7/28/2019 To Study the Assessment of Financing SME Units With
Special Reference to IDBI Bank
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To Study the Assessment of Financing SME Units with special
reference to IDBI Bank.
SYNOPSIS:
IDBI Bank was created as a Developmental Finance Institution but
has recently entered the
SME space after conversion into a full service Universal Bank.
Since its reorganization, IDBI
has been actively engaged in providing a major thrust to
financing of SMEs. IDBI Bank has
developed a special business model to serve the SMEs in India.
The bank has set up 30 City
SME Centres (CSCs) across India. According to the micro, small
and medium enterprises
development (MSMED) act, 2006, an enterprise, in the
manufacturing sector, is categorised
as micro enterprise, if the investment in plant and machinery is
up to Rs 25 lakh and for
service sector, if the investment in equipment for rendering the
service is up to Rs 10 lakh. In
manufacturing industry, if the investment in plant and machinery
is above Rs 25 lakh but less
than Rs 5 crore the enterprise is a small enterprise and in the
service sector, if the investment
in equipment for rendering the service is above Rs 10 Lakh but
less than Rs 2 crore. Medium
units, in the manufacturing industry, have the investment in
plant and machinery above Rs 5crore but less than Rs 10 Crore and
in the service sector, the investment in equipment for
rendering the service is above Rs 2 crore but less than Rs 5
crore.
IDBI Bank is one of the aggressive players in the SME segment.
In IDBI Bank, even a
lower level officer can sanction a loan of up to Rs 5 lakh for
government-sponsored schemes
or small loans. Going ahead in the hierarchy, the Assistant
General Managers of the bank are
authorised to sanction up to Rs 1 crore, Deputy General Managers
up to Rs 2 crore, General
Managers up to Rs 5 crore and above Rs 5 crore are approved by
the head/committee. IDBI
has observed that the maximum requirement of the SME segment is
up to Rs 10 crore and to
get this amount sanctioned, SME customers get a sanction at the
branch level or city centre
level itself. IDBI Bank has entered the field of SME banking
very recently. It is still in the
initial stages as compared with other banks that have a very
good branch network. IDBI Bank
has 570 branches as on date. Branch network is one of the key
factors in banking. IDBI Bank
has long experience of project appraisals and considers this to
be its differentiating factor.
The Bank has the feel of the industry as it has played a part in
financing all large industries in
the country either directly or indirectly. Considering these
factors, the Bank is in a better
7/28/2019 To Study the Assessment of Financing SME Units With
Special Reference to IDBI Bank
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position. Moreover, IDBI Bank has started on a strong technology
platform; while most
banks are now opting for core banking technology, IDBI Bank has
mastered core-banking
solutions and is in a position to offer world-class products and
services. The USP of the Bank
is to convey sanction decision for loans up to Rs 5 crore within
10 days of receipt of
application.
The bank factors in the risk profile and credit worthiness of
the borrower before
extending any financial assistance. To make business easy for
the SMEs, the bank has
introduced collateral free loans. The bank not only offers
finance to its SME customers but
also takes care of their all banking needs under one roof with
specific current accounts and
full range of other banking products and services.
IDBI Bank MSME Finance Products:
The bank endeavours to introduce new products with a view to
offer wide array of solutions
to the SME units.
Sulabh Vyapar Loan (Loan for Traders/Service Sector)- Aims to
provide hasslefree finance to traders and to meet their business
needs at competitive interest rates
Dealer Finance/ Dealer Solutions- To provide Liquidity to the
distribution chainpartners.
Loans to Small Road & Water Transport Operators- This
product enables varioustransport operators to acquire a small fleet
of vehicles/ vessels.
Loans to Professionals & Self-employed- Special scheme to
take care of financialneeds of Professionals and Self employed
segment.
Lending Against the Security of Future Credit Card Receivables-
Laghu Udhyami Credit Cards (LUCC)Provides easy finance to
existing
borrowers running Small business units, retail traders, artisans
and other MSE units.
Property Power (Loan against Property)- For unlocking the
potential of propertyand avail credit facility on easy terms for
any business need.
SME Smart Line of Credit- Financial assistance available to the
MSMEs in the formof Pre-approved credit limits enabling them to
grab unforeseen business opportunities.
Funding under CGFMSE (Collateral Free Loans)- IDBI Bank offers
Credit facilityupto Rs 1 Crore to Micro and Small Enterprises
without insisting on collateral and
third party guarantee.
