by Rajen KumarIndia's Manufacturing Muddle
What holds Indias manufacturing sector at the back foot? Why the sector has failed to emerge from the shadow of a strong service sector which has recorded a creditable growth in the...
Special ReportsMar 2014
When you have just decided to go ahead and chase your dream of higher studies, the one you had sidelined for quite some time now, you realize the road ahead is not so...
MSEs Sine Qua Non - Prompt Payment
The plight of Micro and Small Enterprises [MSEs] especially Micro; due to delayed payments by buyers, needs no elaboration but action. In a country 93 per cent are MSEs; (mostly Proprietors vis-à-vis job-workers) who are inherently weak. But being the largest employer, their existence is essential to eradicate the worry of unemployment which is why it is a holy cow in any economy to be guarded by the Government to the extent possible. It gave birth to the statutory stipulation of time-frame for payment plus interest in case of a delay.
Nair Advocacy on Priority Lending
Flow of credit, adequate-timely & low priced to Micro & Small Enterprises both Manufacture and Services, assumes greater importance for its sustainable development. The majority enterprises are Micro most of which are in unorganized sector having a meager finance from Banks, even though they fall in Priority Sector. Priority Sector, it must be noted, has its seeds in the Credit Policy for the Year 1967-68 and besides Agriculture, Exports; the Small Scale Industries [currently MSEs] were included in the list. Lending to this sector really means “Directed Finance” and was confined to Public Sector Banks only upto the Year 1979-80. It was extended to Private Sector Banks thereafter and now all Banks, including Foreign, are to follow Directed Finance to Priority Sector which mainly covers Agriculture, MSEs, Exports, Housing, Education, Weaker Sector, SHGs and so on.
Rating Methodology; The General Principles
The process to obtain a credit rating on a particular issue usually starts with a request from the unit who has expressed an interest in securing a rating. Then happens with a series of meetings between the unit's management and the rating agency ensues. Analysts and corporate financial team then exchange queries, views and information relevant to the credit rating.
Myopic Routes of Finance
Amidst the ongoing financial crisis, it is essential to consider the scale of losses. What we have actually lost in the recent months, which have been in our possession for long. Lot of debates and articles have discussed the potential causes of financial sectors' failure and diminishing market sentiments in past few months. There could be many reasons behind the present financial chaos; among them, inflated treatment of stock markets can best be attributed for the mess. Because of the unprecedented growth till the financial crisis of 2007 that was finally disturbed by the unrestricted financial routes which were in perfect shadow of regulation. So, no one could exactly trace the investors as their business dealt through intermediaries, even those middlemen's were never required to follow the Know Your Customers (KYC) norms. These myopic investment routes may be considered the progenitor and nurturer of speculative finances. Two most prolific among them are: - Sovereign Wealth Funds (SWF)
Basel-III Norms – Highlights
Following the recent financial meltdown, the leaders of the group of G-20 economies asked the Basel Committee on Banking Supervision (BCBS) to reach the new rules needed to prevent another financial crisis in future. The aim was to mitigate the greed ridden financial crisis instead of blocking the real factors behind it.
Emerging Economies to be New Engines of Growth
India continues to achieve one of the highest rates of GDP per capita growth in the world. Nevertheless, the income gap with OECD countries remains large, primarily reflecting low levels of labour productivity, calling for further reforms to support rapid and inclusive growth
Public Sector Banks – Business vs Vigilance
Public Sector Banks have been playing a vital role in the economic development of the nation. The flow of credit to agriculture and allied sectors during the 1st two decade of nationalization paved the way for industrial growth because of the robust growth in the rural economy. The contribution of credit to SMEs also heralded entry of Indian economy in the global scene. Never the less the Public Sector Banks have been subjected to continuous criticism by various Govt. agencies and entrepreneurs /borrowers alike in different forum and in different periods.
SME Finance Needs Priority
MSMED (Medium and Small Scale Industries) Act, 2006 modified the title to 'enterprise' instead of industry thus providing proper recognition to the service sector and conferred pride of place to micro – enterprises; ceilings were also redefined and now up to Rs. 25 lakhs is considered a Micro enterprise, up to Rs. 5 crore as Small enterprise and up to Rs. 10 crore as a Medium enterprise.
Micro Finance Institution: Banker of MSMEs
Lack of finance is a major constraint that the Micro, Small and Medium Enterprise (MSMEs) sector faces. MSMEs often encounter higher barriers to external financing than larger firms that limit their growth and development. It is observed that MSMEs have been more likely than larger firms to be denied new loans during a financial crisis. There are several reasons for this, like lack of sufficient guarantee/collateral, difficulties in proving creditworthiness, tiny cash flows, insufficient credit record, poor bank-borrower associations and high operational costs.
Factoring - A Powerful Alternative Source of Working Capital for SMEs
For many SME promoters, having invested their own funds in fixed assets, it is the working capital (or the lack of it) that becomes the chief concern in running the business efficiently. While significant progress has been made in the area of channelizing finance to SMEs, the rapid integration of the global economies and rising domestic demand throws up both opportunities to cater to a global market place and challenge to ensure that the demands of their customers are met in terms of quality and timely delivery of products and services. Clearly, the ease of access to finance will continue to be a key factor in determining the competitiveness of the Indian SMEs. One mechanism to counter challenges of managing financial liquidity especially working capital can be through the use of an internationally practiced tool called Factoring.
CIR helps SMEs to Know the Borrower's Credit Worthiness: CIBIL
Many issues and hurdles can be counted if we analyse failure trend of credit flow towards the sector. But another aspect is related to borrowers itself. The business entity willing to the get credit through any of source need to be have transparent, clear and flawless financial results. If the financial reporting of the company is doubt-free, the chance of getting credit becomes higher.
Does the RBI have the Capacity to Supervise Micro-Finance?
1. What is the proper scope of micro-finance, given the Indian context? What specific problems and issues will it be expected to address, especially based on the lessons from the present (2010) and past micro-finance crisis? This is critical as the essence of any regulation is to prevent market/institutional failures.
Care Rating Report on Leading Small Scale Industries: 'Poor Access to funding - the Most Severe Constraint for MSME Sector'
Report suggest that due to its high risk perception, historically high default rates, unstructured information flow and low availability of collateral, banks and financial institutions have found it difficult to lend to MSMEs.
The Governance of Risk Management at MFIs: Critical Issues and Lessons from the Indian Experience
As governance involves many stakeholders, each with specific assigned responsibilities, they need to ensure that the system as a whole is geared to support the overall strategy of the MFI and ensure the effectiveness of various internal control mechanisms.
Is The Proposed Micro-Finance Credit Bureau A Red Herring?
First, despite the most sophisticated credit bureaus, the sub-prime crisis in the US could not be avoided and therefore, no credit bureau-irrespective of the manner in which it is designed and implemented-is likely to be a foolproof strategy with regard to avoiding such crisis.
Exit Strategies for SMEs
It has been seen that small and medium enterprises which have a clear exit strategy to start with have a better chance of attracting the kind of investors they are looking for; reason being- everyone is happy to know how much would they get back if they put in their money.
Ratings Help SMEs Have Easier Access to Funding
Rating came to our rescue when imported products replaced ours and when banks refused to help us. Dejected, we were almost on the brink of call it a day. We survived the turbulent times when all other players in our industry vanished. CRISIL rating not only helped us get going in the business but have also benefited significantly in terms of improved terms from customers, suppliers, and investors, quicker loan processing, better access to funds, and favorable interest rates.
Collateral Substitutes for SMEs
Collateral issues attract the interest of common people and economists. Lack of collateral is a major constraint for small and micro-enterprises, and especially new entrants to the financial market. It is also a constraint for banks to the extent that it prevents the financing of small scale investments. Bankers reportedly use collateral to screen potential borrowers.
Credit Rating Can Help Develop Information Symmetry Between SMEs and Lenders : Dr. Dogra
Credit rating not only meets a regulatory requirement of getting finance from banks but also helps in enhancing an entity's standing with its existing and prospective customers and suppliers. It also works as a feedback mechanism for the management and helps in self-assessment vis-à-vis peers.
'Banks Hesitant to Give Collateral Free Loan' - Vinod Thapar, President of Knitwear Club, Ludhiana
“It is a general perception in knitwear industry that there are too much hidden charges in private sector banks. I would like to say to all the banks, be it public sector or private sector, that if they want to get business from Ludhiana knitwear industry, then they must avoid levying the objectionable charges. Nationalised banks must also come up with this way.”
Indian Women at the Helm of Banking and Financial Industry
While the system stood on a firm footing, the role of those who manned the Banking sector cannot be undermined. A unique fact in this drama is that some of the top banks were manned by women, such as Naina Lal Kidwai, Chanda Kochchar, Meera Sanyal, Manisha Girotra, Shikha Sharma and Kalpana Morparia.
ICICI Bank Business Banking and CNBC-TV18 present Emerging India Awards to Motivate SMEs
The award focuses on felicitating SMEs who exhibit world-class leadership, outstanding business acumen, best practices and exemplary vision, creating a legacy for others to emulate. These are the SMEs who will lead the next wave of economic growth.
Angel Investing & The Indian Angel Network
The Indian Angel Network (IAN) is India's first, largest and fastest growing business angel network. Currently it has 125 members from across India & overseas, comprising the who’s who of successful entrepreneurs and CEO’s as also leading institutions such as IBM, Intel, Sequoia, etc.
Report of Working Group to Review the CGTMSE
The guarantee fee for collateral free loans upto Rs.10 lakh to Micro Enterprises to be borne/ absorbed by the CGTMSE subject to the proviso that the Trust be free to adjust the guarantee fee both downwards and upwards based on the modelling of the dynamically evolving distribution of claims.
Banking : Slow & Steady Loses The Game
What is more under the ongoing scenario - especially keeping in view the fast changing banking scenario – where a particular technology is being replaced rapidly by another technology - it is better to take for granted that in the near future there would be intense competition – intra and inter [players being Government owned banks, old private sector banks, new private sector banks and foreign banks] not only at the macro- level, but at the very micro-level also.
Finance for SMEs : Options with Hurdles Finance for SMEs
DSE May Provide Platform for SMEs, Hopes to enlist 8000 companies in One Year
Calling All SMEs Who Need Help Understanding Their Business Assets
In short, all businesses are subject to change, whether through internal demand for change or through external influences forcing change, and the ability to complete the required change quickly and effectively is a key factor in making a business successful.
The Aspirations of MSMEs
In view of the PM's MSMEs Task Force recommending a fresh deal for the sector, this year's budget should provide an opportunity to the entrepreneurs to mount a systematic and concerted effort to get set for quality up gradation.
IIM Lucknow Conclave on Funding Options for SMEs
The SMEs sector in India, Abhiyan, the entrepreneurship cell of IIM Lucknow, is conducting an “India SME conclave” at IIM Lucknow on 21st of December, 2009 in association with the Indian Industries Association (IIA) and Ministry of Micro, Small and Medium Enterprises (MSME)
Grameen Koota receives Over 27.5 crore in second round funding
Grameen Koota a division of Grameen Financial Services P. Ltd., a Bangalore-based Microfinance Institution (MFI), announced equity funding of Rs 27.5 crores from MicroVentures Investments (Luxembourg), MicroVentures SPA (Italy), Incofin (Belgium) and Aavishkar Goodwell (India).
SBI’s new office is worth $44 Million!
In what is being billed as the largest commercial property transaction of 2009, Mumbai-based real-estate developer Rustomjee has sold 1.42 lakh square feet of office space in Andheri East, Mumbai to public sector SBI Life insurance company for a whopping $44 million.
Ethics in Business Finance
Ethics is defined as a mode of human behavior (incorporating ends, norms, good, right and choice) in dealing with others. In general this mode deprecates behaviour which is only mypiocally self-serving, on which, conversely, imposes large costs on others with small gains to oneself.
Success Stories of small entrepreneurs from small towns and villages in India.
My name is Dhanalakshmi. I have an STD booth in Porur near Ramachandra College in Central Madras. My family consists of my parents and two brothers. My father has retired from a private company and his earnings till now was not sufficient to run the family. One brother of mine has been attacked by polio and he has to be constantly monitored in the hospital. My father's income was not sufficient to run the family.
SEBI to finalise listing norms for SMES
Security Exchange Board of India (SEBI) is meeting shortly to finalise listing standards for Small and Medium Enterprises (SMEs) to enable them access the capital market, disclosed M. S. Sahoo, Wholetime Member of SEBI.
SME Exchange - On the Anvil Important Announcements by SEBI
Companies listed on the SME exchanges would be exempted from the eligibility norms applicable for IPOs and FPOs prescribed in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR).
The Indian Financial Inclusion Scenario - Initiatives and Lessons
Financial inclusion has become a buzzword internationally – even in developed financial markets there are concerns about those excluded from the banking system. The barriers to access to formal banking system have been identified as relating to culture, education (especially financial literacy), gender, income and assets, proof of identity, remoteness of residence, and so on.
IDBI Bank designs new business model for SME sector
IDBI Bank has developed a special business model to serve the SMEs in India. The Bank has set up 24 City SME Centres (CSCs) across India in Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune to name a few. These CSCs are the Bank's hubs while dedicated SME desks have been set up in several branches across these cities.
Micro-finance crusader Jaya Arunachalam wins Jamnalal Bajaj Award
Padma Shri Dr. (Mrs.) Jaya Arunachalam, President, Working Women's Forum (India) and the crusader of poor working women's emancipation has been selected for the prestigious Jamnalal Bajaj Award for 'outstanding contribution for the development and children'.through various programmes and activities initiated as a mass movement.
CANARA BANK LEADS IN REPUTATION INDEX
India consumers conducted by Reputation Institute (USA), Canara Bank earned a Global Reputation Pulse rating of 73.34 placing it 8th on a list of the largest companies in India, Canara Bank's Reputation score is above the average rating of all Companies rated by consumers in 32 countries, and places Canara Bank in an elite group made up of the 200 best Regarded companies in the world.
Indian Bank: A Model Bank
Celent's Model Bank research was designed to try to answer an apparently simple question: "What would it look like for a bank to do everything right with today's technology?” Celent had undertaken to offer, at a high level, some key best practices in the use of technology that a 'model bank' would use to fulfill their mission.
SIDBI has procured a loan of $400 million from the World Band
Small Industries Development Bank of India (SIDBI) has procured a loan of $400 million from the World Bank to assist small and medium enterprises (SMEs) that are reeling under severe credit crunch and high rate of interest.
Experience the Simplicity of Investing at SKI
Optimising investor wealth and rendering personalized services to its large number of customers are the corner stones of the SKI approach to financial and broking services. "We are guided by the 'client first' philosophy; hence we put the clients' needs first".
Government of India doles out 7000 crore Booster dose to SIDBI
In order to bolster the spirits of the MSME sector trying to weather the downturn, government of India has given Rs.7, 000 crore refinancing fund to SIDBI besides RBI’s stimulus packages and policy initiatives.
RBI Shows Concerns for SME
The RBI has recently cut repo and reverse repo rates on April 21, 2009 by 25 basis points each in order to persuade banks to lend more at reduced rates. RBI has said that SMEs have to endure the worst impact of the slowdown.
Credit risk management for SME exporters
A number of Indian exporters have been hit on account of payment defaults. For a SME, non payment can mean substantial erosion of profit and in a worst case scenario, complete closure of business. This month, we focus on schemes available from the country's leading credit risk insurer, the Export Credit Guarantee Corporation of India.
Microfinance is a Step Away from Indian Women
There are many helping hands available in the form of NGOs and Self-Help Groups, Microfinance Institutions, Public Sector Banks, Government Finance Schemes, and Venture Capitalists, depending on the type of financial help required by the Entrepreneur.
Over 1.3 lakh MSMEs Seek Debts Restructuring by Government Banks
one lakh micro, small and medium enterprises (MSMEs) have approached the Union Bank of India for immediate corporate debt restructuring, while the State Bank of India has cleared 26,000 proposals for rescheduling loans, according to information given to the government.
SBI offers 'HELP' to SMEs in the downturn
India's biggest bank, in a significant move to assist SMEs extended till September 30 the facility by which its existing SME customers can avail themselves of term loans as well as 20 per cent additional working capital limits at 8 per cent concessional interest.
Credit Guarantee Scheme for MSMEs to cover loans upto Rs.100 lakhs
The Credit Guarantee Trust Fund promises collateral free credit for SMEs. Under the scheme, CGTMSE extends guarantee for credit facility to upto Rs.1 crore sanctioned to its Member Lending Institutions (MLIs).
Study Abroad and Drain out our Foreign Exchange
Indian students going abroad for their higher studies cost the country a foreign exchange (forex) outflow of $10 billion annually, says a report released by ASSOCHAM recently. Despite subsidised engineering and management education, about 500,000 students choose to go abroad every year.
The Limited Liability Partnership Act to benefit Small Entrepreneurs
The LLP format is a popular business model with SMEs in developed countries like US, UK, Singapore and Australia. It would not have been introduced at a better time in India when businesses are finding themselves in the throes of recession..
Booster Dose to Lessen the Pain
To mitigate the pains of a sagging economy, the government has come up with a slew of measures to boot investment, spending and growth, to revive exports, to increase liquidity and to boost infrastructure.
SBI Leads Banks to Offer Breathers to help Smaller Entrepreneurs to Boost Businesses
Where do the taxes go?
The Okhla industrial area pays heavily in terms of taxes. But the entrepreneurs there do not see even a penny being spent in development activities. Why is this area so grossly neglected by authorities is anybody's guess.
The key developments that led to the US financial crisis
Roller Coaster Ride of Micro Finance in India
Financial inclusion and unorganized sector have become the buzz words today. For decades, there has been an impending need to bring the most underserved segment of the economy under the fold of formal credit facilities. A vast majority of SMEs in India have been financially excluded because of inherent difficulties in the process of procurement of credit. The system has a basic requirement of a collateral or security which most small entrepreneurs find difficult to provide.
SHGs can promote functional literacy
The Self Help Group (SHG) model of development launched in the 1980s has since come a long way under continued patronage of the central and state governments, NABARD, and NGOs. The programme is today the most effective weapon for social change and eradication of problems like poverty and illiteracy.
Finance to the poorest of the Poor
The financing needs of small and medium enterprises have drawn the attention of several financial institutions. The National Bank for Agriculture and Rural Development (NABARD) has emerged as a pioneer in the field of micro finance, thereby ensuring financial inclusion for more than 5.8 crore poor households
Banks take safety measures as Credit Card frauds increase
The last three years have witnessed a whopping 80% rise in credit card frauds. Reserve Bank of India and a number of banks are taking steps to introduce safety measures and educate customers on how to avoid such frauds which are mainly happening while using credit cards through Internet.
- Winner of appreciation award for promoting SMEs in India.
- 1st ever Indian magazine to penetrate tier II, III cities & the rural belt.
- Industry Partnerships include CII, FICCI, ASSOCHAM, PHDCC, AIMA, ITPO, SME Network, Federation of Indian Micro Small Enterprises (FISME)
- Official Magazine Partners for several national & international MSME events.
The Last Word
January every year used to be the Great Film Month in Delhi. International Film Festival of India, IFFI used to take place a great get together of film buffs. Youngsters with a taste for the...
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