are 95 units are obtaining the facility of term loan.

Some manufacturing units also make use of both facilities that is cash credit and term loan. There are round about 87 units using both facilities.

There manufacturing units which also utilize other facilities like demand draft, current account, RTGS, NBHC, etc.

RECOMMENDATIONS:

State bank should try to reduce the paper work pertaining to providing of these funds.

Ginning sector is one in which they require the cash credit frequently and that to of higher amount. Therefore Bank should emphasis and pays more attention to this sector.

Banks should try to attract Ginning sector’s client by providing C.C at lower interest rates compared to other banks and should try to reduce other charges like D.D charge, multiple cheque book charge, RTGS charge etc.

Bank should try to increase the Cash credit for their existing clients as per their requirement as there is huge demand among corporate clients for the increase in Cash credit limit.

Bank should also try to promote the entrepreneurs and small-scale firms for the development and expansion by providing different corporate loans.

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4. ANALISIS BASED ON TURNOVER

AJI INDUSTRIAL AREA

In Aji industrial area, industries based on their operational activity and size have different turnover ratio. Majority of the units in Aji region have turnover ranging between 25 lacs to 1 crore.

ATIKA AND SAMRAT

In Atika and Samrat, industries based on their operational activity and size have different turnover ratio. Majority of the units in Atika and Samrat region have turnover ranging between 50 lacs to 5 crore.

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TARGHADI AND PADADHARI

In Targhadi and Padadhri, industries based on their operational activity and size have different turnover ratio. Majority of the units in Targhadi and Padadhri region have turnover above 10 crore. Ginning industry is the one where turnover is above 100 units.

METODA AREA:

In Metoda region, turnover of the industries depends on the basis of the working. Units of forging, cnc machine, diesel machine have huge turnover exceeding above 5 crore.

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HADAMTALA AREA

In Hadamtala area, industries based on their operational activity and size have different turnover ratio. Majority of the units in Hadamtala region, majority of the units belong to Ginning industries.

TANKARA AREA

In Tankara area, Ginning industry is having the major hold, therefore the turnover ratio is also high. Majority of the units are having turnover higher than 50 crore.

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SHAPAR AREA

In Shapar Region, Casting industry is having the major hold, therefore the turnover ratio is also high. Majority of the units are having turnover higher than 5 crore.

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FINDINGS AND RECOMMENDATION

FINDINGS:

In Rajkot district, all manufacturing units situated at industrial areas have

different turnover ratios based on their business activities. Following are the number

of units based on their turnover:

Out of total 420 units, 130 units are having a turnover of less than 1 crore. It depicts that round about 31% of the total industries in Rajkot District are having turnover less than 1 crore.

There are near about 170 units that is having a turnover between 1 crore to 5 crore. It depicts that 40% of the industries are in this range

Remaining 120 units are having turnover above 5 crore, which forms about 29% of the total share.

Ginning sector is the one in Rajkot district that is having a huge turnover as compared to other sectors. Generally each Ginning units generates a turnover that is more than 100 crore every year.

RECOMMENDATION:

Tankara, Hadamtala and Padadhri are such region where Bank can get a huge business if it concentrates properly. In these regions the market share of State bank is negligible.

Bank should attract the Ginning sector units through facility of Cash delivery at site, as these units are in need of huge cash on daily basis.

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5. ANALISIS BASED ON EXPORTS AND DOMESTIC MARKET

In Rajkot district’s various GIDC regions are combination of exports oriented

units and domestic oriented units. The following charts depict the analysis of different

GIDC regions based on export and domestic oriented units.

AJI INDUSTRIAL AREA:

In Aji region out of 36 units, 26 units are doing their business at domestic

level and 10 units are doing their business at export level.

This chart shows that majority of units are in domestic market and other units

are in export.

The above chart we analyse the most of the SME units, which are the domestic

stage, they performing their activities.

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ATIKA AND SAMRAT INDUSTRIAL AREA:

In Atika and Samrat industrial area we have surveyed 20 units out of which 5 units were exporting their products and other 15 units were selling their product in domestic market.

TARGHADI AND PADDADHARI:

In Taraghadi and Padadhari region we have visited 31 units out of which 16 units were exporting their product and other 15 units were selling their products in local market.

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METODA GIDC REGION:

Metoda region has more units involved in domestic business. Out of 80 units we have visited in Metoda 20 units were exporting their product and 60 units were selling their product in domestic market.

HADAMTALA REGION:

In Hadamtala region we visited 14 units out of which 8 units were involved in export and 6 units were selling in just domestic market.

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TANKARA REGION:

Tankara region has more units involved in domestic business. Out of 19 units we have visited in Tankara 4 units were exporting their product and 15 units were selling their product in domestic market.

SHAPAR REGION:

In Shapar we visited 220 units out of which only 38 units were doing there business on export level and other 182 units were involved only in domestic market.

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FINDINGS AND RECOMMENDATION

FINDINGS: In Rajkot district there are mainly 7 GIDC industrial regions namely: AJI,

ATIKA & SAMRAT ,KUVADVA, PADDHARI, TARGHADI, METODA, HADAMTALA, TANKARA, SHAPAR.

In this industrial area there are number of small and medium manufacturing units. Out of those units most of them are functioning at Domestic level as well as international level.

As par the research conducted of 420 units in which 319 units are functioning at domestic level and 101 units are functioning at international level.

The chart indicated that 74% manufacturing units are functioning at domestic level, in comparison to that of 26% that functioning at international level.

The vast difference between domestic and international level is due to that majority of manufacturing units are initial stage of establishment. Due to which they are not having large resources of funds. They can’t functioning at international level.

Among all the regions in which Hadamtala, Paddhari, are the one which is having 57% and 53% respectively of its manufacturing units belong to the Export oriented.

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RECOMMENDATION:

Followings are the major steps the SBI can undertake to attract the manufacturing units :

The bank can concentrate on those manufacturing units which are really interested carrying out their activities at international level.

The manufacturing units should be made aware about the SBI EXPORTERS’ GOLD CARD, EXPORT (EPC) AND LETTER OF CREDIT, etc facilities which is provided by SBI.

It should provide those facilities at competitive rates as compare to other banks.

Hadamtala and Paddhari are two region where bank should concentrate more to provide bank export facilities.

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6. ANALISIS BASED ON PREFERENCE TO PUBLICE ANDPRIVATE SECTOR BANKS

AJI INDUSTRIAL AREA:

In Aji industrial area, majority of the firm give preference to pubic sector banks. They consider public sector banks to be secured and does not have any hidden charges associated like that in private banks. Only 6 units have shown their preference to private sector in comparison to 30 unit that have preferred public sector banks.

ATIKA & SAMRAT INDUSTRIAL AREA:

In Atika and Samrat industrial area, majority of the firm give preference to pubic sector banks. They preferred to do their transaction with public sector banks and does not have any hidden charges associated like that in private banks. Only 6 units have shown their preference to private sector banks in comparison to 14 units that have preferred public sector banks.

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TARGHADI AND PADADHRI:

In Targhadi and Padadhri industrial area, majority of the firm give preference to pubic sector banks. They consider public sector banks to be secured and does not have any hidden charges associated like that in private banks. Only 4 units have shown their preference to private sector in comparison to 27 units that have preferred public sector banks.

METODA GIDC REGION:

In Metoda industrial area, majority of the firm give preference to pubic sector banks. They consider public sector banks to be secured and does not have any hidden charges associated like that in private banks. Only 17 units have shown their preference to private sector in comparison to 63 units that have preferred public sector banks.

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HADAMTALA REGION :

In Hadamtala industrial area, firms give preference merely same to pubic sector banks and private sector banks. Out of 14 units, 6 units have shown their preference to private sector in comparison to 8 units that have preferred public sector banks.

TANKARA REGION :

In Tankara industrial area, majority of the firms give preference to pubic sector banks. They consider public sector banks to be secured and does not have any hidden charges associated like that in private banks. Only 4 units have shown their preference to private sector in comparison to 15 units that have preferred public sector banks.

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SHAPAR REGION:

In Shaper industrial area, majority of the firm give preference to pubic sector banks. They consider public sector banks to be secured and does not have any hidden charges associated like that in private banks. Only 57 units have shown their preference to private sector in comparison to 163 units that have preferred public sector banks.

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FINDINGS AND RECOMMENDATIONS

FINDINGS

In Rajkot district there is number of Banks, which provide their services to the corporate sector as well as personal level. Which include public sector bank and private sector bank. Those banks undertaken by government and run by government are known as public sector bank i.e. State Bank of India (SBI), Bank of Baroda (BOB), and Central Bank of India (CBOI). On other hand those banks that run by other than government body known as private sector bank i.e. HDFC, ICICI, and KOTAK MAHINDRA.

As par research conducted most of GIDC region in which public sector bank have a good number preferred by the corporate customers.

Due to following reasons corporate client prefer to public sector bank.

They have trust on nationalised bank Lower interest rates Nationalised banks strictly follow RBI guidelines.

On the other hand HADAMTALA and TANKRA are two regions where private sector banks like HDFC are preferred most. The marker share of HDFC in both regions is 21% and 39% respectively.

Due to following reasons corporate client prefer to public sector bank.

They provide faster and better services than public sector banks Easy paperwork and less formality Maintain good customer relationship. Understand the customer’s needs and try to solve personally.

RECOMMENDATION

Bank should be more responsive towards clients. Employees should understand the responsibility and work accordingly.

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GENERAL PERCEPTION ABOUT SBI

In banking sector SBI is having top position among all the banks. Even though there prevails some negative impression in the minds of customers. Following are some of the perception given by the customers about the SBI.

In SBI employees are lazy and does not take responsibilities for their work.

Services are not up to the satisfaction of the customers.

Bank does not pay attention towards small units.

There are too much formalities compare to other banks.

SBI just follow the new facilities but they have not its own innovative idea.

Employees of SBI are not doing business on the basis of customer requirement

but they are seeing self-security.

When customer come to the branch there is no such hoarding about the

departments.

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LEARNING FROM THE PROJECT

This 8 weeks training period has certainly added lot of depth to our shallow

knowledge of the banking sector as well as the working of the small and medium

scale industries. The research work undertaken by us at seven different regions

gave us a clear picture of the mentality and attitude of the industry owners in each

region. We became aware of the fact that the attitude of the people to a great

extent depends on the environment they work in. For example, the attitude of the

most of industrial areas in Rajkot was somewhat positive towards our survey

Thus, the outcome of the survey can be very well judged by the attitude of the

people working in a particular work environment.

Finally, this project has given us tremendous level of self-confidence, the spirit

to work in teams and the ability to manage things independently. Moreover, it has

helped us groom ourselves in to a professional, which is a pre-requisite in this

competitive world.

“It is good to learn from experience as long as it is others”. The experience

of the highly qualified staff of SBI has taught us the art of dealing with people and

the organization of the goal to be achieved. All this has certainly been useful to us

during the project and will always be useful in achieving many more endeavours

in future.

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CONCLUSION

SBI is a renowned bank all over India and Abroad also. The bank has taken a

very wise step to survey the different industrial areas in Rajkot district to study the

financial needs of various manufacturing units.

There are so many private sector banks as well as multinational banks coming

up but very few are able to provide services that are up to the expectations of the

industries. If this will continue, a time will come when the banking sector will saturate

and there would be no scope for further development.

The findings and recommendations of the survey clearly reveal that there is a

need of proper understanding of the services on the part of the industries in most of

the industrial areas. This effort on the part of SBI to keep customers at the centre and

understand their needs will surely prove as a bull’s-eye in the progress of the bank as

well the banking sector as a whole.

With proper referencing, monitoring and examination of the weak areas of

each zone, the bank can pitch into the prospective sectors of each region and slowly

and gradually capture the major market share.

This positive note concludes the report. This may prove to be useful to the

bank for achieving new heights. Wishing all the very best to the bank and its

extremely dedicated staff.

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BIBLIOGRAPHY

www.statebankofindia.com

www.rbigov.com

Directory of Rajkot Engineering Association, shapar , Metoda

E-credit book of SBI

www.sidbi.com

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