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sme-a-banking-perspective-1223879304224667-8

sme-a-banking-perspective-1223879304224667-8

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Published by Ramesh Kumar

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Published by: Ramesh Kumar on Jul 04, 2012
Copyright:Attribution Non-commercial

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10/14/2014

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1
BANK OF INDIA
SME - A BANKING PERSPECTIVE
 
2
SMEs -
Defined in Different Ways
Turnover Loan SizeInvestments in Capital Assets No. of Employees
 
Investments – upto Rs. 1cr for SSIsupto Rs. 10 cr for MEs ?Turnover – Rs. 50 cr to Rs. 75 cr ?Several Waysof DefiningSMEsKey Characteristicsfrom BankingPerspective
 
3
Definition for SMEs
– No definition is Ideal
Basis for DefinitionBasicRationaleDrawback fromBanks perspective
Assets /InvestmentsCapitalEmployedDiffers fromactivitytoactivity.Manufacturingactivityrequires largeramounts whereas trading/ servicewarrantstheleastLimits withindividualBanksEasytoCaptureInviewof multiplefinance; evenbigCorporatesborrowfromdifferent Banks/ institutions manytimes insmaller quantitiesNo. of employeesIndicationoSizeDoes not directlyco-relatewithBankingneeds. TurnoverSizedeterminesBankingbehaviourInsomeactivities evensmall Companies havehugeturnover likeCorporates.
IN THE GIVEN CIRCUMSTANCES ASSETS/ INVESTMENT & TURN-OVER SEEM TO BE MOST ACCEPTABLE CRITERIA. TURN-OVER UPTO RS. 50CRORES/ RS. 75 CRORES MAY BE KEPT AS THE BENCHMARK.
Certain adopted basis for defining the so called ‘Priority Sector’ maynot be apt
Definition is not the key issue from a Banker’s Perspective

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