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Suggestions to Stimulate Financing under Micro and Small Enterprises

Under the guidance of –Mr. Ashwini Kumar Sharma

Chief ManagerBank of Baroda, Greater Noida Branch

Presented By-Yasha Singh4113007007

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Company Profile

Type- Public Industry-Banking, Financial services Founded-20 July 1908 Founder - Maharaja Sayajirao Gaekwad Headquarter - Vadodara (Baroda), India Area served-Worldwide Key people- S S Mundra (Chairman & MD) Products- Credit cards, consumer banking, corporate

banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, wealth management

Revenue-346 billion (US$5.7 billion) (2012) Net income 52.48 billion (US$860 million) (2012) Total assets 4.574 trillion (US$75 billion) (2012)

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About Project

Topic – Suggestions to stimulate financing under micro and small enterprises.

In the growing global competition, the productivity of any business concern depends upon finance. This topic deals with the financing problem faced by micro and small enterprises and suggestions to stimulate financing in micro and small enterprises.

Project report contains 5 different chapters- The report begins with the first chapter which consists

introduction to the problem, background of micro and small enterprises, objective of the project etc.

The second chapter is the introduction to the literature review which gives a brief idea regarding theoretical rationale for loan guarantee programs in micro and small enterprises.

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The third chapter is about research methodology adopted in preparing this report. It covers the sample procedure, types of data used and the data collection method.

The fourth chapter comprehensive coverage of forecasting concepts and techniques which shows the analysis of data through tabulation, computation and graphical representation of data collected from survey.

The fifth chapter deals with the findings, suggestion and conclusion.

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Objective Objective of this project is to analyze the

problems of the MSME sector and to discuss the strategies for removal of the obstacles.

To study the financing policy and the financing appraisal system as a whole.

To understand the financing system as being used in Bank of Baroda (BoB), Alpha-1, Greater Noida.

To study procedure adopted in evaluating financing proposal by using case analysis in BoB.

To understand the commercial, financial and technical viability of the proposal proposed and it’s finding pattern.

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Source Of Data

There are mainly two sources of data. PRIMARY DATA: ▪ Data provided by bank.

SECONDARY DATA: ▪ Bank reports▪ Banks loan circulars on micro and small

enterprises▪ Bank and ministry of MSE website▪ Books and Journals

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Need For The Study

There is a total finance requirement of INR 32.5 trillion ($650 billion) in the MSME sector, which comprises of INR 26 trillion ($ 520 Billion) of debt demand and INR 6.5 trillion ($130 Billion) of equity demand.

Despite the increase in financing to MSMEs in recent years, there is still a considerable institutional finance gap of INR 20.9 trillion ($418 billion). After exclusions in the debt demand (62 percent of the overall demand) and the equity demand (from MSMEs that are structured as proprietorship or partnership), there is still a demand-supply gap of INR 3.57 trillion ($ 71.4 billion).

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Financial GapSource: MSME Census, RBI, SIDBI, Primary Research

Source: MSME Census, RBI, SIDBI, Primary Research

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Finance Gap In Micro, Small And Medium

Enterprises Segments

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Equity Demand In Early And Growth Stages

* Figure in brackets is in USD Billion** includes equity demand by micro enterprisesSource: MSME census, SIDBI, Primary Research , IFC- Intellecap Analysis

(in INR trillion)

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Supply Of Finances

(in INR trillion)

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Share Of Non Institutional Informal Source Of Financing

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Structure Of Formal Debt Supply

(in INR Trillion)

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Structure Of Banking Institution Supply(in INR Trillion)

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Analysis

Some of the common financial problems faced by MSMEs are: Inability to obtain external financing; Inability to obtain internal financing; Insufficient capital, start-up costs; Expensive raw materials; High wholesale price; Large losses due to scrap rate, sabotage, breakage and crime; Decline in sales volume; Bad debts and write offs; Heavy equipment and maintenance costs; Government tax, VAT and customs duty; Payroll, rent and utilities; Transportation and petrol costs; High interest rates on loans; Ability to meet financial obligation; Insurance costs and delay in account receivables payment.

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Recommendations

Minimum government regulation and tax.

Better access to finance.

Private equity funding.

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THANK YOU !!