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PNB Summer internship report

PNB Summer internship report

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Published by Anil Anayath

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Published by: Anil Anayath on Feb 29, 2012
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08/12/2015

PROJECT REPORT
ON

“FINANCING THE SME’s – SCOPE & ANALYSIS”

SUBMITTED BY

ANIL SASI ANAYATH
ROLL NO 1005

PROJECT GUIDE

PROF NAYAK

MUMBAI INSTITUTE OF MANAGEMENT & RESEARCH
WADALA (EAST), MUMBAI - 400037

DECLARATION

I hereby declare that this project is submitted in partial fulfillment of

requirement for the award of MMS Finance to Mumbai Institute of

Management & Research in my origin of work and has not been submitted

for any award of any other degree of diploma fellowship or for similar title

or prizes.

I further certify that I have no objection and grant the rights to Mumbai

Institute of Management & Research or Mumbai University to publish any

chapter/ Project if they deem fit in journals or magazines or newspapers

without any prior permission.

Financing the SME’s in PNB – Scope and Analysis

2

ACKNOWLEDGEMENT

I sincerely feel the credit of the project work could not be narrowed to only
one individual. This work is an integrated effort of all those concerned with
it, it would have been quite difficult without their direct & indirect co-
operation. I wish to express my appreciation and gratitude to all the
concerned people.

First and Foremost my intellectual debt is to Mr.Rushikesh
Dhimar (Manager of Circle Office Loan Department Section, Punjab
National Bank, Mumbai) who has contributed significantly towards the
completion of the project. He has provided the guidelines on which this
project was made.

I am thankful to the entire staff of PNB who have taken their
precious time and provided me with requisite data without which this
project would not have completed. I also thank them for giving their
valuable suggestions during the entire period of research.

However, I accept the sole responsibility for any errors of

omission and commission.

Anil S. Anayath

Financing the SME’s in PNB – Scope and Analysis

3

INDEX

Sr. No.

Topics

Page
No.

1

Introduction

7

1.1

Project Description

7

1.2

Relevance of the Project

8

1.3

Objective of the Study

8

1.4

Limitations of the Study

8

2

About the Bank

10

2.1

Mission Statement

10

2.2

Brief History

10

2.3

Products and Services

14

2.4

Awards and Recognitions

15

2.5

Bank’s Logo

16

2.6

Business and Financial Performance

17

3

Literature / Conceptual Support

18

3.1

Banking Sector

18

3.2

Indian Banking Industry

19

3.3

Small and Medium Enterprises in India

20

3.4

Role of SME’s

21

3.5

Financing the SME’s

23

3.6

Book Of Instructions

24

3.7

Important Concepts

25

4

Process / Methodology

26

4.1

Project Methodology

26

4.2

Locale of the Project

26

4.3

Sample Size of the Study

27

4.4

Source of Data

27

5

SME policy

28

5.1

Objective

28

5.2

Scope of the Policy

28

Financing the SME’s in PNB – Scope and Analysis

4

5.3

Small and Medium Enterprises Sector

29

5.4

Bank Approach to SME sector

29

5.5

SME products

30

6

Credit Risk Rating

32

6.1

An Overview

32

6.2

Methodology of CRR

34

6.3

General Guidelines

36

6.4

The Credit Risk Rating Tool

38

6.5

Financial Ratios

46

6.6

System for Assignment & Appraisal of Rating

53

6.7

Important Concepts

55

7

Loan Processing Procedure

56

8

Analysis of SME Proposal (Case Study)

65

9

Conclusion

85

9.1

Conclusion

85

9.2

Findings

87

9.3 Recommendations

88

10

Bibliography

89

Financing the SME’s in PNB – Scope and Analysis

5

EXECUTIVE SUMMARY

Bank extends Loan facilities by way of fund-based facilities and non-fund based
facilities. The fund-based facilities are usually allowed by way of term loans, cash
credit, bills discounted/purchased, demand loans, overdrafts, etc. Further, the
bank also provides non fund-based facilities by way of issuance of inland and
foreign letters of credit, issuance of guarantees, deferred payment guarantees,
bills acceptance facility etc.

Efficient management of Loans and Advances portfolio has assumed
greater significance as it is the largest asset of the Bank having direct impact on
its profitability. In the wake of the continued tightening of norms of income
recognition, asset classification and provisioning, increased competition and
emergence of new types of risks in the financial sector, it has become imperative
that the credit functions are strengthened. RBI has also been emphasizing banks
to evolve suitable guidelines for effective management and control of credit risks.
Credit risk rating is an important function of the bank. It is the process of
evaluating the credit worthiness of a loan applicant. Every bank or lending
institution has its own panel of officials for this purpose.
I have undertaken a study at Punjab National Bank which is an
international bank with its global presence in twenty five countries. The study is
on ‘Loans and Advances of Small and Medium Enterprises - Scope and
Analysis’. The process of Credit Rating & disbursement of loans has been
explained in detail in the project.

Financing the SME’s in PNB – Scope and Analysis

6

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