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CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT, BANGALORE

A Report on

CREDIT RISK ASSESSMENT IN SBI (SME & PER)

Submitted in partial fulfilment of the requirement

For MBA degree course

Done by:

Tanmay Das

(Reg. No.: 1120317)

Under the Guidance of

Faculty Guide Company Guide

Dr. Prof. Anirban Ghatak Mr. Anil Kumar Giri

Professor Asst. Manager (SMECCC)

Dept. of MBA, Christ University, State Bank of India

Bangalore Kolkata

CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT,BANGALORE -560029

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ACKNOWLEDGEMENT

I consider it my privilege to express a few words of gratitude and respect to all those who guided

and inspired me in the successful completion of the project. I wish to take this opportunity to

express my deep sense of gratitude to thank Mr. Anil Kumar Giri (Asst,Manager SMECCC)

for his invaluable guidance throughout my project. I sincerely thank State Bank of India for

providing me with an opportunity to work in the SMECCC Department & RACPC of S.B.I to

get an insight about Credit Risk Assessment.

I also convey my sincere gratitude to my faculty guide Dr. Prof Anirban Ghatak (College

Mentor) CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT and all my friends and

my family for their encouragement and support extended to me during the course of my project.

At the end I would not forget to thank other members of State Bank of India (Local Head office)

who treated me with respect and helped me in the best of their capacity.

Tanmay Das

Reg. No. 1120317

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DECLARATION

I, Tanmay Das, hereby declare that the project report titled Credit Risk Assessment in SME &

PER submitted for the partial fulfilment of the requirements for the award of the Master of

Business Administrationis my original project work and has been carried out under the guidance

of Dr. Anirban Ghatak (Faculty Guide), Professor, Christ University Institute of Management

and Mr.Anil Kumar Giri (Company Guide), Asst. Manager, SMECCC, S.B.I (Kolkata).

.......................

Place: Tanmay Das

Reg. No. 1120317

Date: CUIM, Bangalore

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CONTENTS

(A) Introduction to the Topic

(B) Brief Profile of SME

(C) Industry Profile

(D) Companys Profile

State Bank of India

(E) Research Methodology

E.1. Objective of the Study

E.2. Statement of the Problem

E.3. Sources of Data

E.4. Scope of the Study

E.5. Limitations

(F) Analysis and Interpretation

Executive Summery

Date Chart for disposal of credit facilities.

Brief background

Brief Write Upon Industry

CMA(Credit Market Analysis)

Ratio Analysis

DSCR

Synopsis

CRA

(G) Pre Sanction Survey Report

(H) RACPC (Retail Assets Central Processing Centre)

Home Loan

Car Loan

Education Loan

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(A)INTRODUCTION TO THE TOPIC

State Bank of India (SBI) is the forerunner in the field of SME financing. Majority of the loans

to SMEs are been provided by SBI. SBI has introduced various schemes for SMEs. The various

schemes are according to the sector in which a particular SME belongs. SBI has introduced SME

financing for SME belonging to sectors like:

Agriculture

Medical

Transport

Tourism

Art

Education

SME Business Unit is implementing multiple strategies to maintain Banks premier position

in SME financing.

The Advances given By SBI to SME sector increased to Rs. 76,329 Crores as on

31.03.2008 from Rs. 58,674 Crores of the previous year registering a growth of 30%.

The Deposits of SBI under SME sector increased to Rs. 1,65,168 Crores as at the end

of March 2008 from Rs. 1,23,054 Crores of previous year, recording a growth of 34%

during the year.

The SME architecture has been firmly established and with a focus on companies with

a turnover of less than Rs. 50 Crores, SBIs advances to SME rose by 26% in FY08.

Currently, SBI has 12-lakh SME customers.

The following project focuses on the process of granting credit facilities to small & medium

enterprises. The Purpose of carrying out this project is to find out theSME financing schemes

provided by bank . As we know that SME form the backbone of any economy and SME are vital

for growth of developing countries like India so financing of SME is considered to be very

important issue for any economy. Because of this reason most of the banks, may it be

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nationalized banks likes SBI or Private sector banks like ICICI, all are bringing different

schemes for SME finance, but out of these various schemes which scheme is more profitable and

suitable for a SME is the main question of concern for every SME.

(B) BRIEF PROFILE OF SME

Small and medium-sized enterprises (SMEs) are the backbone of all economies and are a key

source of economic growth, dynamism and flexibility in advanced industrialized countries, as

well as in emerging and developing economies. SMEs constitute the dominant form of business

organization, accounting for over 95% and up to 99% of enterprises depending on the country.

They are responsible for between 60-70% net job creations in Developing countries. Small

businesses are particularly important for bringing innovative products or techniques to the

market. Microsoft may be a software giant today, but it started off in typical SME fashion, as a

dream developed by a young student with the help of family and friends. Only when Bill Gates

and his colleagues had a saleable product were they able to take it to the marketplace and look

for investment from more traditional sources

SMEs are vital for economic growth and development in both industrialized and developing

countries, by playing a key role in creating new jobs. Financing is necessary to help them set upand expand their operations, develop new products, and invest in new staff or production

facilities. Many small businesses start out as an idea from one or two people, who invest their

own money and probably turn to family and friends for financial help in return for a share in the

business. But if they are successful, there comes a time for all developing SMEs when they need

new investment to expand or innovate further. That is where they often run into problems,

because they find it much harder than larger businesses to obtain financing from banks, capital

markets or other suppliers of credit.

It is rather difficult to define precisely as to what constitutes the SME sector, as

a. It covers a wide spectrum of activities ranging from manufacturing to trade to services.

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b. It involves different types of organizations with varying constitutions like proprietary

concerns, partnership firms, private limited companies, public limited companies.

c. Regulations/ Govt. Policy guidelines varies from activity to activity.

d. It overlaps with the presently defined Priority Sector.

Challenges Faced by the SME Sector

Mentoring & Advocacy

Credit/Financing

Technology

Information about Technology

Actual procurement of technology

Finance for Technology up gradation

Market Access

Infrastructure

Procedures

Exit Mechanism

Strategy Interventions for Revitalization and Growth

Various ways of financing SMEs

1. Government

2. Specialized banks for SMEs

3. Leasing companies

4. Private financial institutions

There are a number of banks who help in assisting the SMEs for financing. The main channel

used by the SMEs via Banks is Specialized loans by various Banks.

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The Main reason for choosing bank loans by SMEs compared to other sources of financing like

venture capital, PE funding etc is there is only interest to be paid no stake is to be diluted thus the

whole command of the SME is with the owner only.

There are a number of Private as well as Public sector banks who assist SME in Financing.

(C) INDUSTRY PROFILE

Banking in India originated in the last decades of the 18th century. The first banks were The

General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790;

both are now defunct. The oldest bank in existence in India is the State Bank of India, which

originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of

Bengal. This was one of the three presidency banks, the other two being the Bank of

Bombay and the Bank of Madras, all three of which were established under charters from the

British East India Company. For many years the Presidency banks acted as quasi-central banks,

as did their successors. The three banks merged in 1921 to form the Imperial Bank of India,

which, upon India's independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a

consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 andstill functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that

issues stock and requires shareholders to be held liable for the company's debt) It was not the

first though. That honor belongs to the Bank of Upper India, which was established in 1863, and

which survived until 1913, when it failed, with some of its assets and liabilities being transferred

to the Alliance Bank of Simla.

When the American Civil War stopped the supply of cotton to Lancashire from the Confederate

States, promoters opened banks to finance trading in Indian cotton. With large exposure to

speculative ventures, most of the banks opened in India during that period failed. The depositors

lost money and lost interest in keeping deposits with banks. Subsequently, banking in India

remained the exclusive domain of Europeans for next several decades until the beginning of the

20th century.
http://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengal

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Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire

d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;

branches in Madras and Puducherry, then a French colony, followed. HSBC established itself

in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade ofthe British Empire, and so became a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881

in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in

1895, which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period

of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrialand other infrastructure had improved. Indians had established small banks, most of which

served particular ethnic and religious communities.

The period between 1906 and 1911, saw the establishment of banks inspired by

the Swadeshi movement. The Swadeshi movement inspired local businessmen and political

figures to found banks of and for the Indian community. A number of banks established then

have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of

Baroda, Canara Bankand Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina

Kannada and Udupi district which were unified earlier and known by the name South Canara

district. Four nationalised banks started in this district and also a leading private sector bank.

Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking".

During the First World War (1914-1918) through the end of the Second World War (1939-1945),

and two years thereafter until the independence of India were challenging for Indian banking.

The years of the First World War were turbulent, and it took its toll with banks simply collapsing

despite the Indian economy gaining indirect boost due to war-related economic activities. At

least 94 banks in India failed between 1913 and 1918 as indicated in the following table:
http://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Pondicherryhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Pondicherryhttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Kolkata

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Source: wikepedia.com

The partition of India in 1947 adversely impacted the economies ofPunjab and West Bengal,

paralyzing banking activities for months. India's independence marked the end of a regime of

the Laissez-faire for the Indian banking. The Government of India initiated measures to play an

active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the

government in 1948 envisaged a mixed economy. This resulted into greater involvement of the

state in different segments of the economy including banking and finance.

The major steps to regulate banking included:

The Reserve Bank of India, India's central banking authority, was nationalized on

January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public

Ownership) Act, 1948

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of

India (RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing

bank could be opened without a license from the RBI, and no two banks could have

common directors.

Despite the provisions, control and regulations ofReserve Bank of India, banks in India except

the State Bank of India or SBI, continued to be owned and operated by private persons. By the

YearsNumber of banks

that failed

Authorised capital

(Rs. Lakhs)

Paid-up Capital

(Rs. Lakhs)

1913 12 274 35

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 209 1
http://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1http://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1http://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/Partition_of_India

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1960s, the Indian banking industry had become an important tool to facilitate the development of

the Indian economy. At the same time, it had emerged as a large employer, and a debate had

ensued about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of

India, expressed the intention of the Government of India in the annual conference of the AllIndia Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The

meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance

and nationalised the 14 largest commercial banks with effect from the midnight of July 19,

1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of

political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the

Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received

the presidential approval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated

reason for the nationalization was to give the government more control of credit delivery. With

the second dose of nationalization, the Government of India controlled around 91% of the

banking business of India. Later on, in the year 1993, the government merged New Bank of

India with Punjab National Bank. It was the only merger between nationalized banks and

resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the

1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of

the Indian economy.

In the early 1990s, the then Narasimha Rao government embarked on a policy ofliberalization,

licensing a small number of private banks. These came to be known as New Generation tech-

savvy banks, and included Global Trust Bank (the first of such new generation banks to be set

up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI

Bank), ICICI Bankand HDFC Bank. This move, along with the rapid growth in the economy of

India, revitalized the banking sector in India, which has seen rapid growth with strong

contribution from all the three sectors of banks, namely, government banks, private banks and

foreign banks.
http://en.wikipedia.org/wiki/Indian_economyhttp://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Nationalisationhttp://en.wikipedia.org/wiki/Jayaprakash_Narayanhttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Narasimha_Raohttp://en.wikipedia.org/wiki/Liberalizationhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/Liberalizationhttp://en.wikipedia.org/wiki/Narasimha_Raohttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Jayaprakash_Narayanhttp://en.wikipedia.org/wiki/Nationalisationhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/wiki/Indian_economy

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The next stage for the Indian banking has been set up with the proposed relaxation in the norms

for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights

which could exceed the present cap of 10%,at present it has gone up to 74% with some

restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used

to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave

ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this

led to the retail boom in India. People not just demanded more from their banks but also received

more.

Currently (2007), banking in India is generally fairly mature in terms of supply, product rangeand reach-even though reach in rural India still remains a challenge for the private sector and

foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to

have clean, strong and transparent balance sheets relative to other banks in comparable

economies in its region. The Reserve Bank of India is an autonomous body, with minimal

pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage

volatility but without any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in

its services sector-the demand for banking services, especially retail banking, mortgages and

investment services are expected to be strong. One may also expect M&As, takeovers, and asset

sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak

Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has

been allowed to hold more than 5% in a private sector bank since the RBI announced norms in

2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/India

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Central Bank Reserve Bank of India

Nationalised

Banks

State Bank of India, Allahabad Bank, Andhra Bank, Bank of Baroda,Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India,Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank,

Oriental Bank of Commerce, Punjab and Sind Bank, Punjab NationalBank, Syndicate Bank, Union Bank of Indian, United Bank of India,UCO BANK, Vijaya Bank

Private Banks Bank of Rajasthan, Bharath Overseas Bank, Catholic Syrian Bank,Centurion Bank of Punjab, City Union Bank, Federal Bank, Ganesh Bankof Kurundwad, HDFC Development Credit Bank, Dhanalaxmi Bank,ICICI Bank, IDBI, IndusInd Bank, ING Vyasa Bank, Kotak MahindraBank, Laxmivilas Bank, Lord Krishna Bank, South Indian Bank, TamilNadu Merchantile Bank Ltd., Axis Bank, YES Bank

(D) COMPANYS PROFILE

STATE BANK OF INDIA

Introduction:

State Bank of India (SBI) (BSE: 500112, LSE:SBID)is the largest banking and financialservice company in India, by almost every parameter revenues, profits, assets, market

capitalization, etc. It is today going through a momentous phase of Change and Transformation

the two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy

and moving with agility to give the Private and Foreign Banks a run for their money.

The bank is entering into many new businesses with strategic tie ups Pension Funds, General

Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant

Acquisition, Advisory Services, structured products etc each one of these initiatives having a

huge potential for growth.

The Bank is forging ahead with cutting edge technology and innovative new banking models, to

expand its Rural Banking base, looking at the vast untapped potential in the hinterland and

proposes to cover 100,000 villages in the next two years.

It is also focusing at the top end of the market, on whole sale banking capabilities to provide

Indias growing mid / large Corporate with a complete array of products and services. It is

consolidating its global treasury operations and entering into structured products and derivative

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instruments. Today, the Bank is the largest provider of infrastructure debt and the largest

arranger of external commercial borrowings in the country. It is the only Indian bank to feature

in the Fortune 500 list.

State Bank of India has 172 foreign offices in 37 countries across the globe. SBI has about26,000+ ATMs (25,000th ATM was inaugurated by the then Chairman of State Bank Shri O.P.

Bhatt on 31 March 2011, the day of his retirement); and SBI group(including associate banks)

has about 45,000 ATMs.SBI has 21,500 branches, including branches that belong to its associate

banks. SBI includes 99345 offices in India. India's number one ADB is in bellary i.e. State bankof India bellary ADB.

With four national level Apex Training Colleges and 54 learning Centres spread all over the

country the Bank is continuously engaged in skill enhancement of its employees.

The bank is also looking at opportunities to grow in size in India as well as internationally. Itpresently has 82 foreign offices in 32 countries across the globe. It has also 8 Subsidiaries in

India SBI Capital Markets Ltd, SBI Mutual Funds, SBI factor and commercial services Ltd,

SBI DFHI Ltd, SBI Cards and Payment Services Ltd, SBI Life Insurance Company Ltd, SBI

Fund Management Pvt. Ltd, SBI Canada - forming a formidable group in the Indian Banking

scenario.

Vision, Mission and Value statement

As always, customer service and customer satisfaction remains at the core of our efforts. In thisdirection, Bank unveiled on the 1st July 2008, its new Vision, Mission and Value statements,

which were based on views of the Banks staff.

The vision statement

My SBI,

MY Customer First,

My SBI: First in Customer Satisfaction

Vividly describes its customer centric focus and shall be the guiding principle for your Banks

plans, activities and strategies in future.

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The Mission Statement-

We will be Prompt, Polite and Proactive with our customers.

We will speak the language of young Indian.We will create product and services that help our customers achieve their goal.

We will go beyond call of duty to make our customers feel the valued.

We will be of service even in the remotest part of our country.

We will offer excellence in service to those abroad as much as we do to those in India.

We will imbibe state of art technology to drive excellence.

The Value statement-

We will always be honest, transparent and ethical.

We will respect our customers and fellow associates.

We will be knowledge driven.

We will learn and will share our learning

We will never take the easy way out.

We will do everything we can to contribute to our community we work in.

We will nurture pride in India.

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ABOUT LOGO

Togetherness is the theme of this corporate logo of SBI where the world of banking services

meet the ever changing customers needs and establishes a link that is like a circle, it indicatescomplete service towards customers. The logo also denotes a bank that it has prepared to do

anything to go to any lengths, for the growth and newer, more challenging, more promising

direction. The key hole indicates safety and security.

Evolution of SBI

The origin of the State Bank of Indiagoes back to the first decade of the nineteenth century

with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the

bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique

institution, it was the first joint-stock bank of British India sponsored by the Government ofBengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed

the Bank of Bengal. These three banks remained at the apex of modern banking in India till their

amalgamation as the Imperial Bank of India on 27 January 1921. In the year 1955, the

controlling interest in the Imperial Bank of India was acquired by the reserve Bank of India and

State Bank of India (SBI) came into existance by the act of Parliament as successor to the

Imperial Bank of India.
http://upload.wikimedia.org/wikipedia/en/c/cc/SBI-logo.svg

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State Bank of India is the largest and one of the oldest commercial bank in India, in existence for

more than 200 years. The bank provides a full range of corporate, commercial and retail banking

services in India. Indian central bank namely Reserve Bank of India (RBI) is the major shareholder of the bank with 59.7% stake. The bank is capitalized to the extent of Rs.646bn with the

public holding (other than promoters) at 40.3%.

SBI has the largest branch and ATM network spread across every corner of India. The bank has a

branch network of over 17000 branches (including subsidiaries). Apart from Indian network it

also has a network of 73 overseas offices in 30 countries in all time zones, correspondent

relationship with 520 International banks in 123 countries. In recent past, SBI has acquired banks

in Mauritius, Kenya and Indonesia. The bank had total staff strength of 198,774 as on 31st

March, 2008. Of this, 29.51% are officers, 45.19% clerical staff and the remaining 25.30% were

sub-staff. The bank is listed on the Bombay Stock Exchange, National Stock Exchange, KolkataStock Exchange, Chennai Stock Exchange and Ahmedabad Stock Exchange while its GDRs are

listed on the London Stock Exchange.

SBI group accounts for around 25% of the total business of the banking industry while it

accounts for 35% of the total foreign exchange in India. With this type of strong base, SBI has

displayed a continued performance in the last few years in scaling up its efficiency levels. Net

Interest Income of the bank has witnessed a CAGR of 13.3% during the last five years. During

the same period, net interest margin (NIM) of the bank has gone up from as low as 2.9% in FY02

to 3.40% in FY06 and currently is at 3.32%.

The government of India owes about 59.41% of State Bank of India

Following are the banking subsidiaries of SBI:

State Bank of Travancore (SBT)

State Bank of Bikaner and Jaipur (SBBJ)

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State Bank of Mysore (SBM)

State Bankof Patiala (SBP)

State Bank of Hyderabad (SBH)

SBIs Present organisational Structure

The bank has a 4 tier structure the central office is the Banks apex policy-making body. The

Central Office is now called Corporate Centre. The management of the Bank vests with the

Central Board consisting of a Chairman, 2 Managing Directors and other directors. The term of

office of a director is 3 years.

At the Local Head office, a local Board is constituted. The Board Members comprise CGM (ex

officio), directors of the Central Board ordinarily resident in the area, one member elected by thelocal shareholders holding together, not less than 2.5% of the issued capital and other nominated

by the Government in consultation with the RBI.

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(E) RESEARCH METHODOLOGY

E.1. OBJECTIVE OF THE STUDY

Primary objective:-

To study the Credit Risk Assessment in SME (State Bank of India)

Secondary objective:-

To understand , analyse and interpret the risk in giving loan to SME sector

E.2. STATEMENT OF THE PROBLEM

The basic issue while doing project is that what all process SME has to undergo while procuring

loan from State Bank of India. Intensive study was done both with respect to SME as a customer

and Bank who assist these SMEs in giving loan

E.3. SOURCES OF DATA

The sources of the data so collected in this project are as follows:-

Reports of the already appraised project

Manuals

Internet

E.4. SCOPE OF THE STUDY

The scope of the study includes finding out how the loan is given to SMEs. State Bank of India

(SBI) is the forerunner in the field of SME financing. Majority of the loans to SMEs are been

provided by SBI. SBI has introduced various schemes for SMEs.

E.5. LIMITATIONS

Bank norms are very strict

Very little deviation was observed with respect to primary & collateral security.

Few projects were studied for coverage of whole sector.

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(F) ANALYSIS AND INTERPRETATION

EXECUTIVE SUMMARYCIRCLE: KOLKATA

BRANCH: BENGAL

COMPANY: TAPAS HEALTH CARE PVT. LTD.

The following Contents are presented :-

(a)Date chart for Disposal of Credit Facilities.

(b) Brief Background (Company/ Group/ Promoters/ Management including shareholding

pattern).

(c) Brief Write up on industry/ sector and companys standing.

CMA(Credit Market Analysis)

RATIO ANALYSIS

DSCR (Debt. Service Coverage Ratio)

SYNOPSIS

CRA

(i)Date chart for Disposal of Credit Facilities

1 Name of the Branch Garfa Branch

2 Circle Kolkata

3 Name of the Unit M/s Tapas Health Care Pvt. Ltd.

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4. Limits (Existing) (Rs in lacs)

Existing

Cash Credit 15.00

Term Loan 116.00

TOTAL 131.00

Credit Facilities ( Proposed)

Cash Credit 35.00

TL 0.00

TOTAL 35.00

5 Date of receipt of the proposal at the Branch 17/01/2012

Date of receipt of the proposal at the SMECCC 20/02/2012

6 Queries raised on (if queries raised more than once, please

mention all the dates)

15/03/2012

7 Date of receipt of complete information 30/04/2012

8 Date of submission to sanctioning authority 07/05/2012

(Rs. in lacs)

Circle/Network: Bengal/ Kolkata

Network

Branch: Garfa

Borrowers Profile

a. Name, Address, Manufacturing activity/Locations, Date of incorporation, Banking

arrangement etc of

Company: M/s Tapas Health Care Pvt. Ltd.

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Name of the

Directors/Partners/Proprietor

Dr. Tapas Banerjee

Smt. Rangana Banerjee

Group, if any N.A.

Address: P-10, Garfa East End Road, Kolkata-700078

Regd Office: 406, Garfa Main Road

Mfg facility( Locations): N/A

Segment: C&I Constitution: Pvt Ltd Co. IRAC Status

Advances: Standard

Investments : Nil

Industry: Trade & Service Activity :Nursing Home

Date of incorporation: 09.08.2005 Banking with us since: 2005

Banking arrangement: Sole Banking.

Existing Connection : Yes

If yes, date of last renewal:

03.06.2010

New unit: No. If Take over, whether all

norms complied with: NO.

(ii) Brief Background (Company/ Group/ Promoters/ Management including shareholding

pattern):

Company: Tapas Health Care is a Private Limited company incorporated 0n 09.08.2005. The

company was set up to creat facilities for health care development across Kolkata and suburban

areas for middle income group. Dr. Tapas Banerjee and his wife Smt. Rangana Banerjee are the

directors of the company. Dr. Tapas Banerjee is an MBBS and doctor of medicine from Calcutta

university. He is attached with various hospitals and nursing Homes as a consulting Physician.

Dr. Banerjee has 16 years of Experience in the line of activity. Smt. Rangana Banerjee is an MA

and actively involved in the Nursing Home.

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(iii) Brief Write up on industry/ sector and companys standing:

Health care system is growing fast in India. Health Care is a core sector in India and the

Government is giving thurst to develop the health care system and inviting private investors to

invest in health care projects. Health care facilities are availed by a large percentage of middle

income group, self-employed professionals, small business owners, organised sector employees

and a certain percentage of low income groups. Now a days health care system is in a great

demand among people and it is poised for an enviable growth in future.

Name of

proprietor

Adress Age Edu. Qlf Shareholding

Dr. Tapas

Banerjee

P-10, Garfa

east end road,

kolkata

49 yrs MBBS/MD 50%

Smt. Rangana

Banerjee

16-B, Dover

lane, kolkata

41 yrs M.A. 50%

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CMA (Credit Market Analysis):-

State Bank Of India

ASSESSMENT OF WORKING CAPITAL REQUIREMENTSFORM II -- OPERATING STATEMENT

TAPAS HEALTH CARE PVT. LTD.

AMOUNTIN LACS

As per profit and loss account actuals/estimates for the year ended/endin

31ST MARCH MARCH MARCH MARCH MARCH MARCH MARCH

2009 2010 2011 20122012-2013

2013-2014

2014-2015

1 Gross Sales AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ.

i) Domestic Sales 49.40 51.74 53.10 67.00 83.00 94.00 110.00

ii) Export Sales

iii)

iv) Other Income

TOTAL 49.40 51.74 53.10 67.00 83.00 94.00 110.00

2 Less Excise duty

TOTAL

3 Net Sales (Item 1 - Item 2) 49.40 51.74 53.10 67.00 83.00 94.00 110.00

4 Percentage rise or fall in net 5% 3% 26% 24% 13% 17%sales as compared to last year

5 Cost of sales

i) Raw materials (including

stores and other items used

in process of manufacture)

(a) Imported 8.52 15.10 44.33 28.00 40.00 50.00 65.00

(b) Indigenous

8.52 15.10 44.33 28.00 40.00 50.00 65.00

ii) Other spares

(a) Imported

(b) Indigenous

iii) Power and fuel

iv) Direct labour

(Factory wages and salary)

v) Other manufacturing expenses

(a)Repair & maintenance

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(b)Other factory overheads

vi) Depreciation 6.02 5.95 6.01 6.00 6.10 6.10 6.10

vii) SUB TOTAL (i to vi) 14.54 21.05 50.34 34.00 46.10 56.10 71.10

State Bank Of India

TAPAS HEALTH CARE PVT. LTD.AMOUNTIN LACS

31ST MARCH MARCH MARCH MARCH MARCH MARCH MARCH

2009 2010 2011 20122012-2013

2013-2014

2014-2015

AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ.

viii) Add op. stocks-in-process

ix) Deduct cl. stocks-in-process

x) Cost of Production 14.54 21.05 50.34 34.00 46.10 56.10 71.10

xi) Add op.stock of finished goods 4.92 4.92 8.42 39.84 45.00 50.00 55.00

xii) Ded. cl.stock of finished goods 4.92 8.42 39.84 45.00 50.00 55.00 60.00

xiii) S.TOTAL(Total cost of sales) 14.54 17.55 18.92 28.84 41.10 51.10 66.10

34.86 34.19 34.18 38.16 41.90 42.90 43.90

6 Selling,Gen.and Admn. Exp. 15.87 17.67 18.60 20.00 22.00 24.00 26.00

7 SUB TOTAL (5 + 6) 30.41 35.22 37.52 48.84 63.10 75.10 92.10

8 Oper. profit before intt.(3 - 7) 18.99 16.52 15.58 18.16 19.90 18.90 17.90

9 Interest 16.01 13.51 12.72 12.43 11.04 7.60 4.17

10 Oper.profit after interest (8 - 9) 2.98 3.01 2.86 5.73 8.86 11.30 13.73

11 Non-oper. income/expenses

i)Add other non-operatingincome

(a) Other( Deferred Tax Credit) 0.55 1.20 0.07 0.05 0.05 0.05 0.05

(b)

(c)

(d)

Sub total (Income) 0.55 1.20 0.07 0.05 0.05 0.05 0.05

ii) Deduct other non-oper. exp.

(a) Prel./Pre-op./Other exp. w/o

(b) Interest on partner's capital(c) Partner's Salary

(d)

Sub total (Expenses)

iii)Net of other non-op.income/exp 0.55 1.20 0.07 0.05 0.05 0.05 0.05

12Profit beforetax/Loss(10+11(iii)) 3.53 4.21 2.93 5.78 8.91 11.35 13.78

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13 Provision for taxes 0.33 0.46 0.56 0.60 0.65 0.75 0.75

14 Net Profit/Loss (12 - 13) 3.20 3.75 2.37 5.18 8.26 10.60 13.03

15 Prov. for Def.Tax Assets

16 Prov. for Def.Tax Liabilities

17Profit/Loss after Def.Tax (14-15) 3.20 3.75 2.37 5.18 8.26 10.60 13.03

18 Equity Dividend paid (Amount)

(Already paid + B.S. Provision)

19 Retained profit (14 - 15) 3.20 3.75 2.37 5.18 8.26 10.60 13.03

20Ret.profit/Profit afterDef.Tax(%) 100% 100% 100% 100% 100% 100% 100%

State Bank Of India

FORM III -- ANALYSIS OF BALANCE SHEET

TAPAS HEALTH CARE PVT.LTD.

AMOUNT INLACS

LIABILITIES As per balance sheet for year ending on

31ST MARCH MARCH MARCH MARCH MARCH MARCH MARC

2009 2010 2011 2012 2012-20132013-2014

2014-2015

CURRENT LIABILITIES AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ

1 Short term borr. from banks(incl. bills purch., disc. andexcess borr.placed onrepaymt)

i) From applicant bank 8.70 9.06 15.12 15.00 15.00 15.00 15.0

ii) From other banks

iii) (of which bills purch./disc.)

Sub total (A) 8.70 9.06 15.12 15.00 15.00 15.00 15.0

2 Short term borr. from others

3 Sundry Creditors (Trade) 5.77 5.25 35.47 46.35 60.72 76.30 92.5

4Adv.payments fromcustomers/

deposits from dealers

5 Provision for taxation 0.32 0.46 1.01

6 Dividend payable

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7 Other statutory liabilities

(due within one year)

8 Dep./instal.of TL/DPGs/Deb. 11.12 10.84 20.00 20.00 20.00 20.00

etc.(due within one year)

9 Other curr.liabilities and prov.(due within one year)

(Specify major items)

i) Other 6.23 8.45 5.10 5.00 5.00 5.00 5.0

ii)

iii)

iv)

v)

Sub total (B) 23.44 25.00 61.58 71.35 85.72 101.30 97.5

10 TOTAL CURR. LIABILITIES 32.14 34.06 76.70 86.35 100.72 116.30 112.5

(Total of 1 to 9 excld. 1(iii))

State Bank Of India


AMOUNT INLACS

As per balance sheet for year ending on


2009 2010 2011 2012 2012-2013

2013-

2014

2014-

2015

TERM LIABILITIES AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ

11Deb.(not maturing within1yr.)

12Pref.sh.(redeemable after1yr)

13 TL (excl. instalments payable 86.28 75.44 55.44 40.00 20.00

within one year)

unsecured loans 53.54 12.40 12.40 22.40 27.40 32.40 37.4

14Def.payment credits(excluding

instal. due within one year)

15Term dep.(repayable after1yr.)

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16 Other term liabilties 0.24

17 TOTAL TERM LIABILITIES 140.06 87.84 67.84 62.40 47.40 32.40 37.4

18

TOTAL OUTSIDE

LIABILITIES 172.20 121.90 144.54 148.75 148.12 148.70 149.9(Item 10 + item 17)

NET WORTH

19 Ordinary share capital 1.00 46.00 46.00 46.00 50.00 50.00 50.0

20 General reserve

21 Revaluation reserve

22Other reserves(excl.provisions)

Share application money 3.90

Reserve & Surplus -0.10 3.10 6.84 8.65 10.65 12.65 13.6

Unsecured Loan from others

23Surplus(+)/Deficit(-) in P&LA/C 3.20 3.75 2.37 5.18 9.79 16.29 24.1

Deffered tax liabilities

24 NET WORTH 8.00 52.85 55.21 59.83 70.44 78.94 87.7

25 TOTAL LIABILITIES 180.20 174.75 199.75 208.58 218.56 227.64 237.7

State Bank Of India

FORM III -- ANALYSIS OF BALANCE SHEET


AMOUNT INLACS

ASSETS As per balance sheet for year ending on


2009 2010 2011 2012 2012-20132013-2014

20142015

CURRENT ASSETS AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ

26 Cash and bank balances 0.94 0.36 0.42 2.52 5.60 9.68 14.

27 Inv. (other than long term

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inv.)

i)Govt.and oth. trusteesecurities

ii) Fixed deposits with banks

28Receiv. other than deferredandexports(incl.bill purchasedand

discounted by banks)

ii)Exp.receivables (includingbillspurchased and disc.bybanks)

29

Instal. of deferred

receivables(due within one year)

30 Inventory:

i)R.M.(incl.stores and otheritemused in process ofmanufacture

(a) Imported

(b) Indigenous

ii) Stocks-in-process

iii) Finished goods 4.92 8.42 39.84 45.00 50.00 55.00 60.

iv) Other consumable spares

(a) Imported(b) Indigenous

4.92 8.42 39.84 45.00 50.00 55.00 60.

31Adv. to supp. of rawmaterials

and stores & spares

32 Advance payment of taxes

33 Other current assets

i)ii)

34 TOTAL CURRENT ASSETS

(Total 26 to 33) 5.86 8.78 40.26 47.52 55.60 64.68 74.

State Bank Of India

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AMOUNT INLACS

As per balance sheet for year ending on


2009 2010 2011 2012 2012-20132013-2014

20142015

FIXED ASSETS AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ

35 Gross block(L & B,machinery 168.64 162.80 159.88 161.02 163.02 163.02 163.

and capital work in progress)

36 Depreciation to date 6.02 5.95 6.01 6.00 6.10 6.10 6.

37 NET BLOCK (35-36) 162.62 156.85 153.87 155.02 156.92 156.92 156.

OTHER NON-CURR.ASSETS

38

Inv./book

debts/advances/dep.which are not current assets

i)

(a) Inv. in subsidiary co./affiliates

(b) Others

ii)Adv. to supp. of capitalgoods

and contractors

iii)Deffered domesticreceivables

iv) Deffered export receivables

v) Security deposits 1.04 1.04 1.04 1.04 1.04 1.04 1.

vi) Staff advances

vii)

viii)

ix)

x)

39 Non-cons. stores and spares

40Oth.NCA incl.dues fromdirectors

Deffered tax assets

41 TOT.OTH.NON-CURR.ASSETS 1.04 1.04 1.04 1.04 1.04 1.04 1.

42Intan.assets (patents,goodwill, 10.68 8.08 4.58 5.00 5.00 5.00 5.

prel. expenses, bad/doubtfulexpenses not provided foretc.)

43TOT. ASSETS(34+37+41+42) 180.20 174.75 199.75 208.58 218.56 227.64 237.

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44 TAN. NET WORTH (24-42) -2.68 44.77 50.63 54.83 65.44 73.94 82.

45 NET WORKING CAPITAL -26.28 -25.28 -36.44 -38.83 -45.12 -51.62 -37.

[(17+24)-(37+41+42)]

46 CURRENT RATIO 0.18 0.26 0.52 0.55 0.55 0.56 0.

47 TOT.OUT.LIAB./TAN.N.WORTH -64.25 2.72 2.85 2.71 2.26 2.01 1.48 TOT.TER.LIAB./TAN.N WORTH -52.26 1.96 1.34 1.14 0.72 0.44 0.

Ratio Analysis:-

a. FINANCIALINDICATORS:


2009 2010 2011 2012 2012-2013 2013-2014 2014-2015


Gross Sales (value) 49.40 51.74 53.10 67.00 83.00 94.00 110.00

Net sales (value) 49.40 51.74 53.10 67.00 83.00 94.00 110.00

(Exports)

Net Sales (Quantity)

(Exports) (Quantity)

Raw Materials 8.52 15.10 44.33 28.00 40.00 50.00 65.00

Power and Fuel

Direct Labour

Selling & GA Cost 15.87 17.67 18.60 20.00 22.00 24.00 26.00

Interest 16.01 13.51 12.72 12.43 11.04 7.60 4.17

Operating Profit 2.98 3.01 2.86 5.73 8.86 11.30 13.73

OPM% (OP/NS%) 6.03% 5.82% 5.39% 8.55% 10.68% 12.02% 12.48%

PBT 3.53 4.21 2.93 5.78 8.91 11.35 13.78

PBT/N Sales 7.15% 8.14% 5.52% 8.63% 10.74% 12.07% 12.53%

PAT 3.20 3.75 2.37 5.18 8.26 10.60 13.03Cash Accruals 9.22 9.70 8.38 11.18 14.36 16.70 19.13

PBDIT 25.56 23.67 21.66 24.21 26.05 25.05 24.05

Intt Cov. Ratio 1.60 1.75 1.70 1.95 2.36 3.29 5.77

PUC 1.00 46.00 46.00 46.00 50.00 50.00 50.00

TNW -2.68 44.77 50.63 54.83 65.44 73.94 82.77

Adjusted TNW -2.68 44.77 50.63 54.83 65.44 73.94 82.77

TOL/TNW -64.25 2.72 2.85 2.71 2.26 2.01 1.81

TOL/Adj. TNW -64.25 2.72 2.85 2.71 2.26 2.01 1.81

Current Ratio 0.18 0.26 0.52 0.55 0.55 0.56 0.66

NWC -26.28 -25.28 -36.44 -38.83 -45.12 -51.62 -37.79

DSCR 0.80 0.87 1.02

ROE% 17.82% 4.97% 9.82% 13.74% 15.21% 16.63%

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c. WORKING CAPITAL

2009 2010 2011 20122012-2013

2013-2014

2014-2015


Net Sales 49.40 51.74 53.10 67.00 83.00 94.00 110.00Inventory/Net Sales +Recv./Gross Sales(days) 36 59 274 245 220 214 199

Net Sales / TTA 0.29 0.31 0.27 0.33 0.39 0.42 0.47

ABF / TCA 148.46% 103.19% 37.56% 31.57% 26.98% 23.19% 20.06%

S Cr / TCA 98.46% 59.79% 88.10% 97.54% 109.21% 117.97% 123.79%

OCL / TCA 400.00% 284.74% 152.96% 150.15% 154.17% 156.62% 130.47%

NWC / TCA -448.46% -287.93% -90.51% -81.71% -81.15% -79.81% -50.53%

b. ACTIVITY WISE CASH FLOW ANALYSIS

2009 2010 2011 20122012-2013

2013-2014

2014-2015


a. Net cash from operation 25.23 18.13 14.65 21.79 28.77 28.78 28.47

b. Net cash from investment 0.55 7.04 2.99 1.19 2.05 0.05 0.05

c. net cash from financing -16.01 -21.35 -13.76 -16.18 -20.04 -20.60 -18.17

d. Net increase in cash 9.77 3.82 3.88 6.80 10.78 8.23 10.35

d. COMMERCIAL VIABILITY

2009 2010 2011 20122012-2013

2013-2014

2014-2015


Net Sales 49.40 51.74 53.10 67.00 83.00 94.00 110.00

Operating Profit 2.98 3.01 2.86 5.73 8.86 11.30 13.73

PBT 3.53 4.21 2.93 5.78 8.91 11.35 13.78

PAT 3.20 3.75 2.37 5.18 8.26 10.60 13.03

Cash Accruals 9.22 9.70 8.38 11.18 14.36 16.70 19.13

PBDIT 25.56 23.67 21.66 24.21 26.05 25.05 24.05

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f.CRA RATIOS (SIMPLIFIEDMODEL)

2009 2010 2011 20122012-2013

2013-2014

2014-2015


TOL/TNW -64.25 2.72 2.85 2.71 2.26 2.01 1.81

Current Ratio 0.18 0.26 0.52 0.55 0.55 0.56 0.66

ROCE (%) 14.18% 13.55% 10.84% 11.61% 11.92% 11.00% 10.12%

PBDIT/Interest 1.60 1.75 1.70 1.95 2.36 3.29 5.77

PAT/Net Sale (%) 6.48% 7.25% 4.46% 7.73% 9.95% 11.27% 11.85%(Inventory/N.Sales)+(Receivable/G.sales) indays 36 59 274 245 220 214 199

TNW -2.68 44.77 50.63 54.83 65.44 73.94 82.77

e. EFFICIENCYRATIOS

2009 2010 2011 20122012-2013

2013-2014

2014-2015

AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ.Net Sales/TTA (times) 0.29 0.31 0.27 0.33 0.39 0.42 0.47

PBT/TTA (%) 2.08% 2.53% 1.50% 2.84% 4.17% 5.10% 5.92%

Op Cost/Sales (%) 61.56% 68.07% 70.66% 72.90% 76.02% 79.89% 83.73%

ABF/TCA (%) 148.46% 103.19% 37.56% 31.57% 26.98% 23.19% 20.06%Inventory/Net Sales +Recv./Gross Sales(days) 36 59 274 245 220 214 199

Interest / Cost of Sales 1.10 0.77 0.67 0.43 0.27 0.15 0.06

ABF/Gross Sales 0.18 0.18 0.28 0.22 0.18 0.16 0.14

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DSCR (Debt. Service Coverage Ratio):-

2009 2010 2011 2012

2012-

2013

2013-

2014

2014-

2015

Income 49.40 51.74 53.10 67.00 83.00 94.00 110.00

PAT 3.20 3.75 2.37 5.18 8.26 10.60 13.03

Cash Accrual 14.36 16.70 19.13

Add/Sub. Adj. in cash accrual (if

any) #

Net Cash Accrual (A) 14.36 16.70 19.13

TL Intt 10.10 10.10 10.10 10.10 8.53 5.09 1.65

Add / Sub. Adj in TL Intt (if any) #

Net TL Intt (B) 10.10 10.10 10.10 10.10 8.53 5.09 1.65

TOTAL (A+B) 22.89 21.79 20.79

TL Repay (C) 0.00 0.00 0.00 0.00 19.92 19.92 18.72

TOTAL (B+C) 28.45 25.01 20.37

DSCR 0.80 0.87 1.02

AVG DSCR 0.89

NET DSCR 0.72 0.84 1.02

NET AVG DSCR 0.86

Synopsis:-

Synopsis of balance sheet:

2009 2010 2011 20122012-2013

2013-2014

2014-2015

LIABILITIES AUD. AUD. AUD. ESTI. PROJ. PROJ. PROJ.

CURRENT LIABILITIES

Short Term Bank Finance (A) 8.70 9.06 15.12 15.00 15.00 15.00 15.00Other Current Liabilities (B) (Total of ito iv) 23.44 25.00 61.58 71.35 85.72 101.30 97.57

i. Sundry Creditors 5.77 5.25 35.47 46.35 60.72 76.30 92.57

ii. Advance Payment Received

iii. TL Inst. Repayable in 12 Months 11.12 10.84 20.00 20.00 20.00 20.00iv. Others 6.55 8.91 6.11 5.00 5.00 5.00 5.00TOTAL CURRENT LIABILITIES =(A+B) 32.14 34.06 76.70 86.35 100.72 116.30 112.57

v. Term Loan- SBI > 12 months 86.28 75.44 55.44 40.00 20.00

vi. Term Loan- Others > 12 months

vii. Debentures, Redeemable Pref. Share(< 12 years), FCCB etc.

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viii. Unsecured Loans 0.24

ix. Other Term Liabilities 53.54 12.40 12.40 22.40 27.40 32.40 37.40TOTAL TERM LIABILITIES (D) (Totalof v to ix) 140.06 87.84 67.84 62.40 47.40 32.40 37.40TOTAL OUTSIDE LIABILITY (E) =(C+D) 172.20 121.90 144.54 148.75 148.12 148.70 149.97

x. PUC 1.00 46.00 46.00 46.00 50.00 50.00 50.00xi. Reserves & Surplus (Other thanRevaluation Reserves) 7.00 6.85 9.21 13.83 20.44 28.94 37.77

xii. Share Application Money

xiii. DTL

Net Worth (NW) (F) (Total of x to xiii) 8.00 52.85 55.21 59.83 70.44 78.94 87.77

TOTAL LIABILITIES (G) (E+F) 180.20 174.75 199.75 208.58 218.56 227.64 237.74

ASSETS 2009 2010 2011 20122012-2013

2013-2014 2014-2015

CURRENT ASSETS

a. Cash & Bank Balance 0.94 0.36 0.42 2.52 5.60 9.68 14.78

b. LC/BG Margin & Liquid Assets

c. Receivables (< 6 months)

d. Investments (Other than long term)

e. Total Inventory 4.92 8.42 39.84 45.00 50.00 55.00 60.00f.i. Other Current Assets- Dues fromAss. & Sub.

f.ii. Other Current Assets- Others

TOTAL CURRENT ASSETS (A) 5.86 8.78 40.26 47.52 55.60 64.68 74.78

FIXED ASSETSGross Block 168.64 162.80 159.88 161.02 163.02 163.02 163.02

Less Cuml. Depreciation 6.02 5.95 6.01 6.00 6.10 6.10 6.10Net Block (excluding RevaluationReserves) (A) 162.62 156.85 153.87 155.02 156.92 156.92 156.92

a. Investments in Asso. & Sub.

b. Other Investments

c. Receivables (> 6 months)

d. Others 1.04 1.04 1.04 1.04 1.04 1.04 1.04

Non Current Assets = (a to d) 1.04 1.04 1.04 1.04 1.04 1.04 1.04

Total Tangible Assets (A+B+C = D) 169.52 166.67 195.17 203.58 213.56 222.64 232.74

a. DTA

b. Other Intangible Assets 10.68 8.08 4.58 5.00 5.00 5.00 5.00Intangible Assets including DTA (E) =(a+b) 10.68 8.08 4.58 5.00 5.00 5.00 5.00

TOTAL ASSETS (D+E) 180.20 174.75 199.75 208.58 218.56 227.64 237.74

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CRA (Credit Risk Assessment):-

INSERT THE RATIOSM/S.Tapas Health Care Pvt. Ltd.

2009 2010 2011 Estimated 2012 LATEST3 yrsAvg

Comparison :Projected Ratio: better or atpar or worse ascompared tothe latest ratio.

RATIOS Audited Audited Audited 2011 Projected Ratio Ratio

Insertbetter,atpar, worse

TOL/TNW -64.25 2.72 2.85 1.88 2.71 2.85 -19.56 Better

CURRENT RATIO 0.18 0.26 0.52 0.67 0.55 0.52 0.32 Better

ROCE (%) 14.18 13.55 10.84 14.41 11.61 10.84 12.86 Better

PBDIT/INTT 1.60 1.75 1.70 2.18 1.95 1.70 1.68 Better

PAT/NET SALES (%) 6.48 7.25 4.46 10.19 7.73 4.46 6.06 At Par

INV.+REC/ SALES 36 59 274 205 245 274 123 Better

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TRADING: SIMPLIFIED MODEL

Financial ratios:Parameters

Financial RatiosAverageof last 3yearsPrv-to-Prv Yr Prev. Yr 31-Mar-11

TOL/TNW -64.25 2.72 2.85 -19.56

Current Ratio 0.18 0.26 0.52 0.32

ROCE 14.18 13.55 10.84 12.86

PBDIT/Interest 1.60 1.75 1.70 1.68

PAT/Net Sales(%) 6.48 7.25 4.46 6.06

G.Avg.DSCR 0.89(Inventory/N.Sales)+(Receivable/G.sales) indays 36.00 59.00 274.00 123.00

TNW 50.63

Futureprospects(FP) /(Projectedratios)

(A) Non-achievement of projected performance (Negative score)

Parameters

Latestyear

(projected)

Latestyear

(actual)-ve var.

(%)Scoringpattern

-veScore

CurrentRatio 0.67 0.52 22.00

(0-5)%=0(6-

10)%=0.5(11-

20)%=1(21-

30)%=1.5>30%=3

1.50

ROCE 14.41 10.84 25.00 1.50

PBDIT/INT 2.18 1.70 22.00 1.50

PAT/NS 10.19 4.46 56.00 3.00

TOL/TNW 1.88 2.85 52.00 3.00

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(B) Projections for the next year

Parameters

Latestyear

(actual)Next year

(projected)

Futureprospects

(P)Scoringpattern $

PositiveScore

(Q)

Markesfor -ve

variance(R)

NetMarks(Q-R)

(S)Weight

(T)

Wtdscor(SxT

CurrentRatio 0.52 0.55 At Par

"Better"=2"At par"=1"Worse"=0

1.00 1.50 -0.50 2.00 -1.0

ROCE 10.84 11.61 Better 2.00 1.50 0.50 2.00 1.00

PBDIT/INT 1.70 1.95 Better 2.00 1.50 0.50 2.00 1.00

PAT/NS 4.46 7.73 Better 2.00 3.00 -1.00 2.00 -2.0

TOL/TNW 2.85 2.71 Better 2.00 3.00 -1.00 2.00 -2.0TotalScore -3.00

Note:$ The Methodology for scoring under "Better", "At par", or "Worse" scenarios would be the same as indicated foscoring under respective ratios under Financial Risks

For a new Company/firm which is yet to complete a year of commercial production/ operation, as well as in Takeover cases, there would be no scoring on Future Prospects parameter as a whole and the score would bnormalized

FINANCIAL RISK PARAMETERS Working Sheet

[i] TOL / TNW [Max. weighted scored : 25]

[a] Latest RatioTABLE - I

Ratio Band Marks WeightCompa

ny'sRatio

Company'sScore from

[b]

Compan

y'sWeightedScore =[c]x[e]

[a] [b] [c] [d] [e] [f]

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-19.56 2.85 [b] < [a] 2 2.5 2.00 5.00[b]=[a] or

{[a]+[0.25]} 1

[b]>{[a]+[0.25]} 0Note: i) If the Company/firm obtainsmaximum score in Table-I, the score

in Table-II will be 2ii)Improvements in the ratio onlybelow the benchmark level of 5.00would qualify for getting a score of 2,otherwise it would be treated at parand get a score of 1.

[c] Summary of Total Score "TOL / TNW" TABLE-III

S.No.Particulars

WeightedScore

1Companys Score fromTable I

20.00

2Companys Score fromTable II

5.00

Company's TotalWeighted Score

25.00

[ii] CURRENT RATIO [Max. weighted scored : 20]

[a] Latest RatioTABLE - I

Ratio Band Marks WeightCompa

ny'sRatio

Company'sScore from

[b]

Company's

WeightedScore =[c]x[e]

[a] [b] [c] [d] [e] [f]

>=1.25 8 2 0.52 0.00 0.00

>=1.20 7

>=1.15 6

>=1.10 5

>=1.05 4

>=1.00 2

>=0.90 1

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[b] Moving Average of Company's Last 3 Years' - CURRENT RATIO TABLE II

Last 3 Years'average

Company's latestratio from Table-I

Company's latestratio as compared

to its 3 years'average

Marks Weight

Company'sScorefrom[d]

Company'sWeightedScore =[e]x[f]

[a] [b] [c] [d] [e] [f] [g]

0.32 0.52 [b] > [a] 2 2 1.00 2.00[b]=[a] or {[a]-

[0.03]} 1

[b]=8.00 8 2 10.84% 8.00 16.00

>=7.00 7

>=6.00 6

>=5.50 5

>=5.00 4

>=4.50 2

>=4.00 1

< 4.00 0

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[b] Moving Average of Company's Last 3 Years' ROCETABLE-II

Last 3 Years'average

Company's latestratio from Table-I


to its 3 years'average

Marks Weight

Company'sScorefrom[d]

Company'sWeightedScore =[e]x[f]

[a] [b] [c] [d] [e] [f] [g]

12.86 10.84% [b] > [a] 2 2 2.00 4.00[b]=[a] or {[a]-

[0.25%]} 1

[b]=3.00 8 1.5 1.70 2.00 3.00

>=2.75 7

>=2.50 6

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>=2.25 5

>=2.00 4

>=1.50 2

>=1.00 1

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[vi] PAT / Net Sales [%] [Max.Weighted Score-10]

[a] Latest Ratio TABLE - I

Ratio Band [%] Marks Weight Company's Ratio

Company's

Scorefrom [b]

Company'sWeightedScore =

[c]x[e]

[a] [b] [c] [d] [e] [f]

>=5.50 8 1 4.46% 5.00 5.00

>=5.00 7

>=4.50 6

>=4.00 5

>=3.50 4

>=3.00 2

>=2.00 1

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[c] Summary of Total Score "PAT / Net Sales" TABLE III

S.No.Particulars

WeightedScore

1 Companys Score from Table I 5.00

2 Companys Score from Table II 0.00Company's Total WeightedScore

5.00

[xiii] Case I : Gross Average DSCR for All Loans [for a borrower enjoying TL facility only]

[Maximum Weighted Score : 20]

RatioBand

Marks WeightCompany's

RatioCompany's

Score from [b]

Company'sWeightedScore =[c]x[e]

[a] [b] [c] [d] [e] [f]

>=2.00 10 2.00 0.89 0.00 0.00

>=1.98 9>=1.95 8

>=1.92 7

>=1.90 6

>=1.88 5

>=1.85 4>=1.80 3

>=1.78 2

>=1.75 1

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[b] Moving Average ofCompany's Last 3 Years' -Ratio - (Inv./NS+Rec./GS)x 365 [Days'] TABLE-II

Last 3 Years' averageCompany's latest

ratio from Table-I


to its 3 years'

averageMarks Weight

Company'sScore from [d]

CompanyWeighte

Score = [e]

[a] [b] [c] [d] [e] [f] [g]

123.00 274.00 [b] < [a] 2 2 0.00 0.00[b]=[a] or {[a]

+[15]} 1

[b]>{[a] +[15]} 0Note: i) If the Company/firm obtainsmaximum score in Table-I, the score inTable-II will be 2ii)Improvements in the ratio only belowthe benchmark level of 180 days wouldqualify for getting a score of

2, otherwise it would be treated at parand get a score of 1.

[c] Summary of Total Score under Case = II - (Inv. / NS + Rec. / GS) x 365 [days'] TABLE - III

S.No.Particulars

WeightedScore

1Companys Score fromTable I

0.00

2

Companys Score from

Table II

0.00

Company's TotalWeighted Score

0.00

CASE - III :For aCompanyhaving bothWC & TLFacilities.

[i] Scoring done for TL as under Case-I Score : 0.00

[ii] Scoring done for WC as under Case II Score : 0.00

Final Score (For both WC & TL= (case-I + case-II)/2 0.00

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Tapas Health Care Pvt. Ltd.

TRADING SECTOR : SIMPLIFIED MODEL

BORROWER RATING SUMMARY

(A) Financial Risk (FR) Marks

(a)

Weig

ht

(b)

Maximum

Weighted Score

= (a) x (b)

( c )

Companys

Weighted

Score

(d)

S.

No.

Parameters

(i)

TOL/ TNW

(a) Latest ratio -8

(b)Average of last 3 years-2

10 2.5 25

25.00

(ii)

Current Ratio

(a) Latest Ratio -8


10 2 20

2.00

(iii)

Return on Capital Employed (ROCE)(%)

(a) Latest ratio -8


10 2 20

20.00

(iv)

PBDIT/Intt.

(a) Latest ratio -8


10 1.5 15

6.00

(v)

PAT/Operating Income

(a) Latest ratio -8


10 1 10

5.00

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(vi)

(A) Gross Average DSCR (for All loans)

(for TL only)

(B) Inventory/Net Sales +

Receivables/Gross Sales (Days)

(a) Latest ratio -8


(for WC only)

or

(C) Sum of Scores under (A+B)]/2

(for a company enjoying both WC &

TL facilities)

10 2 20 0.00

(vii)Group Risk

10 0.5 5 Normalised

(viii) Forex Risk 10 0.5 5 Normalised

(ix) Future Prospects (FP) (Projected

Ratios)

10 2 20 -3.00

Total Score 140

Total Score normalized to 70 140/2=70 59.23

Qualitative Factors (-ve) (-10) 1 (-10) 0.00

Total Score (FR) 70 29.62

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TRADING SECTOR : SIMPLIFIED MODEL

BORROWER RATING SUMMARY

( B ) Business Risk (BR)

S. No. Parameters Maximum

Score

Companys Score

(i) Competition & Market Risk 8 8.00

(ii) Outlook/Cyclicality 6 6.00

(iii) Technology 2 2.00

(iv) Business Environment 2 2.00

(v) Regulatory Risk 2 1.50

Total Score (BR) 20 19.50

(C) Management Risk (MR)

(i) Integrity 2 2

(ii) Track Record/Conduct of Account 2 2

(iii) Expertise, Managerial Competence & Commitment 2 1.5

(iv) Payment Record 0.5 0.5

(v) Structure & Systems 0.5 0.5

(vi) Experience in the Trade 1 1

(vii) Length of Relationship with the Bank 0.5 0.25

(viii) Succession Plan/Key Person 1.5 1.5

Total Score (MR) 10 9.25

MR Score Normalised to 10 10 9.25

(D) Qualitative Parameter (External Rating) (+5) 0.00

(E) Aggregate Risk Score :(FR + BR + MR): (A+B+C+D) ~ 100 58.37

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(F) CRA Rating Based on the above Score SB 8

(G) Country Risk (CR) N/A

(H) Final Borrower Rating after CR SB 8

(I) Financial Statement Quality Satisfactory

(J) Risk Score/Rating Transition Matrix Annexed

CRA & Pricing: SB-8

Facility CRA Card Rate Proposed Rate

Term Loan SB-8 7.25% above Base Rate 7.25% above Base Rate

CC (stocks) SB-8 6.50% above Base Rate 6.50% above Base Rate

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(G) PRE SANCTION SURVEY REPORT

1. Date of InspectionName of the Official

2. Name of the Unit...

And Address.

..

Land Mark

..

3. Purpose of Visit.

4. Person interviewed and his.

Relationship with the unit.

5. Observations Unit/Shop/Office/Factory

Ownership Rented/Owned/Lease

(Rent receipt/Lease Deed to be enclosed)

Up-Keep

Ambience

Records

Methods of Accounting

Registered maintained

Maintenance

Stock

Adequacy Eye estimation Value

Quality Variety

Normal Holding Period/Amount

Purchase/Sale

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Seasonal Effect, If any

Major Suppliers and sources

Major buyers and area of sale

Credit Received: Period and Amount

Credit Extended: Period and Amount

Outstanding at any time

Level of Activity

Morale of Employee

6. Banking: Present Banking With

Credit facility, if any, with:

Account No:

How present business financed:

7. Personal Whether married

Occupation

Name

Nos. of children

Whether has LIP

Whether assessed to tax

Personal Property

House in own name, address, location etc.

Why came in business

And experience

8. Data collection: Information/ Data required

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9. Details of property to be mortgaged:

Holding

Street No.

Location/ Landmark

Date of visit

Area and Names of construction

Property belongs to

And relationship

Consideration of Mortgage

Eye estimation of value of property

Credit Officer

Comment of Asst. General Manager

Asst. General Manager

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(H)RACPC (Retail assets central processing centre)

HOME LOAN:-

SOURCING:-

Branches.

HLST (Home Loan Sales Team).

Project Area (Through Agent).

MARKETING:-

Advertisement.

Helpline.

Website.

Fixed Rate Of Interest is not existing.

Floating Rate Of Interest (it can be changed)

10.5% upto 30lacs.

10.75% upto 75 lacs.

Above 75 lacs 11%.

Process of Payment the Loan Amount

Pre-payment

Fore-closer

*No Extra Charge for Pre-payment and Fore-closer Payment.

PARAMETERS OF HOME LOAN:-

Know Your Customer.

Income Criteria.

Property.

Promoter Reputation.

RISKS INVOLVED IN HOME LOAN:-

Interest Rate Risk (Change in Market).

Death of the Borrower.

Fraud Case.

Fire & Earthquake (Environmental Risk).

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STEPS TAKEN BY SBI TO MANAGE THE RISKS:-

Managing the interest rate & Government subsidies.

Provide insurance (Accident insurance free of cost & SBI life insurance for any kind of death).

Legal Action.

For Environmental Risk one Mandatory Insurance is there.

The loan property has to be registered.

CAR LOAN:-

SOURCING:-

Dealer.

Branch.

MPST.

MARKETING:-

Advertisement.

Website.

Helpline.

PARAMETERS OF CAR LOAN:-

Know Your Customer.

Income criteria.

PROCESS OF PAYMENT THE LOAN:-

Pre-payment.

Fore-closer.

RISKS INVOLVED IN CAR LOAN:-

Interest rate.

Death of the borrower.

Car damage.

Fraud Case.


Insurance is mandatory.

Legal Action.

*Presently Floating rate of interest for car loan is 11.25%.

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EDUCATION LOAN:-

SOURCING:-

Branches.

Institution.

MPST (Multi Product Sales Team).

MARKETING:-

Advertisement.

Website.

Direct approach.

INTEREST RATES (Normal Education Loan):-

Upto 4 lacs-13.5% ( security free)

4 lacs to 7.5 lacs- 13.25% ( 3rd

party guarantee).

Above 7.5 lacs-12% ( with full security).

SCHOLAR LOAN:-

List: Without security With full security

A- upto 20lacs 30lacs

B- 15lacs 20lacs

C- 10lacs 15lacs

*Float rate of interest is 12%.

*In education loan Co-borrower in mandatory.

PARAMETERS OF EDUCATION LOAN:-

Borrower Details.

Institution details.

RISKS INVOLVED IN EDUCATION LOAN:-

Institution Placement.

No Job.

Drop out.

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Co-borrower is mandatory.

Co-borrower is equal responsible.

Legal Action.

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(I)FINDINGS

First of all the definition of SME as per SBI was different which is as follows :-

Micro and small enterprises (for manufacturing & service sector) are eligible for SMEs.The

investment criteria are as follows:-

1. Micro(manufacturing) investment in P&M upto Rs.25 lacs

2. Small(manufacturing) investment in P&M upto Rs. 5 crore

3. Micro(Service) investment in P&M upto Rs. 10 lacs

4. Small(Service) investment in P &M upto Rs. 2 crore

SBIs Approach to finance SSIs is:-

Types of facilities sanctioned to SSI

1. Entrepreneur Scheme: Maximum project cost Rs. 20 lakhs Margin: Nil upto Rs 5 lakhs.

If project cost is more than Rs 5 lakhs , a margin of 10 % is to be met by by the

entrepreneur on the amount in exess of Rs 5 lakhs.

2. Libralised Scheme: The bank extends finance for working capital finance in the form of

cash credit and purchase of machinery etc in the form of Term Loans.

Working Capital Finance : The bank extends need based and comprehensive assistance for

purchase of raw materials, for carrying on production and for enabling the units to give credit to

its purchasers. Thus, usually the stocks of raw materials, stock in process and finished goods and

debtors are taken as security for granting working capital advances. At times, a unit may have to

make advance payment to suppliers or establish letters of credit in their favour. The banks extend

these facilities also. One of the criteria is borrower shall have reasonable stake in the business.

Equity must be about 25 % of the total cost of the project.

Term loans: The Term loan is secured by hypothecation of machinery. The repayment of the

loans has to be fixed keeping in mind the useful life of the machine. The instalment must take

into account the cash accruals and ordinarily the acceptable Debt Service Coverage Ratio is 2:1.

Four important concepts relating to term loans are-

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1. Breakeven level of operations

2. Margin of Safety

3. Debt/Service coverage ratio

4. Gestation period

Breakeven Level of Operations:

At this level total revenue equal total expenses and the unit does not makes either profit or loss.

Margin of safety:

It is the percentage drop in sales that can occur before the unit starts incurring loss.

DSCR:

It provides the safety cushion available to the term creditors for the repayment of term loans.

Gestation period:

The time frame required for commercial production and regular sales may be divided into time

required for acquisition of land & buildings, purchase & installation of plant & machinery, trial

production and may range from 1 month to 18 month.

Broadly if we see , the basic steps involved in granting loan to SMEs are as follows :

Steps for SME loans by State Bank of India (SBI)

1. Application for loan by SME to local branch of a particular area.

2. Inspection/Survey of SME by the Executives of that Local branch.

3. Sending the Documents of survey by Local branch to SMECC branch

4. Preparing credentials of Promoters and firm by SMECC branch and investigating the same

5. Estimating the amount of loan to be sanctioned and forwarding the documents for sanctioning.

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6. If the loan is been sanctioned by the central authority then disbursement of the loan amount

into account of the SME.

(J) SUGGESTIONS

The process of granting loan should be simplified.

Community education should be imparted as still a lot of section believes that procuring

bank loan obtaining is very difficult process. Thats why they depend on money lender.

Rate of interest gap is huge.

Review should be conducted on periodic basis.

(K) CONCLUSION

As far as suggestion is concerned following SWOT analysis was done for this project

Strength Brand name

Market leader

Government owned

Diversified portfolio

Weakness Higher NPA

Less modernisation

Opportunities

2000 branches coming on various

location merged with associate

banks

Threats

Other nationalised bank

Pricing factor

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State bank has earned a reputation in the market over the period of time (being the oldest bank in

india tracing history back to 1806). It is also ranked at 380 in 2008 Fortune global 500 list, and

ranked 219 in 2008 Forbes Global 2000. With an asset base of $126 billion and its reach , it is a

regional banking behemoth. It also has excellent penetration in the country with more than 10000

core branches and more than 5100 branches of associate banks. Government also owns 60 %

stake in SBI. This gives SBI an edge over private banks in terms of customer security. It also

offers very low transition costs which attracts small customers. It is also planning to add 2000

branches and 3000 ATMs. This will further increase its reach.

SBI is a leading bank in the country, it provides a variety of products and services to

SMEs

It aims to serve all classes of the society so SMEs does not face any problem in

procuring loan.

Also the pricing factor offered by SBI is very lucrative.

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BIBLIOGRAPHY

www.wikipedia.com

www.sbi.co.in

Annual reports of SBI

Journals of SBI
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ANNEXURES

Annexure A

Various annexure are attached. Firstly annexure A in which various terms and conditionsare mentioned which are as follows:-

1) Security-it is divided as under:-

Facility Primary security Collateral security Guarantee

Cash Credit

Term Loan

Hyp.of receivable

assets.

Mortgage of landed

property

Land

Name of

promoters+ any

corporate guarantee

if any

2) Period of advance and repayment terms

Working capital-It is repayable on demand. The facility which has been sanctioned should beavailable for 3 months from that date, subject to review every 12 month, when it may be

cancelled/reduced/enhanced depending upon the conduct and utilisation of advances.

Term loan- It is to be availed within a period of 1 month from the date of sanction . The term

loan is to be repaid as per the given repayment schedule-

Particulars 2012-13 2013-14

1st

quarter

2nd quarter

3rd quarter

4th quarter

Total repayment in a year

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Others-

The bank states that interest shall be payable on the outstanding in the loan accounts computed

on daily balances basis duly compounded and debited to the accounts at monthly rests on the last

working day of every month , in accordance with the account practices of bank from time to

time. Commitment charges should be payable in case of non utilisation of sanctioned limits. And

prepayment charges should be payable in case of prepayment of term loan instalments.

3) Various unconditional cancellability clauses are given which are as follows :-

Rate of interestInterest at 3.75 above base rate to be charged(Present base rate is 8.25% w.e.f

14-02-11). Present effective rate is 12 %.wherever expedient; interest rate is directly linked to the

credit risk assessment of the borrower.

For the term loan- interest will be charged at the rate mentioned on daily outstanding debit

balance in account at monthly rests. . Rate will be 3.95% above base rate.

Rate of interest is subject to revision from time to time due to changes in base rate, revision even

without changes in base rate.

Penal interest

Cash credit limits:

Irregularity in cash credit account

Continuously irregular for a period

beyond 60 days2% on the entire out

standings. In other cases2 % on

irregular portion

Non submission of stock statement 1% for the month if the stock statement

is not submitted within the stipulated

period.

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Non submission of renewal data 1% for the delay beyond 3 months from

the date renewal was due.

Commitment charge: working capital

limit

0.25% p.a on the entire unutilized

portion if average utilization of 60% or

less. Commitment charge to be levied

half yearly for all fund based limits

irrespective of the size of the loan.

4) Next the margin is decided like

Fund based limits Margin (in %)

a) Cash credit

b) Term loan

Non fund based limits

a)L.C

b)B.G

After that the tenor or retention period of bills is decided and the insurance is decided. Assets

charged to bank should always be fully insured by borrower against fire,lightning,riots etc. with

a company approved by bank in the joint name of bank and self at own cost or full market value

or banks interest, whichever is higher. The policies should be lodged.

5) Inspections- before inspection credit guarantee cover is seen and stock statement is verified on

quarterly basis. And the inspection is done on monthly basis where the bank officials/inspectors

are to be permitted in the factory/business premises as and when required to inspect the

stocks/books/equipments. Where the premises are leased/hired, necessary approvals to the effect

from the lessor, if any required, are to be obtained. All assistance to be extended to the banks

officials in conducting and completing such inspections smoothl