by Rajen KumarMiddlemen Rule PSU Banks
The Union Finance Ministrys recent advisory to the public sector banks to take a tough stand while sanctioning loans to the corporate houses is, to say the least, amusing. The advisory,...
Special ReportsOct 2013
Association of Healthcare Providers India AHPI represents the vast majority of healthcare providers in India to work as not for profit organization for advocacy with...
How Small Manufacturing Businesses can Generate Funding for Expansion of their Ventures?
The Micro Small and Medium Enterprise MSME sector in India is essential to achieving the targeted growth rate of our nation. This sector nurtures budding entrepreneurs and incubates innovation at its most rudimentary level. A growth in the MSME sector ensures industrialization in backward areas. In the last five year plan, this sector demonstrated an average growth of 12 percent, raising the share of the manufacturing sector in GDP to 16 percent.
A New Concept in SME Financing
Globally, innovative models are being explored to provide better funding alternatives to SMEs one of them is Impact Investment. These investments are made into SME companies, organizations, funds with the purpose to produce quantifiable social and environmental impact alongside a financial return. The impact investors here target a range of returns from well below the market up to market rate, depending upon the business model of the issuer. There are certain bodies and associations working for effective impact investing by building critical infrastructure and developing activities, education, and research that attract more investment capital to poverty alleviation and environmental solutions.
Spotlight on MSME Finance
Finance, needless to mention, is the blood of every business, whether Micro, Small or Medium or otherwise. Bible, Ecclesiastes 10 19 says, A feast is made for laughter, and wine maketh merry but money answereth all things! Another amous saying is of W. Somerset Maugham from Of Human Bondage, Money is like sixth sense without which you cannot make a complete use of other five. How true for the MSMEs also! Many studies, reports, findings are available on Finance to MSMEs. The Report, MSME Finance in India of International Finance Corporation, [IFC] distinguishes itself from the other resembling reports not only by its contents but also on the analysis and apt way forward.
Finance & Business Integration
This has created big role for CFO of an organisation across business & finance integration. If one looks carefully, the word CEO and CFO runs in sequence (middle of their alphabet) depicting role of partnership between a Business Leader & Finance Leader.
A Tool for Financial Inclusion and Consumer Empowerment in India
Financial literacy is considered an effective tool for financial inclusion as both go side by side. When people are aware about financial products and market they will be inclined towards financial products which will increase financial inclusion. Final goal of any financial program is to empower consumer.
Financial Restructuring of SMEs
SMEs are backbone of Indian economy. They contribute around 45% of industrial output, about 40% of exports and employ more than 60 million people. Across verticals, SME are worried a lot as the payments are getting delayed, customer confidence is slowing down and cost of doing business is moving northwards.
Promise, Protection & Practice - MSE Banking Code
How to get timely and adequate Finance is a very tough exercise for any Micro and Small, mainly Micro Enterprise. Government survey has indicated still 90% of total Micro units in India are to procure it from relatives, friends and private money lenders only. The 'Code of Bank's Commitment to Micro and Small Enterprises' [MSEs Banking Code] is therefore not only a ray of hope but an advancement and assertion in disbursement of credit to MSEs in general. When published for first time in May 2008, MSEs Banking Code was 'VOLUNTARY' and hence was merely Bankers Wish List, though called as commitment. The recently revised and declared in August 2012 MSEs Banking Code is 'the COMMITMENT' as the word voluntary finds no place now. This improvement is a welcome move on the part of Banking Codes and Standards Board of India [BCSBI]. As said by BCSBI, “the Code represents best practices agreed by us as our commitment to you.” [Here you = MSEs].
CGTMSE SCHEME -A WIN-WIN SITUATION
Micro, Small and Medium Enterprises constitute the backbone of the Indian economy. The 26 million MSEs in India contribute roughly 10% to the GDP, employ more than 60 million people and contribute almost 45% of the total manufacturing output and 40% of the total exports.
Credit Ratings Help SMEs to Access Capital
Prevailing information asymmetry within the MSMS sector impedes supply of adequate quantum of finance. The banking and financial service institutions are unable to take decisions due to lack of structured and analyzed information on the MSMEs. In such a scenario, credit rating for the MSMEs provides to be beneficial in building confidence of the formal channels of lending on the MSMEs.
Recent Trends in Credit Rating; Corporate Governance
An SMEs desire to obtain a credit rating is often motivated by its need for getting Bank finance at a subsidized rate / issuing debt-related instruments in capital market. However, information asymmetry problem is one of the major obstacles to the unit’s endeavor. To reduce the information asymmetry problem, the unit has to seek a credit rating from an independent credit rating agency.
Present State of our Economy The markets are in jittery, and for valid reasons. The rupee has hit an all-time low of Rs. 53 and macroeconomic indicators of the economy are sagging. Industrial production is on a downward spiral. Policymaking is ground to an apparent halt, and the rollback of the decision to open up multi-brand retail has sapped investor confidence. The negative growth registered in industrial production in October, a sharp 5.1% decline, and shows that industrial productivity is slowing far more rapidly than expected.
SME Enterprises: A Road Map to Fulfill an Under Delivered Promise!
The contribution of SME to the Indian economy is over 10% of the GDP. It accounts for nearly 35% of the manufacturing and 40% of the exports. The role of the SME in the employment generation can hardly be discounted. The SME sector is truly representative of the spirit of the Indian entrepreneurship. It is all about frugality in the business and survival of against all odds. It is based on native intelligence and being extremely street smart.
- 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
Of the 80 odd seasons that he has been through, he savoured less springs and suffered more rains, proverbially. Not that time took a toll on his age, it was his own siblings who dumped, nay disowned,...
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