A Report of Standard Chartered

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A Report on Small & Medium Enterprise Financing

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SUMMER TRAINING PROGRAM

THE REPORT

ON

SMALL & MEDIUM ENTERPRISE FINANCING BY

GOPAL C HANDRA SAHA (ROLL NO. 17/MBA/Finance)

REPORT SUBMITTED IN THE PARTIAL FULLFILMENT OF

THE REQUIRMENT OF MBA PROGRAM

DSMS BUSINESS SCHOOL WEST BENGAL UNIVERSITY OF TECHNOLOGY

PROF. DR. D. P. SAMANTA

(Principal, D.S.M.S. B’ School)

COMPANY GUIDE FACULTY GUIDE

MR. AVISEK DAS (Relationship Manager) PROF. PARTHA CHATTERJEE

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Student’s Declaration

I hereby declare that the project report entitled “Small and Medium

Enterprise Financing” submitted in partial fulfillment of the

requirements for the Degree of Masters of Business Administration

in Finance to DSMS BUSINESS SCHOOL, DURGAPUR. (West Bengal

University of technology, West Bengal India,) is my original work and

not submitted for the award of any other degree, diploma, fellowship,

or any other similar title or prizes.

Place: Durgapur (Gopal Chandra Saha)

Date: Reg. No. 092510710021

Roll No. 09251009040

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A project report

By

Gopal Chandra Saha

On

“SMALL & MEDIUM ENTERPRISE FINANCING”

Is approved and is acceptable in quality and form

---------------------------------- ----------------------------------------------

(Internal Examiner) (External Examiner)

Name: Name:

Qualification: Qualification:

Designation: Designation:

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This is to certify that the project report entitled

“SMALL & MEDIUM ENTERPRISE FINANCING”

Submitted in partial fulfillment of the requirements for the Degree

Of

“Masters of Business Administration”

From

“DSMS Business School”

Gopal Chandra Saha

Registration No. 092510710021

Roll no. 09251009040

Master of Business Administration (MBA)

Has worked under my supervision and guidance and that no part of this report has been

submitted for the awarded of any other degree, Diploma, Fellowship or other similar titles

or prizes and that the work has not been published in any journal or Magazine.

Certified

Guide’s name:

Qualification:

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ACKNOWLEDGEMENT

The report bears the imprint of many people and without their support it would not have existed.

First of all I would like to express my sincere in-debtless and profound sense of gratitude to MR. Avisek Das, Relationship Manager of Standard Chartered Bank, Siliguri Branch, whose continuous support in all manners had made me capable to complete this project.

I acknowledge greatest thanks to Standard Chartered Bank for providing me the opportunity to gain the practical knowledge by working in the organization.

I acknowledge my deepest thanks to my project guide Prof. Partha

Chatterjee, DSMS B-School for all his care and encouraging words and

giving suggestion at the crucial stages of the project.

I am also grateful to my Parents and my friends, my brother for their

encouragement.

Thank you

Gopal Chandra Saha

Roll No. 09251009040

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S.NO. HEADING AND SUB HEADINGS PAGE NO.

A Acknowledgement 6 1 Introduction 8 2 Main Text 10

2.1 2.2 2.3 2.4 2.5 2.6

2.7 2.8 2.9

Definition of SME in India and World SME’s in India Challenge faced by SME’s Risk Faced by SME’s unit The causes of sickness of SME industries Government’s promotional policy and support network Financial needs of SME Financial requirement of SME About Standard Chartered

10 12 14 14 15 16

17 18 21

3 Analysis of SME Exposure 28 3.1 3.2 3.3

3.4

SME exposure of Standard Chartered Financial Policy at Standard Chartered Preparation of Credit Monitoring Arrangement Methods of Calculating Working Capital Requirement Process of Sanctioning of loan

31 32 33

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4 Top Five Players in Siliguri Market (Segment wise)

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4.1 4.2

Questionnaire List of SMEs Visited

66 69

5 References 73

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1. INTRODUCTION Small and medium sized enterprises (SMEs) are one of the

principal driving forces in economic development. They stimulate private ownership and entrepreneurial skills, they are flexible and can adapt quickly to changing market demand and supply situations, they generate employment, help diversify economic activity and make a significant contribution to exports and trade.

In India, small and medium industries play a vital role in the growth of the economy. Small industries have a 40% share in industrial output, producing over 8000 value-added products. They contribute nearly 35% in direct export and 45% in the overall export from the country. They are one of the biggest employment-providing sectors after agriculture, providing employment to 28.28 million people.

SMEs are a reservoir for the creation of jobs and a source of

diversity in the industrial fabric. At the same time, SME weaknesses in terms of finance, human resources and commercial contacts are a source of concern. Depending on the country, SMEs often suffer from both financing difficulties, at least in certain critical stages of their development, and structural weaknesses in their management capacity.

Credit is a critical input for the SME Sector. Provision of timely

and adequate finance to SME Sector is central to the banking policy. Nationalization of major banks in 1969 signaled the need for redefining lending priorities and it was mandated that 40 per cent of loan should be for what is called priority sector which includes agriculture, SME and individual service and business sectors. There has been a steady increase in the flow of credit to SME Sector which has gone up considerably from Rs.48, 400 crore in 2001 to Rs. 1, 04, 900 crore in 2007.

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SMEs developed in a manner, which made it possible for them to achieve the following objectives: • High contribution to domestic production • Significant export earnings • Low investment requirements • Operational flexibility • Location wise mobility • Lowering cost of production • Generation of employment • Attaining lower gestation period As a result of globalization and liberalization, coupled with WTO regime, Indian SMEs have been passing through a transitional period. With slowing down of economy in India and abroad, particularly USA and European Union and enhanced competition from China and a few low cost centers of production from abroad many units have been facing a tough time.

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2. MAIN TEXT 2.1 DEFINITION OF SMES IN INDIA AND WORLD

There is no universal definition of small and medium enterprises. In some countries, there are certain objective standards, which classify the units as micro, small or medium enterprises depending on the number of employees. In some other countries, annual turnover of the company determines the size of an enterprise. The concept of size is also a relative phenomenon with reference to the local economies, since a large company in a small country could possibly be considered as a small company in a larger country.

The Micro, Small and Medium Enterprises Development Act,

2006 has come into force on 02.10.2006. Under the Act, the SMEs category in India comprises: (A) Micro Enterprises (B) Small Enterprises (C) Medium Enterprises The criteria fixed for identification are tabulated below for easy reference:

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Table 1: Investment Limits of SME's

Classification

Investment in Plant and Machinery (For Manufacturing Enterprises)

Investment in Equipments (For Service sector Enterprises)

Micro Enterprises

Investment in Plant and Machinery ceiling up to Rs.25Lakhs

Investment in Equipments ceiling up to Rs. 10 Lakhs

Small Enterprises

Investment in Plant and Machinery above Rs. 25 Lakhs but up to ceiling of Rs.500Lakhs

Investment in Equipment Above Rs. 10 Lakhs but up to ceiling of Rs. 200 Lakhs

Medium Enterprises

Investment in Plant and Machinery above Rs.500 Lakhs but up to ceiling of Rs.1000 Lakhs

Investment in Equipment above Rs.200 Lakhs but up to ceiling of Rs. 500 Lakhs

Internationally, SME is categorized with no subtypes. The

Ganguly Committee has recommended that on India, THREE TYPES OF SMEs recognized.

1. Tiny Type

: Annual turnover up to Rs.2 crores.

2. Small Type

: Annual turnover of more than Rs.2 crores but up to Rs.10 crores.

3. Medium Type

: Annual turnover of more than Rs.10 crores but up to Rs.50 crores.

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2.2 SME’S IN INDIA

The SME’s alone contribute to 7% of India’s GDP. As per the Third All India Census of Small Scale industries conducted in 2004, the SME’s have increased from about 80,000 units in the 1940’s to about 10.52 million units. Their total employment is about 25 million and they produce about 7500 products including high technology products.

In the sports goods and garments sector their contribution to exports is as high as 90% to 100%.

They constitute 90% of the industrial units in the country and also contribute to about 35% of India’s exports.

The Government of India since 1951 has encouraged and supported the SME’s through its various policy initiatives. Since 2005, The Government of India has identified 3,000 SME clusters of artisan-specific, village and small enterprises in the country and has taken up 1,150 such clusters for intervention and improvement.

The performance of the Indian small scale sector in terms of critical economic parameters such as number of units, production, employment and export during the last decade is indicated below.

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Table2: Performance of SME Sector:

year No of units

(In millions)

Production

(In billion at current prices)

Employment

(In millions)

Exports

(In billion at current prices)

1993-94 20.38 2416.48 13.93 253.07

1994-95 2.57 2998.86 14.65 290.68

1995-96 2.65 3626.56 15.26 364.70

1996-97 2.80 4118.58 16.00 392.48

1997-98 2.94 4626.41 16.72 444.42

1998-99 3.08 5206.50 17.15 489.79

1999-2000

3.21 5728.87 17.85 542.00

2000-01 3.37 6454.96 18.56 599.78

2001-02 3.46 6905.22 19.22 712.44

2002-03 3.67 8243..63 20.07 861.03

2003-04 3.83 9323.54 20.90 NA

2004-05 4.00 10600.87 21.78 NA

2005-06 4.18 12138.00 22.78 NA

2006-07 4.37 14019.39 22.17 NA

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2.3 CHALLENGES FACED BY SME’s Challenges faced by SMEs may be briefly set out as follows: • Small and medium enterprises particularly the tiny segment of the small enterprises, have inadequate access to finance due to lack of financial information and non- formal business practices. SMEs also lack access to private equity and venture capital and have a very limited access to secondary market instruments. • SMEs face fragmented market in respect of their inputs as well as products and are vulnerable to market fluctuations. • Low technology base and inability to move up to the current technological system owing mainly to lack of funds required for technological up gradation • Economic efficiency is limited affecting their products/services in competition with large sized units. • SMEs face considerable delays in the settlement of dues/payment of bills by the large buyers. • Many small-scale entrepreneurs are facing difficulties in providing collateral security as per the requirements of the financing banks.

2.4 Risks Faced by SME Units

• Management Risks • General Management skills / methods / training / attitudes • Perpetuation of the units as an ongoing concern

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• Financial Risks • Lack of Financial Plans (Too many surprises & ad hoc decisions) • Costs / Finances / Funds Inadequate attention to financial disciplines and cash flow • Inadequate financial plans & control over Cash Flows (perpetually caught up in this vicious cycle).This can be dangerous. • Inability to pay competitive wages / salaries to trained professional in working classes • Meticulous attention to funds flow & cash flows & follow up on regular basis • Marketing Risks • Reach & Net working • Dependence on few customers • Technology Risks (Scope / Costs / Quality) • Need for perpetual R&D • Technology obsolescence • Human Resource Risks • Need for formally trained manpower 2.5 The causes of sickness of SME industries • Diversion of funds.

• Dissension among partners.

• Shortage of power.

• Technological obsolescence.

• Overdependence on purchases by Government.

• Lack of knowledge about various credit schemes

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2.6 Government's Promotional Policy and Support Network New policies/measures for SME:

In order to help the sector integrate with the industry at large within liberalized economic framework the government of India has announced new policy measures. In the present context, the following are of particular interest as announced in the year 1991:

a. The investment ceiling for the purpose of definition of a small unit has been raised to Rs. 6 million (Rs. 7.5 million if the unit concerned undertakes to export 30 percent of its output or if it is an ancillary unit i.e. a firm supplying at least 50 percent of its output to large scale industries).

b. Other investors (including large scale enterprises and foreign investors) are now allowed 24 percent equity participation in a small scale unit.

c. The Act on Delayed Payments to Small and Ancillary Enterprises has been promulgated. Under this act, buying/mother units will be required to pay interest on delayed payments for supplies bought from SME units if the payments are delayed beyond the negotiated and agreed upon time period.

d. The Reserve Bank of India has announced a package of measures to ensure a better flow of credit to the SME through measures such as expansion of 'single window' loan scheme.

Banks are encouraged to open specialized SME branches and to give greater priority to the sector in their annual credit budgets.

e. Access to inputs has been improved by giving SME priority to allocation of iron and steel from public sector undertakings and by

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removing obstacles to imports of a range of raw materials and intermediate products.

f. The number of products which are reserved for SME stands at 836 in 1994. This represents a decrease of only 7 items since the economic reform process has been initiated in 1991.

The Government of India during the pre liberalization period i.e. before 1991 had several incentives and subsidies for promotion of SME sector. These included providing term finance at concessional rates of Interest, higher debt-equity ratio, capital investment subsidies to encourage investment in less developed areas, incentives for starting electronic industries etc.

2.7 Financial needs of SME

2.7.1 Borrowing needs can be classified into two groups:

a) Short term needs – When debt is used to finance temporary or seasonal cash requirement it is known as short term needs which include the following: • Paying accounts payable during a peak period. • Acquiring seasonal inventory. • Carrying peak period accounts receivable. • Meeting intermonth timing difference between the payments of accounts payable accrued expenses and accounts receivable. b) Long term needs – When a debt is used to finance permanent working investment purchase long term assets or

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replace equity is known as long term needs, which include the following: • Supplementing permanent working capital in a growth situation. • Acquiring fixed assets. • Partially financing the purchase of a business.

2.7.2 Lenders may use various credit facilities to meet the various borrowing needs. They are:

a) A short term credit facility – It has a maturity of one year

or less. When a short term facility is used to finance a temporary, short term need its repayment depends on sources that can generate cash in a single operating cycle, such as a seasonal shrinkage of trading assets. b) A long term credit facility – It has a maturity of more than one year. This facility is typically used to finance relatively permanent or long term borrowing needs when repayment is not expected within a single operating period. 2.8 Financial Requirements Of SME 2.8.1 Working Capital Working capital represents the amount of assets that a company can utilize. It is essential to have a positive working capital to ensure the

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operational efficiency of a company. It is used to acquire additional assets, such as inventory products to be used in the business.

Working capital can be used for a variety of purposes. For one, it can be used in the construction and renovation of a place for business. It can also be used to acquire machinery needed for the business operation. A working capital loan is used to provide funds for a business, typically when it lacks the resources to operate sufficiently. It is utilized mostly when a business needs additional growth, until such a time when all the operating expenses can be covered by the revenue generated.

Without the use of a working capital loan, most businesses find it difficult to expand the scope of the business or pay off the current liabilities incurred. This is most evident during the early stages of development for a business, when there is no sufficient cash flow to be obtained from revenues. The loan is needed to pay for utility bills, mortgage payments, business expenses, inventory, and employee payroll. Most businesses may find it difficult to obtain a working capital loan. It is essential to have a good credit rating in order to improve the chances of acquiring such a loan. These are used by lending institutions to assess the overall financial standing of a business or individual. They are then able to ascertain whether giving a loan is at an acceptable level of risk. There are many different working capital loans available. Here are some common examples of the different forms that can be obtained.

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1. Short term loan As the name implies, this is a loan for a short period of time where a quick influx of cash is needed. For example, this is used when a business needs funds to acquire additional inventory. The payment terms usually last for a year or so. 2. Credit Line A credit line can be used to get cash advances. This is similar to a short term loan in that it is used for short term needs. Getting approved for a credit line is dependent on a good credit rating. 3. Equity These can be gotten from personal resources such as ones from a housing property. Additional sources include friends and family members. The terms are flexible allowing you the business owner to grow your business rapidly without the headaches of traditional loans and bureaucratic paper work involved with such a process. These working capital loan program funds fast in as little as 20 to 30 days.

2.8.2 Fixed Asset

Everyone wants to support the loan with an asset. Thus determination is to be made on assets that are most marketable, most liquid and of highest quality. The asset can readily be converted to cash and for which there is a sufficient demand in the market. . Liquidity and marketability usually go hand in hand, since fixed asset that can be readily converted to cash are high in demand.

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2.9 About Standard Chartered

Standard Chartered plc is a British financial services company headquartered in London, UK with operations in more than seventy countries. It operates a network of over 1,700 branches and outlets (including subsidiaries, associates and joint ventures) and employs 73,000 people.

Despite its British base, it has few customers in the United Kingdom and 90% of its profits come from Asia, Africa, and the Middle East. Because the bank's history is entwined with the development of the British Empire, its operations lie predominantly in former British colonies, though over the past two decades it has expanded into countries that have historically had little British influence. It aims to provide a safe regulatory bridge between these developing economies.

It now focuses on consumer, corporate, and institutional banking, and on the provision of treasury services—areas in which the Group had particular strength and expertise.

Standard Chartered is listed on the London Stock Exchange, Hong Kong Stock Exchange and the Indian Stock Exchanges and is a constituent of the FTSE 100 Index.

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PRESENCE OF STANDARD CHARTERED BANK IN INDIA: 33 CITIES WITH MORE THAN 83 BRANCHES

2.9.1 MORE THAN BANKING Corporate Social Responsibility (CSR) is at the core of the values of Standard Chartered Bank. The Bank is committed to the communities and environments in which it operates. The Bank strongly supports the trend towards delivering shareholder value in a socially, ethically and environmentally responsible manner. ‘Living with HIV’ is a global community initiative of Standard Chartered that is aimed at raising awareness of HIV/AIDS amongst employees through workshops and amongst stakeholders by providing thought leadership. Under ‘Seeing is believing’, a program that aims to restore sight to one million people globally by 2007, the

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Bank has raised funds to help 8000 people to see. In partnership with Sight Savers International and VISION2020 the Bank is now involved in two flagship projects at Vishakhapatnam and Muzaffarpur, both aimed at the elimination avoidable blindness. Furthermore, in support of the communities ravaged by the Asian Tsunami Crisis in 2004 the Standard Chartered Group committed US$ 1 million to India. The Bank is utilizing these funds for the rehabilitation of two villages adopted near Chennai. In 2004, Standard Chartered initiated the phenomenally successful Standard Chartered Mumbai Marathon - an event dedicated to charity fund raising. The two marathons held so far have forged partnerships with customers and charities and deepened the Bank’s ties with the community, with over US$ 1 million being raised in 2005. 2.9.2 Some other fact about STANDARD CHARTERED BANK · Over 50 nationalities are represented among our top 500 senior executives. · SCB is the only international bank with over 90% profits from Asia, Africa, and the Middle-East. · SCB is the only international bank with a long unbroken banking history in India and China. · SCB is the largest international bank in India in terms of branch network and profits · SCB is the only bank in the Falkland Islands. · SCB is one of three note issuing banks in Hong Kong. a) Principles and Value · At Standard Chartered our success is built on teamwork, partnership and the diversity of our people. · At the heart of our values lie diversity and inclusion. They are a fundamental part of our culture, and constitute a long-term priority in our aim to become the world's best international bank. · Today we employ 78,000 people, representing 115 nationalities, and you'll find 61 nationalities among our 500 most senior leaders.

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· We believe this diversity helps to fuel creativity and innovation, supporting the development of exciting new products and services for our customers worldwide.

b) Stand for Strategic intent · The world's best international bank · Leading the way in Asia, Africa and the Middle East c) Brand promise · Leading by Example to be The Right Partner d) Values · Responsive · Trustworthy · International · Creative · Courageous e) Approach · Participation Focusing on attractive, growing markets where we can leverage our relationships and expertise · Competitive positioning Combining global capability, deep local knowledge and creativity to outperform our competitors · Management Discipline · Continuously improving the way we work, balancing the pursuit of growth with firm control of costs and risks

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2.9.3 Products offered by standard chartered

2.9.4 Standard Chartered Bank’s Products for SME

a) Bank Term Loan – A bank term loan to a company with a fixed maturity and often featuring amortization of principal. If this loan is in the form of line of credit, the funds are drawn shortly after the agreement is signed. Otherwise the borrower usually uses the funds from the loan soon after they become available. Bank term loans are very common kind of lending. It is a contract, a legally enforceable commitment to lend a specific amount for a specific period of time. It sometimes goes by product name. Some examples are given below:

• Mortgage- A term loan secured by legal property.

Operation

SME Banking

Commercial Banking

Personal Banking

Insurance Investment Services

Loans Accounts

ULIP Savings Currents

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• Bullet – A term loan with all principle to be repaid on one date in the future. • Bridge – A term loan with a short term, where repayment is required upon a certain event. • Standby Term loan – The company has a predetermined amount disbursed on an as need basis. Repayment is on a predetermined schedule and funds cannot be re borrowed. • Balloon – A term loan that require small principle repayment over a number of periods and then a large payment at the end of the loan. • Leveraged Or Capital Lease – A long term secured loan structured so it can be accounted for on financial statements as a lease in accordance with GAAP. b) Overdraft – The word overdraft means, the act of overdrawing from a bank account. In other words, the account holder withdraws more money from a bank account than has been deposited in the bank. c) Packing Credit – Short term loan that bank provides to the exporters and or to the manufacturers for the purpose of promoting small and medium industries. Loans can be in bath or in other currencies.

d) Post Shipment – Loans are provided upon presentation of documents and a credit line request. Post shipment is applied by presenting bill of exchange issued specifying the amount and credit term according to the documents. The maximum available term is 180 days.

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e) Letter Of Credit – Letter of credit is a financial instrument often used in inland or international business w3here suppliers or vendors do not have established relationships with their counter parts. A letter of credit is a bank’s direct undertaking to the supplier to pay. When letter of credit is in use, the issuing bank does not wait for the buyer to default and for the seller to invoke the undertaking f) Bank Guarantee - An agreement by a third party to repay the loan in case of default or nonpayment by the borrower, which offers an alternative source of repayment, is known as guaranty. As a source of repayment, a guaranty is as reliable as the guarantor’s ability and willingness to repay. It is a written contract stating that in the event the primary party i.e., the buyer is unable or unwilling to pay its dues to the supplier bank, as guarantor to the transaction the bank guarantee would pay to the supplier. In other words, a bank guarantee is an undertaking of a bank on behalf of its customer. But this comes into play only when the principal party i.e., the buyer has failed to pay its supplier.

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3. Analysis of SME Exposure

A squeeze on interest margins, a nudge from the central bank and an opportunity to expand their credit portfolio towards a new and relatively unexplored direction, and led most banks to take a focus on the small and medium enterprise (SME) sector. According to a recent survey commissioned by Citibank, the small businesses and professionals community in India is estimated at more than 3 million. As a result, this sector is the focus of attention among banks.

With so much to work with, most banks now have special cells in place to target this sector. In addition to providing the usual loans and working capital assistance, banks are now going the extra mile to empower their SME clients. But nothing works like a nudge from the Finance Minister himself. P Chidambaram has asked the State Bank of India (SBI) to increase its share of lending to this sector. “The bank should also use its vast branch network to increase lending to the SME sector as it helps in generating employment and also addresses the issue of balanced regional development,” he said. SBI on its part has already taken an initiative in this direction. Through its Project Uptick, has taken a cluster financing approach, where the units from similar industry are identified for process improvement. This means that units, which come forward to adopt innovations, get financial assistance for up gradation costs. ICICI Bank, the country's second largest bank, has introduced a simplified loan product, an unsecured loan up to Rs 25 lakh for the SME sector. This is ideal for promoters with big ideas and little

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collateral security. SMEs can also apply for loans through the bank’s website now. Another service in the pipeline is the roping in legal and taxation experts as channel partners whose services SME units could utilize. However, the most important thing is the client’s track record, the bank maintains. Oriental Bank of Commerce (OBC) is in the process of setting up a specialized cell for the SME sector. Apart from processing and imparting loans for this sector, the cell would carry out marketing activity and follow up loan cases for customers of SMEs. The cells would be set up at all the 29 OBC regional centers across the country. Though, these are recent initiative, almost all banks now have a special package for this sector. The foreign banks don’t want to be left behind either. Most of them want to target the neglected segment of potential customers as many of these businesses get only transactional banking services, because of their size and relatively low cash flow requirements. Typically, these are customers who do not have access to loans from private and nationalized banks based on their income. Standard Chartered Bank has taken a lead in this direction. It is offering this service through a separate business unit called Standard Chartered Investment & Loans Ltd (SCILL), currently present in 16 cities. The bank has drawn up a road map to extend SCILL’s network to 60 cities by the end of this fiscal. HSBC, which has become an aggressive player in the Indian market, is not far behind. HSBC is offering this mass-banking service through

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its 21 branches in 16 cities across the country. The minimum income level required for getting a loan from HSBC is just Rs 3,500 per month for salaried employees and Rs 10,000 per year for the self-employed. Despite its extensive research, Citibank is a later entrant in this business, and has announced its initiative only recently. Understandably, risk management for this sector is a huge issue with banks. CRISIL has stepped in to provide a rating service for the SME sector. According to this rating program, SMEs would be rated on a scale of one to eight, with scale one indicating the highest credit quality and the scale eight, hinting at default possibilities. The ratings assigned to SMEs would also function as a self-improvement tool for them. To top all initiatives, SBI, ICICI Bank and Standard Chartered Bank, have agreed to join hands with the Small Industries Development Bank of India (SIDBI) to float a rating agency for the SME segment. The rating agency, Small and Medium Enterprises Rating Agency (SMERA), will rate the company’s overall strength; unlike most rating agencies whose core business are to rate debt instruments. With planning, government encouragement and dedicated rating services, banks can tap the potential of this sector in the coming years.

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3.1 SME Exposure of Standard Chartered

The Indian banking sector may be focused on increasing its share in the retail banking space. But for Standard Chartered Bank, the future lies in the less glamorous SME (small and medium enterprise) segment.

After gaining a strong base in credit card and personal banking segment, the bank now plans to focus on the SME sector in the next couple of years and has even lined up a few innovative products. "Most Asian countries are dominated by SME businesses which account for 60-70 per cent of GDP" said Mike Denoma, group executive director (consumer banking) of Standard Chartered Bank. While he was unwilling to specify the bank's exact strategy, some of the products like cash management services and loan products are likely to be launched soon.

According to him, a focus on the SME segment would make a good business sense for the bank which has a strong clientele base of high net worth individuals (HNI). Denoma believes that with many of the HNIs being the chief executives of the small and medium sized enterprises, it would be easier for the bank to foray into the SME segment. Denoma believes that the new focus on SME segment besides retail banking could change a few things for StanChart which is increasingly finding India attractive. "We were never more excited about India earlier' says Denoma and adds that the next five years would be completely different from the past five years. In fact StanChart has identified India along with China as a key market for its future growth plans. What has added to StanChart's excitement is the fact that India would be ready with a credit bureau before the end of 2004. According to Denoma, that would change a few things in the pricing

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of products like credit cards and loan products as a good borrower would not be required to pay for the delinquencies of other borrowers. At present, a single interest rate is applicable for all borrowers irrespective of their creditworthiness.

3.2 FINANCING POLICY AT STANDARD CHARTERED BANK I. LOAN APPLICATION BY THE FIRM This is the very first step taken by the bank to approve any kind of credit facilities to the SMEs. The loan application covers various type of information about the enterprise which helps the bank to analyze whether they should grant the loan and the degree of risk associated with that loan. The various aspects covered here are: • Details of the enterprise :- The application form should contain various information about the enterprise such as Name of the firm, Registered Office, Administrative Office, Factory works, Godown, Branch Office, Constitution of the Firm(HUF/Sole/Partnership), Date and Place of Incorporation, Sector, Category (SSI/Medium/Large), main activity of the firm, name of Directors/Proprietor/Karta, Capital Structure of the firm along with list of major share holders, name & address of the guarantors, etc are to be provided, whether the borrower firm is insured with Export Credit Guarantee Corporation(ECGC). • Credit Facility: - Here the firm specifies the kind of credit it requires such as cash credit, term loan, packing credit, etc. and shows the calculation of the amount required. • Submission of Documents: - Along with the detailed information about the enterprise certain documents also needs to be submitted such as memorandum of association, articles of

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association, proof of collateral securities held, insurance papers of properties held, last two years audited financial statements along with projections for the next two years, information of credit facilities enjoyed from other banks, income tax return of the firm and Directors/Proprietor/Karta. II. ANALYSIS OF CREDIT APPLICATION BY STANDARD CHARTERED BANK After the application form along with the documents are received by the bank the credit manager first verifies the authenticity of the documents and starts analyzing the various financial statements and makes a report on the assessment of the Working Capital Requirement with the help of CMA data sheet, prepares a Credit Risk Rating, checks the past credit history of the firm and then finally arrives at a decision to grant the loan.

3.3 Preparation of Credit Monitoring Arrangement (CMA) For appraising the Working Capital requirement the borrower has to submit the financial data to the Bank in a format prescribed by RBI. This is known as the CMA format (Credit Monitoring Arrangement). There are total six forms to be filled up in an excel sheet according to the CMA format. These forms give the following details: FORM I: Here individual information in respect of each of the working capital credit facilities such as Cash Credit, packing credit, Bill purchased and discounted, Letter of Credit, Bank Guarantee, etc. is to be given. The details of credit facilities availed and deposit accounts maintained with other banks are also given. Along with this, the record of maximum and minimum utilization of these limits

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during the past 12 months is given. For renewal of credit facilities the existing limit along with the new limits requested are provided. FORM II: Details of Operating Statement for last two years audited figures, current year estimates and projections for next year are calculated. Here calculations for gross sales, net sales, cost of sales, operating profit, other non-operating income, total income and profit before tax is shown. FORM III: Here the Balance Sheet for last two years audited figures, current year estimates and projections for next year are analyzed. The categories of broad heads here are Current Liabilities, Term Liabilities, Net Worth, Total Liabilities, Current Assets, Fixed Assets, other Non-Current Assets, Total Assets, Tangible Net Worth and Net Working Capital. Current Liabilities include Short term borrowings from banks/others, sundry creditors, advance from customers, provisions, dividend payable, other statutory liabilities, other current liabilities and provisions. The total of all these items accounts for TOTAL CURRENT LIABILITIES (A). The term liabilities include debentures, preference shares, term loans, and other unsecured loans which totals to TOTAL TERM LIABILITIES (B). (A+B) is the TOTAL OUTSIDE LIABILITIES. The NET WORTH (C) includes share capital, general reserve, and profit and loss a/c. The total of (A+B+C) forms TOTAL LIABILITIES. Current Assets include cash/bank balance, investments (other than long term), receivables, stock, and other current assets. The total of CURRENT ASSETS, FIXED ASSETS AND NON-CURRENT ASSETS forms TOTAL ASSETS. Net Working Capital is the difference of total current assets and liabilities.

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FORM IV: Comparative statement of Current Assets and Current Liability for last two years audited figures, current year estimates and projections for next year. Also calculation for month’s consumption of raw materials, cost of production, and cost of sales, receivables, and purchases are shown. FORM V: Computation of Maximum Permissible Bank Finance for Working Capital Requirement for last two years audited figures, current year estimates and projections for next year. FORM VI: Details of funds flow statement for last two years audited figures, current year estimates and projections for next year are calculated. Here increase/decrease in current assets and liabilities are shown in details. Along with the above forms a statement of Analytical and Comparative Ratios is also submitted. These data are also last two years audited figures, current year estimates and projections for next year are calculated. The various ratios include current ratio, Debt/Equity ratio, Bank borrowing/Total outside liabilities, net sales/Total tangible assets, etc. Also stock of raw material in terms of No. of months consumption, WIP in terms of No. of months cost of production, FG in terms of No. of months cost of sales, Sundry debtors in terms of No. of months sales are also given.

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3.4 Methods of Calculating Working Capital Requirement As per the recommendations of Tandon Committee, the corporate should be discourage from accumulating too much of stocks of current assets and should move towards very lean inventories and receivable levels. The committee even suggested the maximum levels of Raw Material, Stock-in-process and Finished Goods which a corporate opening in an industry should be allowed to accumulate these levels were termed as inventory and receivable norms. Depending on the size of credit required, the funding of these current assets (Working needs) of the corporate could be met by one of the following methods: • First Method of Lending: Banks can work out working capital gap, i.e. total current assets less current liabilities other than bank borrowings and finance a maximum of 75 per cent of the gap (called Maximum Permissible Bank Finance or MPBF); the balance to come out of long-term funds, i.e., owned funds and term borrowings. This approach was considered suitable only for very small borrowers i.e. where the requirements of credit were less than Rs.10 lacks. • Second Method of Lending: Under this method, it was thought that the borrower should provide for a minimum of 25% of total current assets out of long term funds i.e., owned funds plus term borrowing. A certain level of credit for purchase and other current liabilities will be available to fund the buildup of current assets and the bank will provide the balance (MPBF). Consequently total current liabilities inclusive of bank borrowing could not exceed 75% of current assets. RBI stipulated that the working capital needs of all borrowers enjoying fund based credit fund based credit facilities of more than Rs.10 lacks should be appraise(Calculate) under this method.

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• Third Method of Lending: Under this method, the borrower’s contribution from long term funds will be to the extent of entire CORE CURRENT ASSETS, which has been defined by the Study Group as representing the absolute minimum level of raw material, process stock, finished goods, and stores which are in the pipeline to ensure continuity of production and a minimum of 25% of the balance current assets should be finance out of long term funds plus term borrowings. However this method was not accepted for implementation and hence is only for academic interest.

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Method 1 Method 2 Method 3 (Rs.) (Rs.) (Rs.) A. Current Asset 25,00,000 25,00,000 25,00,000 B. Current liabilities 22,00,000 15,00,000 17,00,000 C. Working Capital (A-B) 300,000 10,00,000 800,000 D. Less 25% of 3,00,000 75,000 __________ _________ E. Less 25% of Current Assets (25, 00,000*25%) ___________ 625,000 _________ F. Core Current Asset ____________ ___________ 100,000 G. Real Asset (A-F) ____________ ____________ 24,00,000 H. 25% of G ____________ ____________ 600,000 I. Current Liabilities ____________ ____________ 17,00,000 J. Maximum Permissible Bank Finance Method 1 (C-D) 225,000 ____________ _____________ Method 2 (C-E) ___________ 375,000 _____________ Method 3 (G-H-I) __________ ___________ 100,000

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The process of sanctioning of loan can be better understood in 10 different steps which start as follows: 1. Origin 2. Evaluation 3. Negotiation 4. Approval 5. Documentation 6. Disbursement 7. Portfolio Management 8. Administration 9. Orderly Payment 10. Unforeseen, Workout & Re-Payment The process starts with Origin where client referrals, prospect discovery and outside referrals take place. After that the next step is Evaluation which is the most important step and almost half of sanctioning process is completed in this step. The step consist of the loan, the type of business that the customer engage with, management, figure and risk rating to determine the credit worthiness of the client and to arrive at the lending rate. The rest of the steps take place in the given sequence as shown in Fig 1. The process can be easily understood with the help of this diagram:

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3.5 Fig. 1:- Process of sanctioning loan

Origin Client Request Prospect Discovery

Evaluation Purpose Management Business Figures Risk Rating

Negotiation Tenor Security Repayment Other

Approval Sanctioning Officer

Documentation Legal drawing Document Review Collateral Checks

Disbursement Notes valid Document properly Executed Purpose of finance To be executed Portfolio Management

Administration Figures Collateral Payment Credit review

Orderly Repayment

Unforeseen

Workout Early Recognition Restructuring Management of plans Legal Efforts Re-Organization Term of Recognition

Re-payment Principal in full Interest in full

Re-payment Principal in full Interest in full

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4. TOP FIVE PLAYERS IN SILIGURI MARKET (SEGMENTWISE)

• Actually SME is looking for short & medium type business. This SME is providing a simple way to develop the businesses. Every business men are getting these opportunities through Standard chartered bank. This bank provides CC with less interest than any other banks. Under this project the following 20 segments are functioning in this bank.

1. Automobile 2 wheeler

2. Automobile 4 wheeler

3. Foods grains

4. Traders of Oil

5. Traders of Sanitary items

6. Traders of Electrical

7. Retailer of Garments

8. Traders of Pulses

9. Traders of Hardware items (Wire, Wire nettings, Building material)

10. Traders of Hardware Iron & Steel

11. Trader of Cement

12. Trader of Pharmaceuticals

13. Retailers of Electronics

14. Traders of jwellery

15. Trader of Sugar

16. Trader of Tea

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17. Trader of Marbles

• The main target of the Standard Chartered bank is to provide CC (Cash Credit) with a less interest. The interest rates of this bank are 11.25%-11.50%. The cash credit is a short-term cash loan to a company. Stan chart provides this type of funding after getting proper security to secure the loan. If any business man to follow the norms and securities of the bank then he can continue his transaction with the bank.

• According to needs and demands of the Cash Credit in Siliguri market questionnaires are required. This questionnaire is detailed with some basic questions i.e. Customer name, contact number, sales, stock, existing bank etc. Sometimes some businessmen don’t want to give any information about their business because it’s totally confidential but a prefect marketing approach can help to gain this barrier. This approach should be politeness and meaningful so that a customer can consider his merit of profitable business.

• Objective of the project: The main object of this project was found out the top five players from this segment with respect of their turnover. I surveyed the Siliguri market and it was found that maximum businessman’s turnover was above 5 crore.

o Below I have given my experience which I have got from market.

1. Auto Dealer(2 wheeler) of siliguri:

So many small and medium 2wheeler auto dealers are situated in Siliguri. These auto dealers are doing their business in siliguri market with high or medium turnover.

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These auto dealers are like i) Hero Honda (Beekay Auto Pvt. Ltd) ii) Yamaha (National motors) iii) TVS motor (Annapurna house) iv) Bajaj (Siliguri Auto works pvt. Ltd) v) Royal Enfield (Siliguri Distributors) vi) Kinetic vii) LML

Basically the segment of Standard Chartered Bank is to find out top five players in siliguri market. After survey of 2 wheeler auto dealers in siliguri market those auto dealers are playing with high value of turnover in the 2 wheeler sectors, they are i) Beekay auto pvt. Ltd. ii) Annapurna house iii) Siliguri auto works pvt. Ltd. iv) National motors v) Siliguri distributor.

These auto dealers are doing their business with the help of different banks like SBI, HDFC, Union Bank, AXIS Bank, Canara Bank, PNB, Karnataka Bank etc.

Mainly they have chosen their existing bank for their self satisfaction. Some banks do not provide “CC” to the auto dealers because the criteria are not fulfilled by the customer. The criteria should match with the banker’s requirement.

As examples, Hero Honda (Beekay auto pvt Ltd) has 15 crore turnover p.a. and following CC form SBI with 12.5% interest because the organization is getting better facilities from SBI.

Bajaj (Siliguri auto works pvt ltd) has 13 crore turnover p.a. and their existing bankers are SBI, HDFC and using CC from SBI with 12.25% interest because they are getting good facility.

TVS (Annapurna house) has 12 crore turnover p.a. and they are using CC from Canara Bank because they enjoying better facilities with 12.5% interest. Their CC limit is 1 crore.

Yamaha (National motors) has 8 crore turnover p.a and they are satisfied by HDFC bank at 12.25% interest because they believe to do banking with good relationship. So Yamaha get good relation with HDFC.

Royal Enfield (Siliguri Distributors) has 6 crore turnover p.a. and they are enjoying their banking with Karnataka Bank and using current account.

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If the top five players of two wheeler auto dealers are shown in a graph then it will show the exact position among them in siliguri market.

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Annapurnahouse

Beekay autopvt.ltd

NationalMotors

Siliguri autoworkspvt.ltd

Siliguridistributor

2. Auto dealer(4wheeler) of siliguri:

There are so many 4wheeler auto dealers in siliguri. They are doing their business with their long year experience and with their relationship of banks. The banks are all time helping them to do their business. The business men are getting different types of facility from banks i.e. working capital loan, term loan, Cash Credit etc. Some business man doesn’t want to change their bank for their long year relation.

Their existing banks are SBI, HDFC, AXIS, ICICI, PNB etc. Maximum dealers are doing their business with SBI because it is the oldest Govt. bank in siliguri.

Turnover p.a (in crore)

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The survey report has detailed about the top five 4wheeler auto dealers in siliguri. This auto dealer has positioned on the basis of their turnover.

These 4wheeler auto dealers are Kaysons Motors, Bajla motors Pvt. Ltd, Topsel Toyota, Beekay Auto, Durga Hyundai, Ravi Auto (Mahindra) etc.

These top five auto dealers (4wheeler) are banking with SBI, ICICI, AXIS, and HDFC.

Beekay Auto (Maruti Suzuki) is the top player in this segment because Maruti Suzuki has great demand in this siliguri market. Their products are Alto, ZenEstilo, Versa, Ritz, Aster etc. Their turnover is 12 crore and they are using “CC” from SBI with 12.5% interest. They believe that SBI is Govt. bank and it has more secured than private bank.

Bajla motors pvt. Ltd (Tata) is also reputed organization in siliguri. Their turnover is 8 crore and they are also using “CC” from ICICI bank with 12% interest.

Kaysons House (Chevrolet) is 6 years old organization and its turnover is 4.2 crore. Their existing banks are Axis, SBI and ICICI. They are using “CC” from SBI with 11.5% interest.

Ravi Auto (Mahindra) has 7 crore turnover and their existing bank is HDFC. They follow “CC” of this bank with 12% interest. They have chosen this bank for their long year relationship.

Durga Hyundai (Hyundai) has 5 crore turnover and their existing banks are HDFC, ICICI. They have only normal current account.

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02468

10121416

Bajlamotors pvt

ltd

BeekayAuto

DurgaHyundai

KaysonsHouse

Ravi Auto

Turnover p.a ( in crore)

3. Traders of food grains:

There are so many food grains dealers in siliguri market. Maximum business men are running their business from generation with their own experience and also they are very qualified person. Their business strategies are totally different with others. Maximum business men are following Govt. bank because it is more secure than private bank. Actually this type of dealers follows the other dealer that how they are dealing their business and how they are benefited by bank etc. At that time of survey so many business men are not like to share their turnover, their existing bank, their stock level etc. Because they think that it can be hamper their business indirectly.

After survey I have found some top food grain players in siliguri market and within this player I have located top five players. They are PP Commercial, Motikar trading co., S.K enterprise, Mangal chand Anup kr., Motilal Kisan lal.

PP commercial is situated in siliguri nayabazar near M.R Compound. They follow CC from SBI with 12% interest. They follow SBI for their long year relationship.

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Though they are dealing with other private bank yet they follow SBI only for their business safety. Their turnover is 8 crore.

Motikar trading co. has good business in siliguri market. Their turnover is 5 crore and their existing bank is SBI. They follow CC at 12 % interest.

Mangal chand Anup kr has 6 crore turnover. They follow CC from PNB with 11.50% interest. This organization believes on cash transaction and they have minimum creditors account in their balance sheet.

S.k enterprise has 7 crore turnover. Their existing bank is SBI and they follow CC at 12% interest. This organization is very old organization and the owner of this organization is very educated. His business handling ability is very good and I can say he is perfect gentle man.

Motilal Kisan lal has 4 crore turnover. Their existing bank is Standard Chartered Bank. They follow CC at 11.25% interest. They are satisfied with their banking because they are more facility than the other banks.

0123456789

10

Motikartrading Co.

Mangal ChandAnup kumar

S.K Enterprise Motilal KishanLal

PP commerce

Turnover p.a (in Crore)

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4. Trader of Oil:

This type of business is situated in siliguri’s Nayabazar. They all are very experience person. They have been doing their business for so many years. Maximum dealers prefer SBI for their banking transaction and beside this bank they also prefer HDFC, ICICI, Union Bank, Bank of Baroda etc. Though in this segment every business is touching the position of crore but after surveys I have found some top class dealers at nayabazar.

They are G.Corporation, Chandan Mal Kisan Lal Trader, Kalika & Sanghai Distributor, Mahendra Munna Distributor, Biresh lal Jagdish Prasad. They all are top class business man in this segment. Their oil products are Ruchi, Tulsi, Emmami, Fortune etc.

G.Corporation is doing their banking transaction with SBI and HDFC. They also follow CC (Cash Credit) of SBI at 11.5% interest. Their turnover is 15 crore. I have talked with Jiban Krishna Roy, the owner of this business and a very experienced person. He shared me about his business’s turnover, existing banks and vintage of this business. The vintage of this business is above 15 years.

Kalika & Sanghai Distributor is very reputed business man at Nayabazar and they have two firms, first is Kalika Distributor and second Sanghai Distributor. The owner of this firm is Naresh Kr. Sanghai. Their turnover is 8 crore and they have 70 lakh CC in HDFC Bank at 12% interest. But they are not satisfied with HDFC’s customer service. When I informed some great offer of Standard Chartered Bank then he want to shift his bank because Standard Chartered interest is CC interest rate is 11.25%. I have also arranged a meeting with my senior for their bank shifting.

Mahendra & Munna Distributor has 7 crore turnover and they follow CC HDFC Bank at 11.75% interest. The Owner of this organization is OM

Prakash Agarwall is a very good business man and also very experienced person.

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Chandan Mal kishan Lal Trader has 10 crore turnover and the vintage of this business is 20 year. They have the dealership of Tulshi oil and they follow CC with SBI at 10.68% interest. Their CC limit is 94 lakh.

Biresh Lal Jagdish Prasad has 7 crore turnover and they follow CC with Bank Baroda at 12.25% interest. The owner of this business is Nand kishore Agarwall. He will be also shifting his bank with our bank because he is not satisfied with Bank of Baroda customer service

02468

10121416

G.Corporation

Kalika &Sanghai

Distributor

Chand MalTrader

Mahendra &Munna

Biresh LalJagdishPrasad


5. Trader of Sanitary Items:

This type of business is situated in siliguri’s Church road. They all are very experience person. They have been doing their business for so many years. Maximum dealers prefer SBI for their banking transaction and beside this bank they also prefer HDFC, ICICI, Union Bank, Bank of Baroda etc. Though in this segment every business is touching the position of crore but after surveys I have found some top class dealers at Church road.

In this segment the top five players are Siliguri Sanjay Traders, R.K Sanitation, Classic Sanitation, Sushil Sanitary Mart, and Shree Omkar Trader.

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Siliguri Sanjay Trader is doing their banking transaction with HDFC. They also follow CC (Cash Credit) of SBI at 11.5% interest. Their turnover is 6 crore. I have talked with Bimal Agarwal, the owner of this business and a very experienced person. He shared me about his business’s turnover, existing banks and vintage of this business. The vintage of this business is above 15 years.

R.K Sanitation is very reputed business man at Church road and they have two firms, first is R.K Sanitation. The owner of this firm is R.K Agarwall. Their turnover is 4 crore and they have 30 lakh CC in PNB Bank at 12% interest.

Classic Sanitation Distributor has 2 crore turnover and they follow CC SBI Bank at 12% interest. The Owner of this organization is P.K Agarwall a very good business man and also very experienced person.

Sushil Sanitary Mart Trader has 3 crore turnover and the vintage of this business is 20 year. Their bank is IDBI bank and they don’t follow any CC but now they want to create it in Standard Chartered Bank. They are interest for 50 lacks limit CC.

Shree Omkar Trader has 1 crore turnover and they follow CC of Canara Bank at 12.25% interest. There CC limit is 10 Lacks and the owner of this business is Navin Agarwall.

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Siliguri SanjayTraders

Shree OmkarTrader

Sushil SanitaryMart

Classic Sanitation R.K Sanitation

Turnover p.a (in Crore)

6. Trader of Electricals (wholesaler):

There are so many Electricals dealers in siliguri market. Maximum business men are running their business from generation with their own experience and also they are very qualified person. Maximum business men are following Govt. bank because it is more secure than private bank. Actually this type of dealers follows the other dealer that how they are dealing their business and how they are benefited by bank etc. At that time of survey so many business men are not like to share their turnover, their existing bank, their stock level etc. Because they think that it can be hamper their business indirectly. There are so many electrical dealers in siliguri market and difficultly it was founded top five players in this market.

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So these players are Shree Shyam Supplier, Jyoti Enterprise, Mahavir Electricals, Bharti Enterprise and Sanjay Electrics.

Shree Shyam Supplier is doing their banking transaction with SCB. They also follow CC (Cash Credit) of SCB at 11.25% interest. Their turnover is 12 crore. I have talked with Manish Golyan, a very experienced person. He shared me about his business’s turnover, existing banks and vintage of this business. The vintage of this business is above 15 years.

Jyoti Enterprise is very reputed business man at Church road.The owner of this firm is OM Prakash Agarwall. Their turnover is 9 crore and they have 2 crore CC limit in SCB at 11.25% interest.

Mahavir Electricals Distributor has 5crore turnover and they follow CC SCB at 11.25% interest. Their CC limit is 1 crore. The Owner of this organization is Dhiraj Golyan a very good business man and also very experienced person.

Bharti Enterprise has 2 crore turnover and the vintage of this business is 20 year. Their bank is PNB and they follow CC in this bank.

Sanjay Elecricals has 3 crore turnover and they follow CC of Bank of Baroda at 12.25% interest. There CC limit is 50 Lacks and the owner of this business is P.K Agarwall.

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Shree ShyamSupplier

Mahavirelectricals

JyotiElectricals

BhartiElectricals

SanjayElectricals


7. Retailer of Garments:

There are so many Garments retailer in siliguri. They all very habituated and highly educated person. Maximum business men are following Govt. bank because it is more secure than private bank. Actually this type of dealers follows the other dealer that how they are controlling their business and how they are benefited by bank etc. But their turnover is not very high as like other segment. Maximum business men are not follow CC, they use only normal current account.

The top five players are Agarwal Brothers, Rony’s, Guru Nanak Garments, JP Brothers, and Modi Garments.

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Agarwal Brothers is situated at gouri sankar market .The owner of this firm is S.K Agarwall. Their turnover is 1 crore and their bank name is Bank of Baroda.

Rony’s is situated at gouri sankar market .The owner of this firm is Manab Dutta. Their turnover is 48 lacks and their bank name is Grameen Bank. They follow CC at 5 lack limit.

Guru Nanak is situated at gouri sankar market .The owner of this firm is Jashbir Singh (Sonu). Their turnover is 40 lacks and their bank name is ICICI Bank.

JP Brothers is situated at gouri sankar market. Their turnover is 50 lacks and their bank name is ICICI and Axis Bank.

Modi Garments is situated at gouri sankar market .Their turnover is 30 lacks and their bank name is HDFC, AXIS Bank.

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AgarwalBrothers

Rony's Guru NanakGarments

JP Brothers ModiGarments


8. Traders of Pulses:

All this dealers are situated in siliguri at nayabazar and they are very knowledgeable person. They know how to control business and customer. After my survey, I have found that maximum business men are depending on Govt.

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bank and they does not trust private bank. Though the private banks are giving maximum facility than Govt. bank yet they believe on Govt. bank. I have found some five players at nayabazar. They are Shree Bhawani Enterprises, PP Commercial, Sanjay kr. Rajib kr., Mahendra & Munna Distributor, Binod kr & Monoj kr.

PP commercial is situated in siliguri nayabazar near M.R Compound. They follow CC from SBI with 12% interest. They follow SBI for their long year relationship. Though they are dealing with other private bank yet they follow SBI only for their business safety. Their turnover is 8 crore.

Mahendra & Munna Distributor has 7 crore turnover and they follow CC HDFC Bank at 11.75% interest. The Owner of this organization is OM Prakash Agarwall a very good business man and also very experienced person.

Binod kr. & Monoj kr. has 6 crore turnover and they follow CC in HDFC Bank at 11.75% interest. The Owner of this organization is Ajay Agarwall.

Shree Bhawani Enterprise is situated in siliguri at nayabazar. They follow CC from INDUS IND BANK with 12% interest. Though they are dealing with other private bank yet they follow INDUS IND BANK only for their business releation. Their turnover is 25 crore. Sanjay kr. & Rajib kr. has 5 crore turnover and they follow CC in SBI at 12.5% interest.

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ShreeBhawani

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Sanjay kr.Rajib Kr.

Mahendra &Munna

Distributor

Binod kr.&Monoj kr.


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9. Trader of Hardware Items(Wire, Wire nettings, Building Material)

All this dealers are situated in siliguri and they are very knowledgeable person. They know how to control business and customer. After my survey, I have found that maximum business men are depending on Govt. bank and they does not trust private bank. Though the private banks are giving maximum facility than Govt. bank yet they believe on Govt. bank because their money is safe in Govt. bank. I have found top five hardware dealers in this market. They are Siliguri Balaji Stores, Mahavir Traders, Sinhal Brothers & Co., Durga Iron Steel and Shyam Hardware Store.

Siliguri Blaji Store has 4 crore turnover and they follow CC in Union Bank at 12% interest. The Owner of this organization is Bijay Kr. Agarwall.

Mahavir Traders has 5 crore turnover and they follow CC in SBI at 11.75% interest. The Owner of this organization is Chandan Mal Agarwall. They also do their business with Canara Bank.

Sinhal Brothers & Co. has 6 crore turnover and they follow CC in SBI at 11.5% interest.

Durga Iron Steel has 3 crore turnover and they follow CC in HDFC Bank at 12% interest. The Owner of this organization is Sankar Lal Agarwall.

Shyam Hardware Store has 4 crore turnover and they follow CC in SBI at 11.75% interest. The Owner of this organization is Pradip Agarwall.

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Siliguri BalajiStore

MahavirTrader

SinhalBrothers &

Co.

Durga IronSteel

ShyamHardware

Store


10. Trader of Hardware Iron & Steel:

All this dealers are situated in siliguri and they are very knowledgeable person. They know how to control business and customer. After my survey, I have found that maximum business men are depending on Govt. bank and they does not trust private bank. Though the private banks are giving maximum facility than Govt. bank yet they believe on Govt. bank. I have found top five hardware dealers in this market. They are Siliguri Builders (P) Ltd, Bajrang Trading Co., Ganesh Steel Syndicate, Kundu Complex and Durga Iron Store.

Siliguri Builder has 100 crore turnover and they follow CC in SBI at 12% interest. The Owner of this organization is Bikash Agarwall.

Bajrang Trading Co. has 3 crore turnover and they follow CC in OBC at 12% interest. The Owner of this organization is Mr.P.K Agarwall. Their CC limit is 30 lacks.

Ganesh Steel Syndicate has 5 crore turnover and they follow CC in SBI at 12% interest. The owner of this organization is Sanjib Agarwal.

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Kundu Complex has 5 crore turnover and they follow CC in HDFC Bank at 11.75% interest. The Owner of this organization is Samir Kundu.

Durga Iron Steel has 3 crore turnover and they follow CC in HDFC Bank at 12% interest. The Owner of this organization is Sankar Lal Agarwall.

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Ganesh SteelSyndicate

KunduComplex

Durga IronSteel


11. Trader of Cement:

All this dealers are situated in siliguri and they are very knowledgeable person. They know how to control business and customer. I have found top four hardware dealers in this market. They are Sunrise Builders, Shiv Builders, M.K Trading Co., Builders Steel Center.

Sunrise Builders has 60 crore turnover and they follow CC in Union Bank at 12% interest. The Owner of this organization is Rajesh Agarwall.

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Shiv Builders has 25 crore turnover and they follow CC in SBI at 12.5% interest. The Owner of this organization is Susil Agarwall.

M.K Trading Co. has 10 crore turnover and they follow CC in IDBI Bank at 12% interest. The Owner of this organization is Mahesh Bhansali.

Builders Steel Center has 9 crore turnover and they follow CC in SBI at 12% interest. The Owner of this organization is B.P Agarwall.

BB Agarwal & Sons has 11 crore turnover and they follow CC in Indusind Bank at 12% interest.

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Sunrise Builder Shiv Builders M.K Trading Co. Builders SteelCenter

BB Agarwal & Sons


12. Trader of Pharmaceuticals (Wholesaler):

All this dealers are situated in siliguri at Khudiram Pally. After survey I have found top five players of pharmaceuticals. They are Sunrise Distribution, Gunjan Distributors, Anand Pharmaceuticals, P.C distributor, Bikash Medical, Shree Shyam Pharmaceuticals. Sunrise Distribution has 2 crore turnover and they follow normal current account Bank of Baroda. The Owner of this organization is Suresh Kr. Singla. Gunjan Distribution has 1 crore turnover and they follow Current account PNB. The Owner of this organization is Prasanjeet. Anand Pharmaceuticals has 50 lakh turnover and they follow Current in Union Bank. The Owner of this organization is Susil Agarwall. P.C Distributors has 25 lakh turnover and they follow normal current account.

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Bikash Medical has 20 lakh turnover and they also follow current account in SBI.

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SunriseDistribution

GunjanDistribution

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Bikash Medical


13. Retailer of Electronics:

I have found five electronics retailers in this siliguri market and like others they also follow Govt.Bank. These players are Sony Center, Millennium Info system, Computer land, Mahavir Stores and Sri Krishna Distributor.

Sony Center has 1 crore turnover and they follow normal current account in Bank of Baroda.

Millennium Info system has 2 crore turnover and they follow Current account in Bank of India. I have met with Suman Banik and he has given me this information.

Mahavir Stores has 3 crore turnover and they follow CC in PNB. I have met with Pradip Agarwal and he has given me this information about their business.

Sri Krishna Distributor has 3 crore turnover and they follow normal current account in Syndicate Bank. The CC limit of this organization is 70 lakh.

Computer Land has 2 crore turnover and they follow current account in Bank of India.

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0

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1.5

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2.5

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Sony Center Millennium InfoSystem

Mahavir Stores Sri KrishnaDistributor

Computer Land


14. Trader of Jwellery:

Maximum top class dealers are situated in siliguri at Hill Curt road. After survey I have found top five players of Jwellery. They are Bidhan Jwellery, Diamond queen Jwellery, Senco Gold, Guinea House, Das Jwellery.

Bidhan Jwellery has 6 crore turnover and they follow CC account in SBI. The CC interest rate is 13%.

Gunjan Distribution has 3 crore turnover and they follow CC account SBI. I talked with Ajay Das; he is one of member in this organization.

Diamond Queen has 5 crore turnover and they follow CC in SBI. The Owner of this organization is Pawan kr. Sinhal.

Senco Gold has 4 crore turnover and they follow CC account in ICICI bank.

Das Jwellery has 2 crore turnover and they also follow current account in SBI.

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Bidhan Jwellery Gunjan Distribution Diamond Queen Senco Gold Das Jwellery


15. Trader of Sugar:

All this dealers are situated in siliguri at Nayabazar road. After survey I have found top five players of Sugar dealer. They are Bengal Agencies, PP Commercial, Sanjay kr.Rajib kr., S.K Enterprise and Seven days foods (P) Ltd.

Bengal Agencies has 100 crore turnover and they follow CC account in SBI. The CC interest rate is 11.5%. I have met with Kisan Agarwal and he has given me this information.

PP Commercial has 18 crore turnover and they follow CC account SBI. I have met with Rajesh Agarwal; he is one of the members of this organization. They also follow HDFC and ICICI bank.

S.K Enterprise has 3 crore turnover and they follow CC in SBI.

Sanjay kr. Rajib kr. has 5 crore turnover and they follow current account in SBI. I have met with Rajib Kr.

Seven days foods (P) Ltd has 4 crore turnover and they follow normal current account in HDFC.

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100 18

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BengalAgencies

PPCommercial

S.kEnterprise

Sanjay Kr.Rajib kr.

Seven daysfoods (P)

Ltd.


16. Trader of Tea:

Siliguri is very famous for Tea and for me it is very easy to find top five players. So these players are Sri Rama Tea Manufacturing Co. (P) Ltd., Rai & Co, Putinbaree Tea Association Ltd, Avinash Tea Co. and Dewkinandan shivshanker.

Sri Rama Tea Manufacturing Co. has 20 crore turnover and they follow CC account in SBI. The CC interest rate is 11.5%. I have met with Babulal Agarwal and he has given me this information.

Rai & Co. has 5 crore turnover and they follow CC account in United Bank. I have met with S.Roy; he is one of the members of this organization.

Putinbaree Tea Association Ltd. has 3 crore turnover and they follow CC in SBI.

Chandanmal Binod Kr. traders has 25 crore turnover and they follow CC in UCO Bank. I have met with Rambilash Gloyel.

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Avinash Tea Co. has 6 crore turnover and they follow CC account in SBI and their CC limit is 31 lakh.

0

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Shree Rama TeaManufaturing Co.

Rai & Co. Putinbaree Chandanmal BinodKr.

Avinash Teac

17. Trader of Marbles:

There so many marbles dealers in siliguri and they are Ridhi Sidhi Marbles, Haryana Marbles, Marbles House, Ganpati Marbles, and Bhawani Marble & Sanitation.

Ridhi Sidhi Marbles has 20 crore turnover and they follow CC account in IDBI. The CC interest rate is 11.5%. I have met with Ram Agarwal and he has given me this information.

Haryana Marbles has 5 crore turnover and they follow CC account in SBI.

Marbles House has 3 crore turnover and they follow CC in SBI. The owner of the organization is Dalon Mondol.

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Ganpati Marbles traders has 3 crore turnover and they follow CC in SBI. I have met with Pramod Maiya.

Bhawani Marble & Sanitation has 2 crore turnover and they follow CC account in SBI. The owner of the organization is Ashok Goel.

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Ridhi SidhMarbles

HaryanaMarbles

MarblesHouse

GanpatiMarbles

BhawaniMarble &

Sanitation


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4.1 Questionnaire

1. Name of the Organization: 2. Address: ………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. 3. Type of business: ……………………………………………………………………………. 4. Vintage of the business: ………………………………………………………………….. 5. Name of the person you are speaking: 6. Designation: a) Manager b) Floor manager c) Partner d) Proprietor e) Other 7. Contact no: 8. Level of stock: a) Below 10 lacks b)11-30 lacks c) 31-50 lacks d) 51 lacks-1 crore e) above 1 crore 9. Paid stock: a) Below 10 lacks b) 11-30 lacks c) 31-50 lacks d) 51 lacks-1 crore e) above 1 crore

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10. Debtors level: a) Below 20 lacks b) 20-50 lacks c) 50-80 lacks d) Above 1 crore 11. Debtors days: a) Within 30 days b) Within 2-3 months c) Within 4-6 months d) above 6 months 12. Turnover (p.a): a) Below 50 lacks b) 50 lacks-1 crore c) 1 crore-5 crore d) Above 5 crore 13. Creditors level: a) Below 1 lack b) 2-5 lacks c) 6-10 lacks d) Above 10 lacks 14. Existing bankers: a) SBI b) Standard Chartered c) ICICI Bank d) HDFC e) AXIS Bank f) Others 15. In which bank are you operating your current account? ……………………………………………………………………………………………….. …………………………………………………………..

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16. Is it a working capital a/c or a normal current a/c? ……………………………………………………………………….. 17. What exactly are you looking for in your bank? …………………………………………………………………………………………………. …………………………………………………………………………………………………. ……………………… 18. Do you think that your bank is providing quality customer care services? a) Yes b) No 19. Your expectations from SCB? ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. Date.

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4.2 LIST OF SMEs VISITED

TRADER OF HARDWARE IRON & STEEL

Sl No. Name Contact Person Address & Phone No.

Present Bankers Turnover

1 Siliguri Builders Pvt. Ltd. Bikash Agarwal

429/354 Sevoke Road,Sky Star Building,Siliguri,Ph No.9232749000 SBI/HDFC 100 crore

2 Ganesh Steel Syndicate Sanjib Agarwal

2.5 Mile,Sevoke Road,Slg,Ph no.9832060471 SBI 5 crore

3 Kundu Complex Samir Kundu 2nd Mile,Sevoke Road,SLG,Ph no.9434049281

SBI,HDFC, Axis 5 Crore

4 Bajrang Trading CO. Mr.P. K Agarwal Sevoke Road,SLG,Ph no.9832021090 OBC 3 crore

5 Durga Iron Stotre Sankar Lal Agarwal Sevoke Road,SLG-1,Ph no.2777512 HDFC 3 crore

TRADER OF CEMENT Sl

No. Name Contact Person Address & Phone No. Present Bankers Turnover

1 Sunrise Builders Rajesh Agarwal 3rd mile Infront of Sonamotor,Sevoke Road,SLG,Ph no.9434045411 Union Bank 60 Crore

2 Shiv Builders Susil Agarwal Burdwan Road,SLG,PH no.9434045148 SBI 25 crore

3 M.K.Trading Co. Mahesh Bhansali 2nd mile,Sevoke Road.Ph no.9434044691 IDBI 10 Crore

4 Builders Steel Center(Ultra Tech) B.P Agarwal Sevoke Road,SLG,Ph no.2777553 SBI 9 crore

5 BB Agarwal & Sons KC Dey Road,Ph no. 2430732 Indusind Bank 11 Crore

6 TRADER OF PHARMACEUTICALS (WHOLESALER) Sl


1 Sunrise Distribution Suresh Kr. Singla Khudiram Pally Bank Of Baroda 2 CRORE

2 Gunjan Distributors Prasanjeet S.B road(khudiram Pally) PNB 1 CRORE

3 Anand Pharmaceuticals Arup Das Khudiram Plalli ,Ph no. 2532396 Union Bank 50 lakh

4 P.c Distributor Khudiram Plalli SBI 25 lakh 5 Bikash Medical Bikash Kr. Khudiram Pally,Ph no.9832356010 SBI 20 lakh 6 B.R Distributers Khudiram Pally,Ph no.2435307 SBI 15 lakh

7 Shree Shyam Pharmaceuticals M.L Gupta

S.B road(khudiram Pally),ph no.9832066171 SBI 19 lakh

8 Tirupati Enterprise Khudiram Pally SBI 10 lakh

9 Bharat Drug Distributor Sandip Paul Khudiram Pally,ph no.2592920 SBI 18 lakh

TRADER OF ELECTRICALS (WHOLESALER ) Sl


1 Shree Shyam Supplier Manish Golyan Sevoke Road,siliguri SCB 12 crore

2 Shyam Enterprise Pankaj Agarwal Sevoke Road,siliguri,Ph no.9434877251

Oriented Bnak of cmmerce 1 Crore

3 Maheswari Electrics P.K Maheswari Sevoke Road,Siliguri,Ph no.2777557 Canara Bank 2 Crore

70

4 R.K Electronics Binek Agarwal Sevoke Road,Siligri,Ph no. 9832071000

Canara Bank 2 Crore

5 Bharti Enterprise Babulal Garg Sevoke Road,Siliguri,Ph no.9832356475 SBI 5 Crore

6 Mahabir Stores Pradip Agarwal Sevoke Road,Siliguri,Ph no.9932210531 PNB 3 Crore

7 Mahabir Electricals Dhiraj Golyan Sevoke Road,Siligri,Ph no.9932018834 SBI/SCB 5 Crore

8 Jyoti Enterprise OM Prakash Agarwal Sevoke Road,SLG,PH No.9434082373 SCB 9 Crore

9 Atlas Copco N.K agarwal Gurudware Building,Sevoke ROAD,SLG,Ph no.2431297 SBI 4 Crore

10 Bharat Electricals Subhas Agarwal Sevoke Road,SLG,Ph no.2777491 PNB 2 Crore

11 Sri Krishna Distributor Ronit Agarwal Nayabazar,SLG,Ph no.2503117 Syndicate Bank 3 Crore

12 Sanjay Electricals P.K Agarwal Sevoke Road,SLG, Ph no.2533152 BOI 3 Crore

RETAILER OF GARMENTS Sl


1 Agarwal Brothers S.K Agarwala Seth Srilal Market,SLG,Ph no.2530348 Bank of Baroda 1 crore

2 Sachin Sourav Retails G.Agarwal H.C Road,SLG,Ph no.6459401

HDFC,Bank of india50 akh 30 lakh

3 Rony's Manab Dutta Gouri Sankar Market,SLG,Bidhan Road,SLG,Ph no.2536410

Grameen Bank 48 lakh

4 G.M. Dresses Suman Gouri Sankar Market,SLG,Bidhan Road,SLG,Ph no.2537165

ICICI Bank,Axis Bank 20 lakh

5 Guru Nanak Garments

Jasbir Singh(Sonu)

Gouri Sankar Market,SLG,Bidhan Road,SLG,Ph no.9832328008 Union Bank 40 lakh

6 Pradeep Trading Pradeep Gouri Sankar Market,SLG,Bidhan Road,SLG,Ph no.9832317075 ICICI 24 lakh

7 Kamal Hosiery P.C Sharma Gouri Sankar Market,SLG,Bidhan Road,SLG,PH no.9434188388 IDBI 20 lakh

8 J.P Brothers Gouri Sankar Market,SLG,Bidhan Road,SLG ICICI 50 lakh

9 Modi Garment Gouri Sankar Market,SLG,Bidhan Road,SLG HDFC,Axis 30 lakh

RETAILER OF ELECTRONICS Sl


1 Sony Center Sevoke RoadSLG,Ph no.2641654 Bank of Baroda 1 crore

2 Millennium Info system Suman Banik Sevoke Road,Slg,Ph no.2641808

Bank of India 2 crore

3 Computer Land Sevoke Road Sevoke Road,SLG,Ph no.2642980 BOI 2 crore

4 Mahavir Stores Pradip Agarwal Sevoke Road,Siliguri,Ph no.9932210531 PNB 3 Crore

5 Sri Krishna Distributor Ronit Agarwal Nayabazar,SLG,Ph no.2503117 Syndicate Bank 3 Crore

RETAILER OF JEWELLERY Sl


1 Guinea House Ajay Das Hilcurt Road,Siliguri. Ph no.2430446 SBI 3 Crore

2 Das Jewellery Hilcurt Road,Siliguri. Ph no.9832033325 PNB 2 Crore

3 Jashamati Jewellery Hilcurt Road,Siliguri. Ph AXIS Bank 1 Crore

71

no.9832015251

4 Senco Gold Hilcurt Road,Siliguri. Ph no.9874027010 SCB,ICICI 4 crore

5 Bidhan Jewellery Hilcurt Road,Siliguri.Ph no.2530358 SBI 6 crore

6 Diamond queen Jwellers Pawan Kr. Sinhal Seth Srilal Market,SLG,Ph no.2520016 SBI 5 Crore

7 Silver Queen Jwellers Chandan Prakash Sinhal

Seth Srilal Market,SLG,Ph no.9832375446 ICICI 1 Crore

8 Ujjwala Jewellery Ram Ch. Pal Hilcurt Road,Siliguri.Ph no.9434377443 SBI Min 50 akhs

\ TRADER OF TEA Sl


1

Sri Rama Tea Manufacturing Co.(p) Ltd. Babulal Agarwal

Naya Bazar,Siliguri,Ph No: 9434019301 SBI 20 Crore

2 Rai & Co. S.Roy 133,Hill Cart Road,Siliguri,Ph no:9832367275

United Bank 5 Crore

3 Putinbaree Tea Ass. Ltd. G.R Agarwal

Mangturam Road(Khalpara),SLG,Ph no.9434059998 SBI 8 Crore

4 Avinash Tea Co. Khapara,Ward no.8,SLG,Ph no.9933808882

SBI,Union bank 6 Crore

5 Rambilas Roshanlal Mahesh Kr. Agarwal

Dr.Kalinath Road(Naya Bazar),Ph no.9832063258 SBI/PNB 50lakhs

6 Dewkinandan shivshanker Awind Singhal Mahabirsthan,slg,ph:9832010499 SBI 3 crore

7 M/S Chandan tea corporation Rajib Hillcurt Road,slg,ph:9735000000 Union Bank 2crore

8 Usha tea traders Pradip Ghosh Hillcurt Road,slg,ph:0353-2431283 SBI 2 crore

9 Chandanmal Binod Kr. Rambilash Gloyel Naya Bazar,Siliguri,Ph no.25022424 UCO 25

MARBLES Sl


1 Ridhi Sidhi Marbles Ram Agarwal 3rd mile Sevoke Road,SLG,Ph no.9332230051 IDBI 20 Crore

2 Marbles House Dalon Mondol 2nd mile,Sevoke Road,SLG,Ph no.9832009987 SBI 3 crore

3 Haryana Marbles 3rd mile ,Sevoke Road,Ph no.9641021325 SBI 5 crore

4 Bharat Marbles Suresh Dalmia Burdwan Road,Near Jalpaimore,Ph no.9832073766 IDBI 1 crore

5 Rameshwaram Marbles&Tiles Shiv Kr. Agarwal

4th mile,Sevoke Road,SLG,Ph no.9093368972

Rajastan Bank 2 crore

6 Jain Marbles Balchand Choraria

2nd mile,Sevoke Road.Ph no.9832032135 SBI 15-20 lakhs

7 Marble Centre Avinash Mantri 3rd mile,Sevoke Road,SLG,Ph no.9933471226 BOB 50-70 lakhs

8 Bhawani Marble & Sanitation Ashok Goel

2.5 mile,Sevoke road,SLG,Ph no.9832321117/9832035619 SBI 2 Crore

9 Ganapati Marbles Pramod Maiya 3rd mile, Sevoke Road,SLG,Ph no.9832024666 SBI 3 Crore

10 Balaji Tiles Kailash Chowdhary 2nd Mile,Opp. Prapti Showroom ICICI 60 lakhs

Distributors Sl


1 Lal Chand Amar Suraj Kundolia S.F road,SLG,Ph no. 9434044766 HDFC 5 crore

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chand 2 Pen corner Ramesh Agarwal Mahabirsthan Road,Slg,Ph no.2504898 Union Bank 1 Crore

3 Niranjan Network(P) Ltd. Receiption

330,SF road,Behind urbashi Cinema Hall,SLG, Ph no. 9378189003 ICIC Bank 4 Crore

4 Bidya Trader Chandan Kr. Gupta Mahabirsthan Road,Slg,Ph no.2503403 SBI 1 crore

5 Marda Enterprise Dindayal Maheswari Nayabazar,SLG,Ph no.923341934 Union Bank 5crore

6 Mundra Agen Govind Mundra Mahabirsthan Road, SLG, Ph no.9434067111 PNB 1 crore

7 S.p Trading Nirmal Mahabirsthan Road,Slg,Ph no.2778242 SBI 3 crore

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5. REFERENCES

20. S.K.Bagchi, Bank Finance for ―Small and Medium Enterprises

21. V.K.Chopra, Innovations in SMEs Financing

22. www.ciionline.org

23. www.sme.icici.com

24. www.rbi.com

25. www.standardchartered.co.in

26. www.commerce.nic.in

27. http://dgft.delhi.nic.in/

28. www.sidbi.com

29. www.rbi.org.in

30. www.ecgc.in

31. College library

32. Circulars provided by bank

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