Project Progress Report

Report No. 1
Date: 30/6/2010

Roll No: FN103 Name of the Student: Nisha

Joseph

Project Title: Credit Management in SME & marketing strategies of SBI to

foster financing of SME

Company Name: State Bank Of India, Local Head Office, Bangalore

Faculty Guide: Prof.Sreekumar B.Pillai

General Background of the Project: SME’s form the backbone of any nation
whether developing or developed. One such problem is how the credit is
managed in SME. Finance forms the lifeline of any business & if not
available when needed will lead to various other problems. So it is significant
to understand the business environment & how credit is managed in SME’s.
The study undertaken is also important so as to ascertain the mismanagement
of credit in SME, large enterprises & economy as a whole.

Progress made so far: Personal interviews with the top officials of the bank
as well as the personnel’s is completed. I have collected addresses of
customers who have approached bank for the products to go for a consumer
perception & satisfaction survey.

Action Plan for the next fortnight: Questionnaires are to be prepared for the
customer satisfaction survey and marketing strategies of SBI has to be
analyzed.

Problems/difficulties faced, if any: Reluctance shown by other banks in

disclosing datas for the comparative study.

Signature of the student

Guide’s Comments:

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 Signature of the Company
Guide

Industry Overview- Banking

Bank is a financial institution that borrows money from the public and lends
money to the public for productive purposes. The Indian Banking Regulation
Act of 1949 defines the term Banking Company as "Any company which
transacts banking business in India" and the term banking as "Accepting for
the purpose of lending all investment of deposits, of money from the public,
repayable on demand or otherwise and withdrawal by cheque, draft or
otherwise".
The Indian banking system has passed through three distinct phases from the
time of inception. The first was being the era of character banking, where you
were recognized as a credible depositor or borrower of the system. This era
come to an end in the sixties. The second phase was the social banking.
Nowhere in the democratic developed world, was banking or the service
industry nationalized. But this was practiced in India. Those were the days
when bankers has no clue whatsoever as to how to determine the scale of
finance to industry. The third era of banking which is in existence today is
called the era of Prudential Banking. The main focus of this phase is on
prudential norms accepted internationally.The Bank of Bengal, which later
became the State Bank of India. State Bank of India with its seven associate
banks commands the largest banking resources in India.The next significant
milestone in Indian Banking happened in late 1960s when the then Indira
Gandhi government nationalized on 19th July 1949, 14 major commercial

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Indian banks followed by nationalisation of 6 more commercial Indian banks
in 1980.
The stated reason for the nationalisation was more control of credit delivery.
After this, until 1990s, the nationalised banks grew at a leisurely pace of
around 4% also called as the Hindu growth of the Indian economy.After the
amalgamation of New Bank of India with Punjab National Bank, currently
there are 19 nationalised banks in India.In the early 1990’s the then
Narasimha rao government embarked a policy of liberalization and gave
licences to a small number of private banks, which came to be known as New
generation tech-savvy banks, which included banks like ICICI and HDFC.
This move along with the rapid growth of the economy of India, kick started
the banking sector in India, which has seen rapid growth with strong
contribution from all the sectors of banks, namely Government banks, Private
Banks and Foreign banks.. 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, India has 96 scheduled commercial banks (SCBs) -
27 public sector banks (that is with the Government of India holding a stake),
31 private banks (these do not have government stake; they may be publicly
listed and traded on stock exchanges) and 38 foreign banks. They have a
combined network of over 53,000 branches and 49,000 ATMs. According to
a report by ICRA Limited, a rating agency, the public sector banks hold over
75 percent of total assets of the banking industry, with the private and foreign
banks holding 18.2% and 6.5% respectively

Company Profile- STATE BANK OF INDIA

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State Bank of India is the nation's largest and oldest bank. Tracing its roots
back some 200 years to the British East India Company (and initially
established as the Bank of Calcutta in 1806), the bank operates more than
15,000 branches within India, where it also owns majority stakes in six
associate banks. State Bank of India (SBI) has more than 80 offices in nearly
35 other countries, including multiple locations in the US, Canada, and
Nigeria. The bank has other units devoted to capital markets, fund
management, factoring and commercial services, credit cards, and brokerage
services. The Reserve Bank of India owns about 60% of State Bank of India
The traditions of the past continued to be upheld even to this day as the State
Bank years itself to meet the emerging challenges of the millennium.

THE PLACE TO SHARE THE NEWS ...

……
SHARE THE VIEWS ……

Togetherness is the theme of this corporate loge of SBI where the world of
banking services meet the ever changing customers needs and establishes a
link that is like a circle, it indicates complete services towards customers. The
logo also denotes a bank that it has prepared to do anything to go to any
lengths, for customers.

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The blue pointer represent the philosophy of the bank that is always looking
for the growth and newer, more challenging, more promising direction. The
key hole indicates safety and security.

SME
Small and Medium Enterprises (SMEs) are a key factor in the economic
development and innovation. The core of the political and economic
transformation of any country is the creation of the private sector, the
development of entrepreneurship and creation of SMEs.
They are considered to be one of the principal driving forces in economic
development. SMEs stimulate private ownership and entrepreneurial skills,
they are flexible and can adapt quickly to changing market demand and
supply situations, they generate employment, help diversify economic activity
and make a significant contribution to exports and trade. SMEs also play an
important role in innovation and the high-tech business, due to their flexibility
and creativity many of them became large businesses.

SBI in SME

It is needless to stress the important role that the SME sector plays in the
overall growth and vibrancy of the Indian economy. To promote their
improved contribution and enhance the momentum of growth , the State Bank
of India with more than Rs.1,00,000 crores of SME advances will continue to
play a proactive and supportive role The numerous customized products
designed by the bank for the various customer groups in the SME sector help

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our operating and marketing functionaries offer appropriate solutions to the
SME units for their financial requirements.

Product Profile

LIABILITY PRODUCTS:
Power Pack & Power Gain Current Accounts
SBI Shakti Current Account
Sahaj Current Account
Power Jyoti Current Account
Surabhi Deposit Account
TRANSACTION PRODUCTS:
Multi City Cheques
Inter Core Transactions
B2B Payment Solutions
CREDIT PRODUCTS:
SME Smart Score
Rice Mills Plus
SME Care
SME Help
Traders Easy Loan
SBI Micro Loan for Micro Enterprises
SBI SME Collateral Free Loans
Tie – up with Apollo Health and Lifestyle Ltd.
SBI Small & Micro SMILE
Artisan Credit Card
SME Credit Card
Swarojgar Credit Card

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Cyber Plus
SME Credit Plus
Stand by Line of Credit
General Purpose Term Loan for SSI Sector

NB. The highlighted products are the fast moving products of SBI for
SME sector & those are the ones on which I have undertaken the study

RESEARCH METHODOLOGY

Research Methodology

This Section includes the methodology which includes. The research

design, objectives of study, scope of study along with research
methodology and limitations of study etc.

.Objectives of the study

Research has been carried out to achieve the following objectives:

• To study the performance of loan disbursement of selected credit

schemes of SBI in comparison to other selected banks.

• To find the effectiveness of the schemes provided by SBI to various

SME, SSI units.

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 • To explore new strategies for enhancement of growth with respect to
products designed for SME sector in SBI

Data Collection Method

To fulfill the objectives of my study, I have taken both into considerations viz
primary & secondary data.

Primary data: Primary data has been collected through personal interview by
direct contact method. The method which was adopted to collect the
information is ‘Personal Interview’ method.

Personal interview and discussion was made with manager and other
personnel in the organization for this purpose.

Secondary data: The data is collected from the Magazines, Annual reports,
Internet, Text books.

The various sources that were used for the collection of secondary data are

o Internal files & materials

o Websites – Various sites like

www. sharekhan.com

www.indiainfoline.com

www.sbi.co.in

www.investopedia.com

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 www..wikepedia.com and other site

o Information collected from customers through

questionnaires

Sample Size and Sample Design

The banks studied were:

• State Bank of India
• HDFC Bank
• Federal Bank
Further four types of products of these selected banks are chosen
• SME Smart Score
• SME Credit Card
• Traders Easy Loan
• SME CFL

Technique of Analysis
For making analysis of collected data on the study statistical techniques of
Compound Annual Growth Rate (CAGR), mean, standard deviation and Karl
Pearson’s correlation have been applied with the help of the leading SPSS
software.

Limitations of the study

• Geographical scope of this study was limited to Bangalore city and
does not represent the whole of state.
• Sample is not representative of organized / unorganized sector across
the nation.

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• The study is only limited to three banks which may result difficulty in
the generalisation and interpretation of results
• Ignorance and reluctant attitude of customers was also a major
limitation in the study.
• The authenticity of data collected is solely dependent on the
information provided by the respondent. Their views may be biased or
information may contain factual errors.

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