International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 33

Volume 2, No. 11, November 2013

A Study on New MSMEs Products and its Financing of

Vijaya Bank
Srinivas K T, Associate Professor, CIMS-B School, Jayanagara, Bangalore

ABSTRACT 45% of the manufacturing output and 40% of total exports

of the country.
Worldwide, the micro and small enterprises (MSEs) have
been accepted as the engine of economic growth and for MICRO, SMALL & MEDIUM
promoting equitable development. In India, the sector is ENTERPRISES:
generally referred to as the Micro, Small and Medium
Enterprises. MSMEs are playing a pivotal role in the In accordance with the provision of Micro, Small &
overall industrial economy of the country. In recent years Medium Enterprises Development (MSMED) Act, 2006
the MSME sector has consistently registered higher the Micro, Small and Medium Enterprises (MSME) are
growth rate compared to the overall industrial sector. The classified in two Classes:
major advantage of the sector is its employment potential
at low capital cost. In this background study is choose to (a) Manufacturing Enterprises: The enterprises engaged in
know the new MSME products and financing of MSME by the manufacture or production of goods pertaining to any
Vijaya Bank in Bangalore north regional office. The industry specified in the first schedule to the industries
Present study found that Vijaya bank is offering more than (Development and regulation) Act, 1951). The
seven schemes to MSMEs sectors. From the data Manufacturing Enterprise is defined in terms of
collection it is found that from last three years Vijaya investment in Plant & Machinery.
bank(RO) north, Bangalore financed 165.60 and 324.19 (b) Service Enterprises: The enterprises engaged in
crore to micro manufacturing and service sectors providing or rendering of services and are defined in terms
respectively. 360.62 And 467.21 crore to small of investment in equipment.
manufacturing and service sectors respectively and 276.36
crore to medium enterprises. The limit for investment in plant and machinery /
equipment for manufacturing / service enterprises, as
Keywords notified, vide S.O. 1642(E) dtd.29-09-2006 are as under:
MSMEs (Micro, Small and Medium Enterprises) , RFD
Manufacturing Sector
INTRODUCTION: Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakhs
The development of the micro, small and medium rupees
enterprises (SME) sector is on the priority of Government Small Enterprises More than twenty five lakhs rupees
Agenda. As per the Results-Framework Document (RFD) but does not exceed five crore
for Ministry of Micro, Small and Medium Enterprises rupees
(2012-2013), the Mission of the government is to Medium Enterprises More than five crore rupees but
Promote growth and development of globally competitive does not exceed ten crore rupees
Micro, small and Medium Enterprises, including Khadi, Service Sector
Village and Coir industries, in cooperation with concerned Enterprises Investment in equipments
Ministries / Departments, State Governments and other Micro Enterprises Does not exceed ten lakhs rupees:
stakeholders by providing support to existing enterprises Small Enterprises More than ten lakhs rupees but does
and encouraging creation of new enterprises. To not exceed two crore rupees
Endeavour to achieve a cumulative growth of 40%-50% in
Medium Enterprises More than two crore rupees but
the number of registered enterprises by the end of 12th
does not exceed five core rupees
Plan and enhance this sector's contribution to GDP from
the present 8% to 10% by the end of 12th Plan. The role of
micro, small and medium enterprises (MSMEs) in the OBJECTIVES OF MSMEs:
economic and social development of the country is well
established. As per the Report of the Working Group on 1. Creation of greater employment opportunities and
Micro, Small and Medium Enterprises (MSMEs) Growth increased output, income and standards of living.
for 12th Five Year Plan (2012-2017), the sector accounts

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International Journal of Management and Social Sciences Research (IJMSSR)
Volume 2, No. 11, November 2013
2. Meeting a substantial part of the economys
requirements for consumer goods and simple
producer goods.
3. Provides employment and a steady source of
income to the low-in-come groups living in rural
and urban areas of the country.
4. Provides substitutes for various industrial products
now being imported into the country
5. .Improves the quality of industrial products
manufactured in the cottage industry sector and to
enhance both production and exports.
6. Encourage market forces, through competition, to
achieve higher operating standards
7. Elimination of economic backwardness of rural and
underdeveloped regions in the country
MSMEs have been established in almost all-major sectors
in the Indian industry such as: Food Processing,
Agricultural Inputs, Chemicals & Pharmaceuticals,
Engineering; Electrical, Electronics, Electro-medical
equipment, Textiles and Garments, Leather and leather
goods, Meat products, Bio-engineering, Sports goods,
Plastics products etc
BANK PROFILE:
Vijaya Bank was established by Shri. Attavara
Balakrishna Shetty at Bunts Hostel in Mangalore on
October 23, 1931.Since it was established on
Vijayadashami Day, it was named Vijaya Bank. The
objective was to promote banking habits, thrift and
entrepreneurship among the farming community of
Dakshina Kannada district in Karnataka State. The bank
became a scheduled bank in 1958. Vijaya Bank steadily
grew into a large All India bank; with nine smaller banks
merging with it during 1963-68.The bank was nationalized
on 15th April 1980.
Vijaya Bank boasts of being one of the few banks which
has undertaken the principal membership of VISA
International and MasterCard International. Vijay Bank
has been constantly focusing on technological up
gradation.
Vijaya Bank grew steadily by merging nine smaller banks
into it between1963-68. Shri. Mulki Sunder Ram Shetty,
who was the Chief Executive of the bank, is largely
credited with these mergers. The bank was nationalized on
April 15, 1980.
Currently, Vijaya Bank employs 12,500 people. The Bank
has recently recruited young workforce to cope up with the
changing banking scenario & to compete with the growing
private sector & foreign banks functioning in the country.
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ISSN: 2319-4421 34
NEW MSME PRODUCTS OF VIJAYA
BANK:
1. Vijaya Vidya Vahini: The transportation of students
from schools/colleges is identified as a separate important
segment to cater to the need of this segment a separate
scheme for the benefit of the entrepreneurs who are
engaged in the service of facilitating the transport of
students /employees has been envisaged .V-Vidya Vahini
Loan Scheme: is a tailor made loan scheme for
entrepreneurs who are engaged in the service of
facilitating the transport of Students/Employees and
having a tie up arrangement with the Schools/Colleges/
Universities / Educational Institutions with many attractive
features and as such we expect branches to popularize the
scheme to increase our retail lending portfolio. This
scheme which would give an edge to the field
functionaries to compete in the market as this is a
collateral free loan, and would be covered under
CGTMSE.
2. Vijaya Dhaanya Rice Mill: Rice is the basic food item
of India which is consumed by almost 90% of the huller
type thus in order to upgrade the plant and machinery and
to the financial requirement of the existing and new rice
mills the bank has come out with a new loan scheme for
rice mills .V-Dhaanya Rice Mill Loan Scheme: is a tailor
made loan scheme for Rice Mill Entrepreneurs. The
scheme is having attractive features & branches are
expected to popularize the scheme to increase SME
portfolio.
3. Vijaya Dhanvantari: There is a need for addressing the
requirements of doctors/medical practioners who would
like to set up clinic, nursing home, hospitals and
radiological laboratories and with a desire to establish
their practice independently. The professional doctors
segment provides an opportunity for the bank to garner
SME business realizing the need, the bank has come out
with a new loan scheme for doctors/medical practioners.
V-Dhanvantari Loan Scheme: is a tailor made loan scheme
for Registered Medical Practitioners who are engaged in
the medical service. The scheme is having many attractive
features and as such we expect branches to popularize the
scheme to increase our SME Portfolio. .
4. Vijaya Restaurant: Increasing urbanization and rising
disposable income are characteristics that are common
across several emerging economics particularly in Asia.
However ,the pace at which this taken place in India in the
last few years is likely to continue over the next decade
and will outpace most other economies in the region. India
is producing a large number of young people entering the
job market compared to other Asian economies the
number of working adults in the country is using at a fast
pace .this has resulted in demographic shift which has
increased the food service sector in India. Thus, the
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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 35
Volume 2, No. 11, November 2013

restaurant is an important component of our nations
economy and employment opportunities in this sector
would continue to grow in the future as d direct result of
the demographic changes taking place. The bank has
introduced separate scheme for the target group of
restaurants and fast food chains. V-Restaurant Loan
Scheme: is a tailor made loan scheme for the target group
of owners of restaurant and fast food chains and the field
functionaries would be able to compete with other public
sector banks to bring the retail trade customers to our ford
the scheme is having many attractive features and as such
we expect branches to popularize the scheme to increase
our SME portfolio.
5. Vijaya Dhaanya Daal Mill : India is one of the major
pulse growing countries in the world .pulse processing
industry helps in processing the law pulse into edible form
the processing of pulses is by dehusking and splitting both
dry and wet milling processes are employed .the
traditional methods of dehusking and splitting a grain
cause huge waste and yield to the extent of 65%The
productivity of the Daal mill can be increased by
modernization .in this context the need to facilitate
financing of daal mill arises and the banks has come out
with a new loan scheme. V-Dhaanya Daal Mill Loan
Scheme: It is a tailor made loan scheme for Daal Mill
Entrepreneurs. The scheme is having attractive features &
branches are expected to popularize the scheme to increase
SME portfolio
6. Vijaya Vyapar: Traders act as a vital link between
manufactures of goods / commodities and the final
consumers there is need for addressing the financial
requirement of this segment, which provides an
opportunity for the bank to garner big volume of business
.as per the feedback received from the field functionaries,
the department proposes a new scheme to insure hassle
free finance to traders. The bank has introduced a separate
scheme for target group of trading company. V-Vyapar
Loan Scheme: is a tailor made loan scheme for the target
group of trading community .the scheme has been
formulated keeping in view that ,trading community needs
quick and timely financial support an simple terms. The
scheme is having many attractive features and as such we
expect branches to popularize the scheme to increase our
retail portfolio.
7. Vijaya Flour Mill: Roller flour mill serve the purpose
of processing wheat to convert it into flour .the plant will
have facility to produce Maida, suji, Atta, these products
will be sold as per the guidance issued by food and civil
suppliers department of concerned state .thus milling is an
imperative physical function involved in conventions
.wheat grains are the seed of the wheat plant, which is to
grow in kinds of soil and under widely differing climate
conditions. To meet the financial needs of existing and
new roller mills the bank has come out with new loan
scheme. V-Flour Mill Loan Scheme: is a tailor made loan
scheme for existing and new roller flour mills and the
scheme is having many attractive features hence the field
functionaries to popularize the scheme to increase our
MSE portfolio.
OBJECTIVES OF THE STUDY:
1. To study the new products offered by the Vijaya
bank to MSMEs sector
2. To identify the financial assistance of the Vijaya
bank to MSMEs
Scope of the study and data collection:
The main source of data for this study is the past
records prepared by Vijaya bank (Ro) north Bangalore.
The yearly progress reports on outstanding loans of
MSME of the year 2011 to 2013 are used for the purpose
of analysis. The present study is confined to financial
assistance provided by Vijaya bank and data will be
analyzed based on the information provided by Vijaya
bank (RO) North Bangalore.

DATA ANALYSIS:
Table No: 1
Advances to MSMEs Vijaya Bank (RO) North, Bangalore
(Rs. In crore)
Sl.N Year Micro Micro Small Small Medium
o Manufacturing Service Manufacturing Service enterprises
1 2011 39.24 78.19 68.61 121.8 86
2 2012 53.02 93.24 130.34 150.49 112.94
3 2013 73.34 152.76 161.67 194.92 77.42
Total 165.60 324.19 360.62 467.21 276.36
Source: Annual Reports

INTERPRETATION: and Small manufacturing enterprises being a priority

The above table depicts the financial assistance of Vijaya sector for lending as per bank guidelines. From the above
bank (RO) North, Bangalore to MSMEs sectors. Micro table it can observe that Micro manufacturing and micro
service sector received 165.60 and 324.19 crore

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International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 36
Volume 2, No. 11, November 2013

respectively from last three years, it is also noticed that
lending to the above said sector is increasing year by years
for the promotion of enterprises. Small manufacturing and
small service sector received 360.62 and 467.21 crore
respectively from last three years, even for this sector also
lending is increasing year by year. Medium enterprises
being a non-priority sector for lending as per bank
guidelines. The study reveals that there is a fluctuating
trend in the advances given to medium enterprises. It
received only 273.36 crore from last three years.

Graph No: 1
Graph showing Advances to MSMEs
250

194.92
200

161.67
150.49 152.76
150 Micro
130.34
121.8 Micro Service
112.94
Small Manufacturing
100 93.24
86
78.19 73.34 77.42 Small Service
68.61
53.02 Medium enterprises
50 39.24

0
2011 2012 2013

INFERENCE: 100.28 Crore of amounts become non-performing assets

The above graph shows advances to MSMEs by Vijaya
bank (Ro) North, Bangalore. It can inferred that advances
to MSMEs are increasing trend year by year to promote
Micro, Small and Medium enterprises for balanced
regional development.
from last three years. So this is the need of the day to
Vijaya bank to take proper measures to reduce NPA in
MSME sectors. Because NPA affects the profitability of
the bank.
FINDINGS OF THE STUDY:

Table No: 2 1. The total advances are increasing in the Priority

Non-performing Asset of MSME at Vijaya bank (RO) Sector every year as compared to the base year i.e.
North Bangalore 2011. The study reveals that there are more
S.No Year Number of Amount (Rs. in advances sanctioned to micro and small enterprises
accounts crore) by Vijaya bank
1 2011 996 18.06 2. The Growth rate of Priority Sector with the aid of
2 2012 1267 25.67 advances is positive
3 2013 2068 56.55 3. The advance to medium enterprises is being
Total 4331 100.28 fluctuating compared to base year 2011. The study
reveals that there are fewer advances towards
INTERPRETATION: medium enterprises compared to that of micro and
small.
4. Vijaya bank supports the micro, small, and medium
The above table depicts the Non-performing assets Vijaya enterprises. Where it helps cottage industries in
bank (Ro) North, Bangalore from MSMEs sectors. It can increasing their production. Where there is high
observe that number of borrowers who not repaying within demand for such products especially in abroad
due date to bank is also increasing along with amount.

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International Journal of Management and Social Sciences Research (IJMSSR)
Volume 2, No. 11, November 2013
countries. This implies that MSME indirectly helps
in increasing national income.
5. Support and guidance provided by nationalized
bank like Vijaya bank has enhanced opportunities
for entrepreneurs.
6. The NPAs towards MSME sector of Vijay bank
(RO) north Bangalore is significantly high that has
become one of the reasons that bank can take great
concern before lending to these sectors.
7. Because of the higher NPAs in Small Scale
Industries most of the bank restrict their lendings
only to meet the norms of RBI.
8. National priorities are focused by Vijaya bank to
help MSME industries and to uplift MSME by
reducing the rate of interest.
9. CTGSME under this scheme parties are not
required to offer any collateral security of the
immovable property and also not required to offer
any other guarantee.
SUGGESTIONS:
1. The bank should organize many Seminars and
Workshops for creating a relationship and
increasing awareness of financing with micro, small
and medium enterprises.
2. Many of the rural areas in country are not facilitated
with basic infrastructure. Due to this reason banks
are not coming forward and lending advances to
this sector this is causing high cost to entrepreneurs
to produce goods and to start their business as well.
So measures and plans on facilitating such areas
should be focused.
3. The bank should be in constant touch with the
borrowers so that their attitude towards the bank
does not change. This will motivate the borrowers
to repay.
4. There should be proper control system by the head
office on the advances granted by the branches.
5. Not only for startup businesses but also for
expansion and growth of existing entities deepen
the customer relationship.
6. The bank should appoint a regional nodal officer to
look after the loans provided to MSME sector, to
analyze and provide necessary inputs to the MSME
unit to help them to repay their loans to bank. This
will be helpful to reduce NPA of Vijaya bank.
7. The government should also take necessary steps to
promote the MSMEs product in the market by
arranging trade fair, export shows etc. so that the
revenue of MSMEs can increase and they can
discharge their liability as soon as possible.
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CONCLUSION:
Worldwide, the micro small and medium enterprises
(MSMEs) have been accepted as the engine of economic
growth and for promoting equitable development. The
major advantage of the sector is its employment potential
at low capital cost. In India too, the MSMEs play a pivotal
role in the overall industrial economy of the country. In a
developing country like India where we have an immense
presence of unskilled labour, to utilize such labour MSME
is the best way; through opening of labour intensive units.
The countrys main contribution towards GDP is of
agriculture which is also dependent on natural climate in
this situation Micro, Small and Medium enterprises
provide diversity for the contribution to GDP of the
country. In recent years the MSME sector has consistently
registered higher growth rate compared to the overall
industrial sector. With its agility and dynamism, the sector
has shown admirable innovativeness and adaptability to
survive the recent economic downturn and recession.
There is also need to cope up with the world market,
Where MSME can play a major role in the field of export
and contribute the country to achieve its balance of
payment.
It can be finally conclude that although government is
continuously supporting the MSMEs to grow. At the
present situation considering the exposure level of the
entrepreneurs in the country should focus on the lending of
banks which are one of the traditional and trusted ways to
finance the business. In this scenario Vijaya bank MSME
advances is a blessing in disguise because is not only
concentrating on different categories in order to uplift and
strengthen India to move on the path of strong economic
development .This shows that the bank offers many kind
of benefits and support to the new entrepreneurs through
launch of new MSME products .
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1. Agyapong Daniel (2010) Micro, Small and Medium
Enterprises Activities, Income Level and Poverty
Reduction in Ghana International Journal of
Business & Management, Vol. 5 Issue 12, Pp196-
205,
2. Lokhande, Madhavi A. (2011) Financial Inclusion:
for Micro, Small and Medium Enterprises., Vol. 9
Issue 2, Pp39-50,
3. Macaws, Carrington M Seymour, Lisa F (2012) A
Review for Small and Medium-Sized
Enterprises.Journal of Innovation Management in
Small & Medium Enterprises; Pp1-15,
4. Annual progress report of MSME
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