"Operational process of 'Small and Medium Enterprise Credit' in order to minimize the ways of

operational loss to strengthen relationship with the clients: A study on Credit Risk Control department of
SCB."

Introduction - SME finance is the funding of small and medium-sized enterprises, and represents a
major function of the general business finance market in which capital for different types of firms are
supplied, acquired, and costed or priced. Capital is supplied through the business finance market in the
form of bank loans and overdrafts; leasing and hire-purchase arrangements; equity/corporate bond issues;
venture capital or private equity; and asset-based finance such as factoring and invoice discounting.

However, not all business finance is external/commercially supplied through the market. Much finance is
internally generated by businesses out of their own earnings and/or supplied informally as trade credit,
that is, delays in paying for purchases of goods and services.

There has been particularly intensive scrutiny of the kinds of business financial information that banks
use in making lending decisions, and how reliable that information actually is.

Banks have traditionally relied on a combination of documentary sources of information, interviews and
visits, and the personal knowledge and expertise of managers in assessing and monitoring business loans.
However, when assessing comparatively small and straightforward business credit applications, banks
may largely rely on standardized credit scoring techniques (quantifying such things as the characteristics,
assets, and cash flows of businesses/owners). Using such techniques and also centralizing or
rationalizing business-banking operations generally can significantly reduce processing costs.
Standardized computer-based assessment may also be more accurate and fairer than reliance on the
personal judgments of local bank managers. As a result, banks may now be able to offer more loans,
faster and in larger amounts, and reduce previously high security requirements.
However, business lending as a whole is substantially more diverse and complex than personal and
residential mortgage lending. This, coupled with the large size and inherently risky nature of many
business loans, tend to limit the scope and desirability of computerized credit scoring in assessment and
monitoring.

Research objectives - The report focuses on a very specific objective. This is the broad objective and the
aim of this objective is to solve a specific issue. All forms of research are aimed at solving a specific issue
and through the achievement of the broad objective, the research can be considered as successful. Specific
objectives are derived from this objective and all research efforts will be channeled towards attaining this
objective. The broad objective is-

"Operational process of 'Small and Medium Enterprise Credit' in order to minimize the ways of
operational loss to strengthen relationship with the clients
Arising from the broad objective, the specific objectives may be stated as follows:
RO1) The analysis of operational process of the credit division of banks.
RO2) How to reduce the operational inefficiencies of banks.
R03) How to reduce the risks involved in lending but at the same time maintaining relationships
with clients.

It is expected that these specific objectives will direct the study in the proper direction in attaining
the broad objective.

Research Limitations
Limitations are inevitable in the case of any research. Two of the most common limitations for any
research are time and resource constraints. The researcher must be able to anticipate the limitations before
starting on the research and find out ways in which the limitations can be overcome. Stating the research
limitations before moving on with the research process allows the reader to be prepared for what to
expect. Successfully overcoming the limitations and being able to successfully complete the research can
be a bit challenging for most researchers. The limitations that were encountered at the time of carrying out
this study have been mentioned below.

Access to SCBs internal credit data is restricted. Credit data and a lot of credit information is off
limits and only accessible under special circumstances.
 It is difficult to get in touch with many of the SMEs involved under the study.

Certain statistics could not be acquired related to customer satisfaction with the transaction with
the bank.

It wasnt possible to gain access to some of the studies that were conducted in the past related to
the topic.

The respondents are busy people and it is difficult to maintain proper communication with them.

Due to time and resource constraints, it is not possible to physically conduct many of the
activities that are preplanned.

Most of the limitations stated here are common and are encountered by researchers quite often.
Overcoming these limitations and successfully carrying out the research is the main objective. Secondary
data on this topic is limited as this topic has not been researched for previously and collecting primary
data will be difficult as different SMEs and customers need to be approached and would consume their
time.