Chapter:-1

Introduction to the topic

Introduction to the PUNJAB NATIONAL BANK

Origin:

Punjab under the British especially after annexation in 1849 witnessed a period of rapid
development giving rise to a new educated class fired with a desire for freedom from the yoke of
slavery. Amongst the cherished desires of this new class was also an overriding ambition to start
a Swadeshi Bank with Indian Capital and management representing all sections of the Indian
community. The idea was first mooted by Rai Mool Raj of Arya Samaj who, as reported by Lal
Lajpat Rai, had long cherished the idea that Indians should have a national bank of their own. He
felt keenly "the fact that the Indian capital was being used to run English banks and companies,
the profits accruing from which went entirely to the Britishers whilst Indians had to contend
themselves with a small interest on their own capital. At the instance of Rai Mool Raj, Lala
Lajpat Rai sent round a circular to selected friends insisting on an Indian Joint Stock Bank as the
first special step in constructive Swadeshi. Lala Harkrishan Lal who had returned from England
with ideas regarding commerce and industry, was eager to give them practical shape. On May 23,
1894, the efforts materialized. The founding board was drawn from different parts of India
2

professing different faiths and a varied back-ground with, however, the common objective of
providing country with a truly national bank which would further the economic interest of the
country.

History:The Bank opened for business on 12 April, 1895. The first Board of 7
Directors comprised of Sardar Dayal Singh Majithia,Lala Lalchand the
President of its Management Society; Kali Prosanna Roy, eminent Bengali
pleader who was also the Chairman of the Reception committee
of the Indian National Congress at its Lahore session in 1900;Lala Harkishan
Lal,EC Jessawala,Lala Prabhu Dayal,Bakshi Jaishi Ram,and Lala Dholan
Dass.Thus a Bengali, Parsi, a

Sikh and a few Hindus joined hands in a purely national and cosmopolitan
spirit to found this Bank which opened its doors to the public on 12th of April
1895.A Maiden Dividend of 4% was declared after only 7 months of
operation. Lala Lajpat Rai was the first to open an account with the bank
which was housed in the building opposite the Arya Samaj Mandir in Anarkali
in Lahore. His younger brother joined the Bank as a Manager. Authorised
total capital of the Bank was Rs. 2 lakhs, the working capital was Rs. 20000.
It had total staff strength of nine and the total monthly salary amounted to
3

Rs. 320.The first b00ranch outside Lahore was opened in Rawalpindi in 1900.
The Bank made slow, but steady progress in the first decade of its existence.
Lala Lajpat Rai joined the Board of Directors soon after. in 1913, the banking
industry in India was hit by a severe crisis following the failure of the Peoples
Bank of India founded by Lala Harkishan Lal. As many as 78 banks failed during this crisis.
Punjab National Bank survived. Mr. JH Maynard, the then Financial Commissioner, Punjab,
remarked...."Your Bank survived...no doubt due to good management". It spoke volumes for the
measure of confidence reposed by the public in the Bank's management.
Deposits grew from Rs. 10 crores to Rs. 62 crores. On March 31, 1947, the Bank officials
decided to leave Lahore and transfer the registered office of the Bank to Delhi and permission for
transfer was obtained from the Lahore High Court on June 20, 1947. The migrants from Pakistan
were repaid their deposits based upon whatever evidence they could produce. Such gestures
cemented their trusts in the bank and PNB became a symbol of Trust and a name you can bank
upon. Surplus staff posed a big problem.
Punjab Keshari Lala Lajpat Rai (Saluting the spirit of our founding father).

Journey of Punjab National Bank

Punjab National Bank (PNB), was registered on May 19, 1894 under the Indian companies
act with its office in Anarkali Bazar, Lahore.

1895: PNB commenced its operations in Lahore. PNB has the distinction of being the first
Indian Bank to have been started solely with Indian capital that has survived to the present.
(The first entirely Indian Bank, The Oudh Commercial Bank, was established in 1881 in
Faizabad, but failed in 1958). PNBs founder included several leaders of Swadeshi movement
such as Dyal Singh Majithia and Lala Harkishan Lal, Lala Lalchand, Shri Kali Prosanna Roy,
Shri E.C. Jessawala, Shri Prabhu Dyal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat
Rai was actively associated with the management of bank in its early years.

1904: PNB established branches in Karachi and Peshawar.

1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in Delhi circle.

1947: Partition of India & Pakistan at Independence. PNB lost its premises in Lahore, but
continued to operate in Pakistan.

1951: PNB acquired the 39 branches of Bharat Bank (estt. 1942), Bharat Bank became Bharat
Nidhi ltd.

1960: PNB amalgamated Indo commercial Bank (estt. 1933) in a rescue.

1961: PNB acquired Universal Bank of India.

1963: The Government of Burma nationalized PNBs Branch in Rangoon (Yangon).

5

September 1965: After the Indo-Pak war the government of Pakistan seized all the offices in
Pakistan of Indian Banks, including PNBs Head office, which may have moved to Karachi.
PNB also had one or more branches in East Pakistan (Bangladesh).

1969: The Government of India (GOI) nationalised PNB and 13 other major commercial
banks, on july19, 1969.

1976 or 1978: PNB opened a branch in London.

1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The acquisition
added Hindustans 142 branches to PNBs network.

1993: PNB acquired New Bank of India, which GOI had nationalized in 1980.

1998: PNB set up a representative office in Almaty, Kazakhstan.

2003: PNB took over Nedungadi Bank, the oldest private sector bank in Kerala. It was
incorporated in 1913, and in 1965 had acquired selected assets and deposits of the Coimbatore
National Bank. At the time of merger with PNB, Nedungadi Banks shares had zero value,
PNB also opened a representative office in London.

2004: PNB established a branch in Kabul, Afghanistan. PNB also opened a representative
office in Shanghai. PNB established an alliance with Everest Bann in Nepal that permits
migrants to transfer funds easily between India and Everest Banks 12 branches in Nepal.

2005: PNB opened a representative office in Dubai.

2007: PNB establishes PNBIL- Punjab National Bank (international)- in the UK, with 2
offices, one in London, and one in South Hall, Middlesex. Since then it has opened a third
branch in Leicester, and is planning a fourth in Birmingham.

2008: PNB opened a branch Hong Kong.

2010: PNB receive permission to upgrade its representative office in Dubai international
financial centre to a branch.

Acquisitions by Punjab National Bank

1939: PNB acquired Bhagwandas Bank.

1951: PNB acquired the 39 branches of Bharat Bank.

1961: PNB acquired Universal Bank of India.

1960: PNB amalgamated Indo Commercial Bank.

1986: PNB acquired Hindustan Commercial Bank.

1993: PNB acquired New Bank of India.

2003: PNB took over Nedungadi Bank, the oldest private sector in Kerala.

Organization Profile
Today with over 75 million satisfied customers and 6785 domestic branches, 3485 PRAGATI branches
and 8432 ATMs. PNB has continued to retain its leadership position amongst the nationalized banks. The
Bank enjoys strong fundamentals, large franchise value and good brand image. Over the years PNB has
remained fully committed to its guiding principles of sound and prudent banking irrespective of
conditions. Bank has been earning many laurels and accolades in recognition to its service towards doing
well to society, technology usage and on its overall performance. Some of the major awards won by the
Bank are the Best Bank Award, Most Socially Responsive Bank by Business World-PwC, Most
Productive Public Sector Bank, Golden Peacock Awards by Institute of Directors, etc. Besides, the
Bank is ranked 26th amongst FE 500 Indias Finest Companies, 26th amongst the Top 500 India's
Largest Corporations by Fortune 500 India.The Banker ranked PNB on 186th position in 2011, improving
from 257th position a year before. PNB ranked 668th amongst 2000 Global Giants as per the Forbes and
170th in 2012 improving from 195th in 2011 in Top 500 Most Valuable Banking Brands by Brand
7

Finance Banking 500. India Inc Top 100 Most Powerful CEOs for the year 2012, Shri K.R. Kamath,
CMD, PNB, adjudged Most Powerful amongst the Nationalized Banks in India, with overall rank at 50
by Economic Times.
Since its humble beginning in 1895 with the distinction of being the first Swadeshi Bank to have been
started with Indian capital, Punjab National Bank has continuously strived for growth in business which
at the end of March 2014 amounted to 889132 crore and CD ratio 76.21%. PNB is the largest
nationalised Bank in the country in terms of Branch Network, Total Business, Advances, Operating
Profit and Low Cost CASA Deposits. The CASA deposits share to the Total Deposits of the Bank is at
42.62% as on March 2014. Bank achieved a Operating Profit of 11,955 crore and Net Profit of 3062
crore during the FY 2014. Bank also has a strong capital base with Capital Adequacy Ratio of 12.89% as
on 31.03.2014 as per Basel II with Tier I and Tier II capital ratio at 9.90% and 3.74% respectivel

Organization Structure
Bank has its corporate office at Bhikhaji Cama Place, New Delhi and 12 FGM offices which in turn
supervise 68 Circle offices under which the branches function. The delegation of power is
decentralization up to branch level to facilitate quick decision making.

Board of Directors

Mr. Gauri Shankar

Managing Director & CEO

Mr. V K Brahmaji Rao

Executive Director

Ms. Ram S Sanagpura

Executive Director

Mr. Rajesh Aggrawal

Director

Mr. B.P. Kanungo

Director

Mr.T C Jhalani

Director

Dilip Saha

Director

G P Khandelwal

Director

Capacity Building and Transformation

PNB is building its capacity by expanding network by opening new branches and installing
ATMs to provide financial services to needy people in remote/ requires places. Moving forward
and achieving Business Excellence, PNB Pragati, an Organization Transformation Programme
has been initiated in a systematic and well planned manner. Under the programme, 355 PNB
Pragati Branches at various places. These branches will have all the convenient and modern
banking facilities for the customers. PNB Pragati branches are providing 24x7 high-tech services
to their valuable customers through e-lobby by Cash Deposit Machines, Cheque Deposit
Machine, Pass printing Machine and Cash Withdrawal Machine (ATM)

Capacity Building - Expanding Network

Recognitions and Achievements

Banking, Financial Services & Insurance Award under the category Bank with Leading

Financial Inclusion Initiatives by ABP News.

Life Time Achievement Award 2013 to Sh K R Kamath by Dainik Bhaskar

Group. Prestigious Awards by Indian Banks Association:

Best Risk Management and Security Initiatives Winner
Best Customer Management initiative PSU First
Runner-up

Best use of Technology in training and e learning Second

Runner up

Most Innovative Mass Retail Lender for under-Served Segments (special mention) by
BANCON 2013

Skoch Digital Inclusion Award Financial Inclusion project.

Best Banker award for Agriculture Credit and Inclusion by The Sunday Standard

Banking Technology Excellence award for Customer Management and Business

Excellence by IDBRT Hyderabad.

4th Asias Best Employer Brand Awards 2013 for Excellence in Training by
Employer Branding Awards.

MSME Banking Excellence Awards

PNB bags RBI Rajbhasha Award 2014

Annual Social Banking Excellence Award 2014

Golden Peacock Business Excellence Award 2014 by Institute of Directors

PNB RECEIVED AWARD FOR CSR ACTIVITY 2010

PNB

bags

Golden

Peacock

award

for

innovative

Product/Service

for the year 2014

Vigilance Excellence Award 2013-14

10

ABP

News

Leadership

presented
Award

PNB

with

Global

for Organizations

with

CSR

Excellence

Best

CSR

and

Practices

on 17.02.2014

Punjab

National

Bank

conferred

with

Appreciation

Certificate

in

6th Global CSR Summit - cum Excellence Awards

Logic of PNB Logo

Established in 1893 at Lahore the undivided India ,Punjab national bank has distinction of being the firm
Indian bank that has been started solely with Indian capital .the bank has nationalized on 19 th July 1969
along with other 13 banks .from its modest beginning the bank has grown in size and stature to become a
frontline banking institution in India .at present APNB has a network of 5937 domestic branches and
6385 ATMs.strong correspondent banking relationship which its maintain with over 250 leading
international banks all over the world enhances its capabilities to handle transaction worldwide. More
than 70 renowned international banks maintain their rupee account with PNB.The large presence and vast
resource base have helped the bank to build strong links with trade and industry. At the same time the
bank has been conscious of its responsibilities by financing agriculture and allied activities and small
11

scale industries. The bank is committed to maintaining the highest standard of service and will be
covering more offices quality movement titled Alliance with quality.

Quality Policy

To effectively meet customer requirement and to achieve total customer satisfaction

To gain faith and confidence of customer and potential customers regarding the quality of
services rendered.

To achieve operational efficiency by attaining better predictability and profitability.

Future Expansion of the Organization

VISION AND MISSION

VISION
To be a Leading Global Bank with Pan India footprints and become
A household brand in the Indo-Gangetic Plains, providing entire range
of financial products and services under one roof.
MISSION
Banking for the unbanked
12

Functions of Punjab National Bank

Primary function of Punjab National Bank

Being a short term credit lender, Punjab National Bank accepts the savings of public in
following type of deposit accounts.

Current Deposit Account (Current or Running Account): A current account is an account

which is generally opened by business people for their day to day business transactions.

PNB current account

PNB Vaobhav account

PNB Gaurav account

PNB Smart Roamer account

Saving Deposit Account:

This account is generally opened by individual to deposit theri small saving .the main
objective of this account is promotion of thrift.

PNB premium saving account

PNB Prudent sweep account

Total Freedom Salary Account

PNB Vidyarthi Saving Fund Account

PNB Mitra Saving Fund Account

PNB Rakshak Saving Scheme

13

Fixed Deposit:

An account can be opened with a fixed amount for fixed period varies from 7 days to 10 years
normally.

PNB FD multi benefit deposit scheme

PNB special term deposit scheme

PNB ordinary term deposit scheme

PNB tax saver FD scheme

Prospective senior citizen

Recurring Deposit:
In this form of deposit accounts depositors can save and deposit regularly a fixed
installment every month for fixed a period varies from 6M to 120M so that they are
assured of the sizeable amount at the time of maturity. Banks have found this deposit
scheme popular.

Recurring Deposit account

PNB Flexi RD account

Secondary function of Punjab National Bank

14

Bank pays on behalf of its customers as an agent and gets paid fee for agency function.

Payment of taxes, bills

Collection of funds through bills, cheques etc.

Transfer of funds

Sale-purchase of shares and debentures

Collection/ payment of dividend or interest

Credit Methodology
The banks are providing credit facilities to various sectors under various schemes formulated by
RBI. The growth of economy and GDP of our country is directly depends upon the vital role
being played by Primary Cooperative societies, Cooperative Banks and Scheduled Commercial
Banks. In our country 70% of the population is rural orientated and engaged in agricultural
activities directly or indirectly.

PNB is extending loans to farmers for raising crops, to purchase power tillers and agriculture

implements under agriculture sector.

PNB is extending cash credit facility and term loan to manufacturing and service sector under

MSME.
PNB is extending term loans to another section of society i.e. Service man, Salaried persons,
Students, Corporate, shopkeepers, professionals and retired defenses personals to meet their
personal needs and social obligations under retails loans.

Types of Loans

Over draft
15

Demand Loans
Term Loans
Cash Credit

Category of advances
On the basis of nature of security provided

Secured Loans
Unsecured Loans

On the Basis of nature of activity

Agriculture Loans
Direct agriculture loans
Indirect agriculture Loans
MSME loans
MSE loans for micro and small enterprises in manufacturing & Service sector
SME loans for Medium size industries & Service sector
Loans under Retail segment
Vehicle loan
Housing loan
Education loan
Personal loan

Introduction to the Consumer Behavior towards MSME (Micro, Small and

Medium Enterprises) with the reference of PUNJAB NATIONAL BANK ,
KARPUTHALA

16

The Government of India enacted MSMED Act in June 2006 and the provision of the Act came
into force w.e.f. 2nd October 2006. This act has been passed with a view to provide a new
category of Micro, Small and Medium Enterprises with well defined limits for investment in
Plant & Machinery/Equipments. It is applicable to manufacturing as well as service sector
enterprises. This Act seeks to facilitate promotion, development and enhancing competitiveness
of these enterprises. This sector has been tagged as the engine of the modern Indian economy. In
line with the direction of the Government of India and being a partner in growth of the country,
our bank is focusing on MSME and is paying due attention for financial assistance to this sector.

Definition of Micro, Small and Medium Enterprises:

(a) Manufacturing Enterprises i.e. Enterprises engaged in the manufacture or

production, processing or preservation of goods as specified below:
(i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed
Rs. 25 lakh;
17

(ii) A small enterprise is an enterprise where the investment in plant and machinery is more than
Rs. 25 lakh but does not exceed Rs. 5 crore; and
(iii) A medium enterprise is an enterprise where the investment in plant and machinery is more
than Rs.5 crore but does not exceed Rs.10 crore

In case of the above enterprises, investment in plant and machinery is the original cost excluding
land and building and the items specified by the Ministry of Small Scale Industries vide its
notification No.S.O. 1722(E) dated October 5, 2006 (Annex I).
MSMEs have been established in almost all-major manufacturing and services sector in the
Indian industry such as:
Food Processing
Agricultural Inputs
Chemicals & Pharmaceuticals
Engineering; Electrical, Electronics
Electro-medical equipment
Textiles and Garments
Meat products
Bio-engineering
Sports goods
Plastics products
18

 Computer Software, etc.

Retails Trades

(b) Service Enterprises i.e. Enterprises engaged in providing or rendering of services and
whose investment in equipment (original cost excluding land and building and furniture, fittings
and other items not directly related to the service rendered or as may be notified under the
MSMED Act, 2006) are specified below.
(i) A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10
lakh;
(ii) A small enterprise is an enterprise where the investment in equipment is more than Rs.10
lakh but does not exceed Rs. 2 crore; and
(iii) A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2
crore but does not exceed Rs. 5 crore.

Objective:-

The basic objectives of the MSME Loan Policy are: Our Bank has shown growth of MSE credit from Rs.13161 crore as on 31.03.2012 to Rs.17289
crore as on 31.03.2013 with an increase of 31.36%. Medium Enterprises has increased from Rs.
1837 to Rs.2742 crore showing a growth 49.26%.

19

The principal objective of this policy is to improve our portfolio of MSE credit to Rs.53500 crore
by 31.03.2018. In addition to above our other objectives are as under.

1. Banks positive commitment to its MSE customers to provide easy, speedy and transparent
access to banking services in their day to day operations and in times of financial difficulty.
2. Positive thrust to MSE sector.
3. Hassle free credit to Micro and Small Enterprises.
4. Description of MSE sector.
5. Proper appraisal and evaluation of advances proposal.
6. Achievement of different parameters prescribed by Prime Ministers Task Force / Reserve Bank
of India.
7. Cluster Based approach for financing MSE.

20

8. Increased Coverage under credit guarantee scheme of CGTMSE.

9. Complete adherence to BCSBIs Code of Banks commitment to Micro and Small
Enterprises.
10. Generation of large number of youth entrepreneur.
11. The policy strives to ensure that the socio economic obligations cast on the bank are fully
met.
12. The policy document ensures compliance of all the directives/guidelines issued by the
Government/RBI and all other regulatory requirements on MSE.
13. With regard to guidelines issued from time to time by the authorities, the Bank would follow
them in all aspects. However, in varying interpretations, the Bank will adopt a reasonable
interpretation, as determined by the Credit Risk Management Committee without deviating from
the spirit behind the guidelines.

MSME POLICY GUIDELINES

As per the above definition, MSME units are categorized as under :

Enterprise

Micro 1

Micro II

Small

Medium

21

Manufacturin

Up to 10.00

Above

Above

Above Rs.5.00

g (Investment

lakh

Rs.10.00 lacs

Rs.25.00 lacs

cr and up to

in plant and

and

and

Rs.10.00

machinery)

Rs.25.00 lacs

Rs.5.00 crores

crores

Above Rs.4.00

Above

Above Rs.2.00

lacs and up to

Rs.10.00 lacs

cr and up to

Rs.10.00 lacs

and

Rs.5.00 crores

Services

Up

(Investment in

lakh

equipments)

to

4.00

up

to

up

up

to

to

Rs.2.00 crores

Direct Finance :Finance extended to MSE borrowers: MSE Manufacturing Enterprises, Loans for food
and agro processing, Service Enterprises (Bank loans up to Rs. 5 crore per borrower / unit to
Micro and Small Enterprises), Export Credit, Khadi and Village Industries Sector (KVI) (All
loans to units in the KVI sector, irrespective of their size of operations and location and amount
of original investment in plant and machinery. Such loans will be eligible for classification under
the sub-target of 60 percent prescribed for micro enterprises within the Micro and small
enterprises segment under priority sector.), General Credit card (GCC).

Indirect Finance:(i) Loans to persons involved in assisting the decentralized sector in the supply of inputs and
marketing of outputs of artisans, village and cottage industries.
(ii) Loans to cooperatives of producers in the decentralized sector viz. artisans village and
cottage industry.
(iii) Loans sanctioned by banks to MFIs for on-lending to MSE sector as per the conditions
specified in extant Master Circular on Priority Sector Lending.
22

MSME

ADVANCES:

a)
(i)

Advances up to Rs. 50000/-:

(ii)

Advances above Rs. 50000/- & up to Rs 20 lacs:

(iii)

Advances above Rs. 20 lacs:

BR+1.25%
BR+2.25%
As per Master Table above

b)
(i)

Minimum ROI for MSME advances BR i.e presently 10 % *

(ii)

Maximum ROI for MSME advances BR+2.50% *

(iii)

Mean ROI for MSME advances BR+1.25% *

*Subject to internal/external rating of the borrower and the change of BR from time to time.
Term premia @ 0.50% to be added for loans repayable in three years & above.
c)Based on Minimum/Maximum/ Mean ROI on MSME advances, the total yearly interest cost
on fixed amount credit of Rs.100000/- throughout the year will be as under.
(i)

At Minimum ROI @ 10.00% =Rs.10471/-

(ii)

At Maximum ROI @ 12.50% =Rs.13242/23

(iii)

At Mean ROI

@ 11.25% =Rs.11849/-

Delayed Payment:Under the Amendment Act, 1998 of Interest on Delayed Payment to Small Scale and Ancillary
Industrial Undertakings, penal provisions have been incorporated to take care of delayed
payments to MSME units. After the enactment of the Micro, Small and Medium Enterprises
Development (MSMED), Act 2006, the existing provisions of the Interest on Delayed Payment
Act, 1998 to Small Scale and Ancillary Industrial Undertakings, have been strengthened as
under:
i.

In case the buyer to make payment on or before the date agreed on between him and
the supplier in writing or, in case of no agreement before the appointed day. The
agreement between seller and buyer shall not exceed more than 45 days.

ii. In case the buyer fails to make payment of the amount to the supplier, he shall be liable to pay
compound interest with monthly rests to the supplier on the amount from the appointed day or,
on the date agreed on, at three times of the Bank Rate notified by Reserve Bank.
iii. For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay
the interest as advised at (ii) above.
iv. In case of dispute with regard to any amount due, a reference shall be made to the Micro and
Small Enterprises Facilitation Council, constituted by the respective State Government.

MSME FINANCE SCHEMES :-

24

1. PNB MSME SAHAYOG SCHEME

Financial Assistance to meet unforeseen expenditure of MSME Enterprises having good track
record.

PURPOSE
For contingencies like additional purchase of raw material including packing material/ handling
charges for the execution of bulk orders, taking part in national /international trade exhibition,
payment of consultancy charges, machinery repair, labor payments, etc.

ELIGIBILITY
Existing borrowers whose accounts have been classified as standard assets for the last three
consecutive financial years and are enjoying credit limits above Rs. 20 lakh. For term loans &
working capital of above Rs. 20 lakh, the threshold credit rating should be BB (on the closing
of previous financial year). Credit risk rating for any of the earlier years should not be belowB.

EXTENT OF LOAN
The facility is extended by way of clean cash credit limit. Special credit limit for an amount
equal to 20% of the aggregate working capital limits (i.e. fund based and non fund based
separately), subject to a maximum of Rs. 25 lakh.

ASSESSMENT
A simple assessment will be made by computing 20% of the aggregate cash credit working
capital limits (i.e. limits against stock and bills put together) or Rs.25 lakh whichever is lower.

REPAYMENT
The borrowers are free to utilize the facility upto12 times in a year. Each amount of withdrawal
is repayable within maximum period of two months and there should be a gap of 15 days
between the date of complete repayment of outstanding and the next withdrawal.

25

SECURITY
Collateral security to be obtained as per banks extant guidelines. The charge on available
security by way of primary/ collateral to the existing sanctioned limits will be extended to cover
the clean cash credit limit.

2. PNB ARTISAN CREDIT CARD

(Simplified Loan delivery mechanism to provide hassle free financial support to Artisans)

OBJECTIVE
To provide hassle free financial support to Artisans
To make credit delivery simple and easy

SECURITY
Secured by Hypothecation of stocks, receivables, machinery, other equipment, etc.

COLLATERAL SECURITY
No Collateral security and third guarantee required. Loan to be covered under Credit Guarantee
Scheme of CGTMSE.

NATURE OF LIMIT
Term Loan & Cash Credit Limit

MARGIN
Extent of Limit Margin
26

Upto Rs. 2.00,000 Nil

VALIDITY
Card is valid for three years
Nature of limit
Term loan and working capital (both upto Rs. 2 lakh)

ELIGIBILITY
All artisans (Existing & New) involved in production / manufacturing process(and otherwise
eligible for credit facilities for carrying out the proposed activitiesunder any of the existing bank
schemes).
Preference is given to artisans registered with Development Commissioner (Handicrafts).
on financing in clusters of artisans and artisans who have joined to form Self Held Groups
(SHGs).
All existing / new artisan borrowers of the bank enjoying credit facilities upto Rs. 2 lakh and
having
satisfactory dealings with the bank.
Beneficiaries of other Government sponsored loan schemes are not eligible.

3. PNB LAGHU UDYAMI CREDIT CARD

A Simplified Loan Delivery Mechanism

OBJECTIVE:
27

To provide hassle free financial support to Small Business units, Retail Traders, Artisans, Village
Industries, Micro & Small Enterprises (Manufacturing & Services) & Tiny Units, Professionals
and Self Employed Persons, etc.

ELIGIBILITY
Borrowers belonging to aforesaid categories enjoying Cash Credit limits upto Rs. 10 lakh and
having satisfactory dealings with the bank for the last three years.

LOAN AMOUNT
Extent of limit Maximum upto Rs. 20 lakh*
*Condition apply Nature of limit Cash Credit

ASSESSMENT OF CREDIT CARD LIMIT

Credit Card Limit business, retail traders, etc upto 20% of theannual turnover Professional and
self-employed persons 50% of their gross annual income as per Income Tax ReturnMicro &
Small Enterprises units as per simplified turnover method.

MARGIN
A. For Micro & Small Enterprises (other than Trading)
a- Cash Credit (Stocks) Extent of Limit
(i) Upto Rs.2.00 lakh Nil
(ii) Above Rs.2.00 lakh upto Rs. 5.00 lakh 15%
(ii) Above Rs 5.00 lakh 20%
B. For Micro & Small Enterprises (Trading)
Cash Credit (Stocks):30% - 40%
keeping in view, nature of stocks, price fluctuation, shelf life etc.

SECURITY
Hypothecation of stock, receivable, machinery, equipment, etc.

COLLATERAL SECURITY (For Micro & Small Enterprises )

No Collateral Security & Third Party Guarantee for Loans upto Rs.100 lakh covered under
Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE). In other cases,
collateral security or third party guarantee is asked only in cases where primary security is
inadequate or for other valid reasons and not as a matter of routine.
28

4. SCHEME FOR ADVANCES TO SMALL ROAD TRANSPORT OPERATORS

To assist transport operators (existing as well as new entrants) and to create Employment
Opportunities for the borrowers.

ELIGIBILITY
1. An individual or an association desirous of owning transport vehicle(s), for carrying
passengers or goods on hire.
2. The borrower (s) hold the necessary driving license or engage driver (s) possessing valid
license to operate the type of vehicle for which credit is sought.
3. The borrower (s) should have been granted a permit by an appropriate authority to ply vehicle
(s) for passengers or goods traffic for hire.
4. The borrower(s) should be well experienced and have the aptitude in the profession.
5. Transport operators owning one or more trucks/buses are also eligible.

PURPOSE
Purchase of new or old vehicle(s) made by standard manufacturing companies.

EXTENT OF LOAN FOR NEW TRUCK(S)/BUS (S):

90% loans of the invoice cost of the Vehicle inclusive of the cost of chassis, construction of body
thereon.

MARGIN
New Vehicles10% Old Vehicles25% (on the depreciated value calculated @20% p.a. on the
prevalent cost price of new vehicle or market value, whichever is lower)

RATE OF INTEREST
29

(Subject to change from time to time) As per banks guidelines issued from time to time as
applicable to Transport Operators according to the amount of loan.

SECURITY
Vehicle purchased with the amount of the loan will remain hypothecated to the bank as security
of the advance and shall be registered with the Motor Vehicles Authority in the joint names of the
borrower and the bank as Hypothecator and the Hypothecate respectively.

COLLATERAL SECURITY:
FOR LOANS UPTO RS.10.00 lakh:
No collateral security by way of guarantee or mortgage of immovable property if the loan is
covered under Credit Guarantee Scheme of CGTMSE. FOR LOANS ABOVE RS.10.00 lakh*:
Collateral security equivalent to amount of advance by way of: Equitable mortgage of
immovable properties/Pledge of FDRs/NSCs/IVPs/KVPs/ Pledge of other bankable security like
shares/debentures/bonds of adequate value/Third party guarantee(s) having adequate means.
No collateral security or third party guarantee is required for loans up to Rs. 100 lakh covered
under Credit Guarantee Scheme of CGTMSE.

REPAYMENT (FOR NEW VEHICLES)

Maximum period of 60 months by monthly installments, starting from the date when the vehicle
(purchased with the amount of the loan) is put on the road for commercial use or after
completion of two months from the date of advance, whichever is earlier.
(FOR OLD VEHICLES) In case of old (second hand) vehicle, repayment will start one month
after the disbursement of the and loan will be repaid with interest in 30 to 48 months.

Upfront fee for term loans

30

For loans upto Rs.25000 - Nil above Rs.25000 and upto Rs.2 lakh - Rs. 270/- Above Rs.2 lakh 1.25% of the loan amount

Documentation charges
For loans upto Rs.2 lakh - Nil above Rs.2 lakh - Rs.200 per lakh or part thereof subject to a
maximum of Rs. 25000

INSURANCE:
The borrowers will be required to obtain a comprehensive insurance policy including civil
commotion and riots in respect of vehicle (s) hypothecated to the bank in the joint name of the
borrower (s) and the bank as Hypothecator and Hypothecate respectively. The Insurance
Policy will be deposited in the lending office.

5.SCHEME FOR ADVANCES TO OWNER-DRIVERS OF TAXI CARS,

THREE WHEELER, STATION WAGONS, TEMPOS, ETC.

To provide self-employment opportunities to licensed drivers by making cheaper and easier

credit available for financing taxi cars, three wheelers scooters, tempos or station wagons.

ELIGIBILITY
Individuals who hold a driving license, a permit to ply a taxi andhave arranged to buy a vehicle
in their own names.
31

PURPOSE
For purchase of new or old (not more than 3 years)vehicles, and construction of body thereon
including Purchase of fare-meter.

MARGIN
New vehicles:
a) For loans up to Rs. 25,000/- - NIL.
b) For loans. Above Rs.25000/- - 10%
Old vehicles:
25% (on the depreciated value calculated @20% p.a. on the prevalent cost price of new vehicle
or market, whichever is lower).

RATE OF INTEREST (Subject to change from time to time)

As per banks guidelines issued from time to time as applicable to Transport Operators according
to the amount of loan.

SECURITY
Vehicle purchased with the amount of the loan will remain hypothecated to the bank as security
of the advance and shall be registered with the Motor Vehicles Authority in the joint names of the
borrower and the bank.

COLLATERAL SECURITY

FOR LOANS UPTO RS.10.00 lakh:

32

No collateral security by way of guarantee or mortgage of immovable property if the loan is

covered under Credit Guarantee Scheme of CGTMSE.
FOR LOANS ABOVE RS.10.00 lakh*:
Collateral security equivalent to amount of advance by way of: Equitable mortgage of
immovable properties/Pledge of FDRs/NSCs/IVPs/KVPs/ Pledge of other bankable security like
shares/debentures/bonds of adequate value/Third party guarantee(s) having adequate means. No
collateral security or third party guarantee is required for loans up to Rs. 100 lakh covered under
Credit Guarantee Scheme of CGTMSE.

REPAYMENT

(FOR NEW VEHICLES)

Maximum period of 48 months (60 months in case of taxi car) by monthly instalments,starting
from the date when the vehicle (purchased with the amount of the loan) is put on the road for
commercial use or after completion of two months from the date of advance, whichever is
earlier.

(FOR OLD VEHICLES)

In case of old (second hand) vehicle, repayment will start one month after the disbursement of
the loan and loan will be repaid with interest in 24 to 36months.Upfront fee for term loans:
For loans upto Rs.25000 - Nil above Rs.25000 and upto Rs.2 lakh - Rs. 270/- Above Rs.2 lakh 1.25% of the loan amount

Documentation charges
For loans upto Rs.2 lakh - Nil Above Rs.2 lakh - Rs.200 per lakh or part thereof subject to

33

a maximum of Rs. 25000

INSURANCE
The borrowers will be required to obtain a comprehensive insurance policy including civil
commotion and riots in respect of vehicle (s) hypothecated to the bank in the joint name of the
borrower (s) and the bank

6. PNB GENERAL CREDIT CARD (GCC) SCHEME

The objective of the scheme is to increase the flow of credit to individuals for entrepreneurial
activity in the non farm sector provided through the General Credit Card.
All nonfarm entrepreneurial credit extended to individuals which is eligible for classification
under the priority sector guidelines.
The limit be sanctioned is need based limit but fixed with a maximum of Rs. 10 Lakh, on case
to case basis, after analyzing credit needs and repaying capacity of the borrower.
GCC limit shall be repayable in 12 months; No commission will be levied for cash withdrawal.
Nature of facility- WC/WCTL.

7.

SCHEME

FOR

FINANCING

OF

INDIVIDUAL

BUSINESS

CORRESPONDENT (BC) AGENTS DEPLOYED BY THE BANK FOR

CARRYING OUT FINANCIAL INCLUSION WORKS
SCHEME APPLICABILITY:
Branches carrying out Financial Inclusion Work.

ELIGIBILITY:
Individual BCs deployed by the Bank for implementing Financial Inclusion

PURPOSE:
34

To provide financial assistance to Individual Business Correspondent agents deployed

by the Bank for carrying out Financial Inclusion works

NATURE & EXTENT OF LOAN:

Maximum 75000/- Out of which: - Term Loan - 50,000/- (Max.)for purchase of PC/Laptop,
Printer, Web-Cam, Biometric Scanner, Dongle, UPS, inverter etc. Overdraft - 25000/-(Max.) in
the shape of settlement account for carrying out daily cash transactions.

MARGIN: NIL
RATE OF INTEREST:Base Rate (presently 10.25%

CREDIT RISK RATING:

Not Applicable
.

REPAYMENT:
Term Loan Maximum repayment period is 36 months including moratorium period of 3 months
after disbursement of the loan.

Overdraft: Need based loan by way of overdraft, subject to maximum of 25000/- for carrying
out daily cash transactions only..

SECURITY
PRIMARY: Hypothecation of equipments purchased out of bank finance,
35

COLLATERAL:
No Collateral & Third Party Guarantee. To be invariably covered under Credit Guarantee
Scheme of CGTMSE.

UPFRONT & DOCUMENTATION CHARGES: NIL

36

Chapter:-2
Objective & Scope of
the study

Objectives of the study

To know about the various MSME financing schemes of PNB and their usage.
To know the scope of MSME credits, in future, for PNB.
To know the effectiveness of various MSME financing schemes provided by Punjab
National Bank.
To know the problems faced by MSMEs in getting credits.
To know the benefits of MSME financing schemes to the Punjab national bank.
To check the satisfaction level of Micro Small and Medium Enterprises regarding
MSME financing schemes provided by PNB.

SCOPE OF THE STUDY

37

The study is conducted with Punjab National Bank, Kapurthala. The Kapurtahla city is
district head-quarter & its surrounded by no. of villages chosen for two economic
reasons. It has a lot of people working as in different occupations. The income disparities
among the residents are very high. Therefore the study was limited to people who have an
account with the PNB and who availed off various MSME loan schemes provided by
Bank.

38

Chapter:-3
Review of Literature

LITERATURE REVIEW
The comprehensive literature demonstrates that MSMEs are necessary for sustained economic
growth and development of any economy including India. To justify the need of present study,
following literature has been reviewed: UNIDO (1969) in a study based on evidence from a
number of developing countries indicated that small enterprises with a lower level of investment
per worker tend to achieve a higher productivity of capital than do the larger, more capital
intensive enterprises.
Mali (1998) observed that small and medium enterprises (SMEs) and micro enterprises have to
face increasing competition in the present scenario of globalization, they have to specifically
improve themselves in the fields of management, marketing, product diversification,
39

infrastructural development, technological up gradation. Moreover, new small and medium

enterprises may have to move from slow growth area to the high growth area
And they have to form strategic alliance with entrepreneurs of neighboring countries. Data bank
on industries to guide the prospective entrepreneurs including investors from abroad is also
needed.

Bala Subrahmanya (2004)

Highlighted the impact of globalization and domestic reforms on small-scale industries sector.
The study stated that small industry had suffered in terms of growth of units, employment, output
and exports. The Researcher highlighted that the policy changes had also thrown open new
opportunities and markets for the small-scale industries sector. He suggested that the focus must
be turned to technology development and strengthening of financial infrastructure in order to
make Indian small industry internationally competitive and contribute to national income and
employment.

Bargal et al. (2009)

Examined the causal relationship among the three variables GDP, SSI output and SSI exports and
also have compared the performance parameters of SSIs in the pre and post liberalization era.
The study found that the annual average growth rate of different parameters of SSIs have
declined in the period of nineties vis--vis the pre-reform years. There is an absence of any leadlag causal relationship between exports and production in small-scale sector and GDP of Indian
economy.
Dixit and Pandey (2011)
applied cointegration analysis to examine the causal relationship between SMEs
output, exports, employment, number of SMEs and their fixed investment and Indias GDP, total
exports and employment (public and private) for the period 1973-74 to 2006-07. Their study
revealed the positive causality between SMEs output and Indias GDP.
40

Singh et al. (2012)

analyzed the performance of Small scale industry in India and focused on policy changes which
have opened new opportunities for this sector. Their study concluded that SSI sector has made
good progress in terms of number of SSI units, production & employment levels. The study
recommended the emergence of technology development and strengthening of financial
infrastructure to boost SSI and to achieve growth target.
Venkatesh and Muthiah (2012)
found that the role of small & medium enterprises (SMEs) in the industrial sector is growing
rapidly and they have become a thrust area for future growth. They emphasized that nurturing
SME sector is essential for the economic well-being of the nation. The above literature highlights
the various aspects viz. performance, growth & problems of MSMEs in Indian economy and
induces for continuous research in this field

Chapter:-4
41

Research Methodology

RESEARCH METHODOLOGY
Research: Research is the procedure of logical and systematic application of the fundamentals of
science to general and overall questions of a study and scientific technique, which provide
precise tools, specific procedures, and technical rather philosophical means for getting and
ordering the data prior to their logical analysis and manipulation different type of research
designs is available depending upon the nature of research project, availability of manpower and
circumstances.
Research is the systematic and objective

identification

collection

analysis
42

dissemination

and use of information for the purpose of improving decision making

related to the

identification and

solution of problems and opportunities in Marketing.

A descriptive study tries to discover answers to the questions who, what, when, where, and,
sometimes, how. The researcher attempts to describe or define a subject, often by creating a
profile of a group of problems, people, or events.
Such studies may involve the collection of data and the creation of a distribution of the number
of times the researcher observes a single event or characteristic (the research variable), or they
may involve relating the interaction of two or more variables.

Organizations that maintain databases of their employees, customers, and suppliers already have
significant data to conduct descriptive studies using internal information. Yet many firms that
have such data files do not mine them regularly for the decision-making insight they might
provide.
This descriptive study is popular in business research because of its versatility across disciplines.
In for-profit, not-for-profit and government organizations, descriptive investigations have a broad
appeal to the administrator and policy analyst for planning, monitoring, and evaluating. In this

43

context, how questions address issues such as quantity, cost, efficiency, effectiveness, and
adequacy.
Descriptive studies may or may not have the potential for drawing powerful inferences. A
descriptive study, however, does not explain why an event has occurred or why the variables
interact the way they do.

SAMPLE METHOD
Convenience sampling method is used for the survey of this project. It is a non-probability
sample. This is the least reliable design but normally the cheapest and easiest to conduct .In this
method Researcher have the freedom to choose whomever they find, thus the name convenience.
Example includes informal pools of friends and neighbors or people responding to a newspapers
invitation for readers to state their position on some public issue.

SAMPLE SIZE
Sample size denotes the number of elements selected for the study. For the present study, 100
respondents were selected at random. All the respondents are from KARPUTHALA.

TYPES OF DATA
Every decision poses unique needs for information, and relevant strategies can be developed
based on the information gathered through research. Research is the systematic objective and
exhaustive search for and study of facts relevant to the problem
Research design means the framework of study that leads to the collection and analysis of data. It
is a conceptual structure with in which research is conducted. It facilitates smooth sailing of
various research operations to make the research as effective as possible.
44

 PRIMARY DATA
Primary data are those collected by the investigator himself for the first time and thus
they are original in character, they are collected for a particular purpose. A wellstructured questionnaire was personally administrated to the selected sample to collect
the primary data.

SECONDARY DATA
Secondary data are those, which have already been collected by some other persons for
their purpose and published. Secondary data are usually in the shape of finished products.
Two types of secondary data were collected for the preparation of the project work:
Internal Data was generated from companys brochures, manuals and annual reports
External Data, on the other hand, was generated from magazines, research books,
intranet and internet (websites).

Data Analysis
Tools used for data analysis are tables, columns, Pie-charts, Graphs, Bar diagrams.

Limitations of the study

There are always present some limitations under which a researcher has to work. Here following
are the researcher has to work.
Sample Size: The study was limited to one or two branches of PNB in Kapurtahala.
Therefore sample size surveyed was limited over 100 respondents which may not be fully
representative of universe. A large sample size could not be taken due to time and cost
constraints
Innovation: The study was constrained only to the innovation in MSME/consumer
financing.

45

Non-Coverage of certain aspects: There is wide range of parameters affecting consumer

behavior but only a few questions relating to those determinants have been endorsed in
schedule.
Time Constraint: The study is not an extensive we had limited time for conducting this
survey report. In this short period all the respondents had to be personally contacted for
the purpose of all survey & then their responses had to be analyzed. So, some short falls
may be present.
Limitation of sampling technique: Limitation & biasness of convenience & judgement
sampling used in present study to some extent.
Competition: The study does not include competition from the various other MSME
institutions with regards to consumer financing.

46

Chapter:-5
Data Analysis and
Interpretation
DATA ANALYSIS AND INTERPRETATION

i)

Gender of the Respondents

MALE
50

FEMALE
50

TOTAL
100

47

Gender of Respondents

MALE
50

FEMALE
50

Analysis:In this figure there are total 100 respondents out of which 50 are male and 50 female
respondents. This indicates that Male population is availing MSME loans more frequently as
compared to Female.

ii)

Age Group of Respondents

Age group
18-25 year
26-35 year
36-45 year
46-55 year

No. of respondents
20
25
40
10
48

Above 56 year
Total

5
100

No. of Respondents
40

40
35
30
25

25

20

20
15
10

10

0
18-25 year

26-35 year

36-45 year

46-55 year

Above 56 year

Analysis:In above figure, majority of respondents are from 36-45 year age group, 25
respondents from 26-35 year, 18-25 year age group include 20 respondents and 5
respondents in above 56 years.

iii)

Occupation of Respondents

Occupation

of No. of Respondents

Respondents
Professional
Sales Marketing
Clerical/ Administrative
College/Graduate Student

5
10
20
2
49

70
60
50
40
30
20
10
0

Self-employed/Own

60

Company
Other
Total

3
100

Analysis:In this figure shows, 5 respondents are from professional, 10 are from sales
marketing,20 respondents are from clerical/administrative, 2 respondents are from
college/graduate students, 60 are from self employed/ Own company and 3
respondents are from others.

iv)

Residential Status of Respondents

Residential status
Rural
Urban
Total

NO. of respondents
49
51
100
50

No. of respondents

Urban
Rural
51

49

Urban

Analysis:In this figure, 49 respondents are from rural area and 51

Respondents are from urban area.

Which kind of account you have with PNB?

51

Kind of Accounts
Current Account
Recurring Deposit Account
Fixed deposit Account
Saving Account
Total

No. of response
60
10
5
25
100

No. of Respondents
60

60
50
40
30
20
10
0

10

25
5

Analysis:In this Figure, majority of respondents having current account that is 60, 10 respondents having
recurring deposit account, 5 respondents having fixed account and 25 respondents having saving
accounts.

52

According to you which bank you will prefer while availing MSME loan?

Bank
Private Bank
Nationalized Bank
Co-operative Bank
Total

No. of Respondents
NIL
100
NIL
100

No.of Respondents

Private Bank
Co-operative Bank
Nationalized Bank

100

Analysis:-

53

In above figure, all respondents prefer nationalized banks because they all are
Punjab national banks customers. Data collected from only PNB customers thats
why private and co-operative bank respondents are NIL
3

Do you have a MSME loan from PNB?

Options
Yes
No
Total

No. of Respondents
100
Nil
100

No. of Respondents

No
Yes

100

54

Analysis:In above figure, all the respondents are having MSME loans because data collected is for MSME
clients only .

Did you face any problem while applying for MSME loan?

Options
Yes
No
Total

No. of Respondents
51
49
100

No. Of Respondents

Yes
49

No
51

55

Analysis:In this figure, 51 respondents say Yes as they faced some problems while applying
for MSME Loans and 49 respondents say they didnot face any problem.

If yes, what problems did you face regarding the loan?

Problems
Interest Rate
Paper work required
Time taken to extend the loan
Payments conditions
Total

No. of Respondents
5
20
10
15
51

No. of Respondents
20
20
18
16
14
12
10
8
6
4
2
0

15
10
5

Analysis:In this figure, majority of respondents say, they faced problem from too much
paper work requirements, 15 respondents say payment conditions, 10 respondents
say time taken to extend the loan and 5 respondents say Interest rate.
56

If no, what were the obstacles that you faced when you applied for the loan?
Obstacles
Collaterals
Financial Position
Cash Flow that is not

No. of Respondents
5
20
4

consistent with the banks

requirements
Presenting the

10

proposal
Lack of standardized

10

accounting system and books

Total

49

Analysis:In this figure, there are total 49 respondents who say No, out of which 20
respondents face financial position obstacles, 10 respondents face presenting the

57

proposal,10 face lack of standardized accounting system and books, 5 face

collaterals and 4 respondents face Cash Flow that is not consistent with the banks
requirements.

How many times you have availed the MSME loan facilities from PNB?
Time
One Time
Two Time
More than two times
Total

No. of Respondents
45
20
35
100

No. of Respondents

One Time

35

Two Time
45

More than two times

20

Analysis:In this figure, 45 respondents availed MSME loans one time, 20

Respondents availed MSME loans Two times and 35 respondents availed MSME
Loans More than two times.
58

How much amount you want to get in the form of MSME loan?

Amount
Below Rs 100000
Rs. 100000-200000
Rs. 200000-400000
Rs. 400000-600000
Rs. 600000-800000
Above Rs. 1000000
Total

No. of response
5
20
10
20
15
30
100

35

30

30
25

20

20

15

15
10
5

20
10

Analysis:59

In this figure, majority of respondents say they want to get above Rs.1000000
amount for MSME loans, 15 respondents want Rs.600000-800000 and only 5 respondents want
below Rs 100000.

With whose reference you applied the MSME loan in PNB?

Reference
Family
Friends
Relatives
Agent
Own decision
Total

No. of respondents
20
10
10
20
40
100
40

40
35
30
25

20

20

20
15

10

10

Friends

Relatives

10
5
0
Family

Agent

Own decision

60

Analysis:In this figure 40 respondents are having their own decision. 20 respondents say
family, 20 say agent, 10 say friends and 10 say relatives referred them to apply for
MSME loan in PNB.

10 How much MSME loan has been sanctioned by the bank against the amount applied
by you?

Sanctioned amount%
100%
80-99%
50-79%
30-49%
Less than 30%
Total

No. of Respondents
50
30
10
5
5
100

50
50
45
40
35

30

30
25
20
15

10

10

5
0
100%

80-99%

50-79%

30-49% Less than 30%

Analysis:-

61

In above figure, 50 respondents get 100% amount,30 gets 80-99% amount , 10 get
50-79% amount,5 get 30-49% and 5 respondents get less than 30% amount they
applied for MSME loans
11 Which time period will you use to return your loan?

Time Period
1 year
2 years
3 years
4 years
5 years
Above 7 years
Total

No. of Response
10
5
5
10
20
50
100

50
50
45
40
35
30
25
20
15
10
5
0

20
10

10
5

62

Analysis:In above figure 10 respondents return MSME loan in 1 year, 5 respondents

return their loan in 2 years, 5 respondents return their loan in 3 years, 10 respondents
return their loans in 4 years, 20 respondents return their loans in 5 years and 50
respondents have to return their loans in above 7 years time period.
12 Are you satisfied with the amount of MSME loan provided by the PNB?

Satisfied Scale
Satisfied
Neither satisfied nor

No. of response
70
20

dissatisfied
Dissatisfied
Total

10
100

No. of response
10
Satisfied
Neither satisfied nor
dissatisfied

20

Dissatisfied

70

Analysis:-

63

In this figure 70 respondents are satisfied with the amount they get from PNB

for

MSME loans, 20 respondents are neither satisfied nor dissatisfied and 10 respondents are
dissatisfied for amount they get in the terms of loans.

13 Do you have knowledge about the interest rate you paid for MSME loan?

Options
Yes
No
Total

No. of Response
100
Nil
100

No. of response

Yes
No

100

Analysis:In this figure all the respondents have knowledge about interest rate of PNB
64

MSME loans.

14. How much interest rate you have paid for your loan?

Rate of Interest
10%
11%
12%
Total

No. of Response
30
40
30
100

40
40
35

30

30

30
25
20
15
10
1

0.11

125

0
0.1

Analysis:In above figure, 30 respondents pay 10%, 40 respondents pay 11% and 30
respondents pay 12%. Interest rate vary with the amount they get loan from PNB.

65

15. Will you again borrow a MSME loan in future whenever you need?

Options
Yes
No
Total

No. of Response
85
15
100

Column1
15
Yes
No
85

Analysis:In this figure 85 respondents say they want to get MSME loan from PNB
Whenever they need in future and 15 respondents say they are not interested to get
MSME loan in future.
66

16. How much satisfied you are with services delivered by the PNB regarding MSME
loans?

Satisfaction Scale
Strongly satisfied
Satisfied
Neither satisfied Nor

No. of Response
15
50
20

dissatisfied
Dissatisfied
Strongly Dissatisfied
Total

10
5
100

50
50
45
40
35
30
25
20
15
10
5
0

15

20

10

67

Analysis:In this figure majority of respondents are satisfied with services delivered by the PNB, 15
respondents are strongly satisfied, 10 respondents are dissatisfied and 5 respondents are strongly
dissatisfied with the services delivering by PNB.

Chapter: - 6
Findings of the
68

Study

Findings of the Study

The primary purpose of the present study was to determine the Consumer Behavior
towards MSME (Micro, Small and Medium Enterprises) with the reference of PNB.

Demographic Profile: i) It was revealed from the survey conducted that the male populations were showing their
interest to avail the MSME loans more frequently than females.
ii) The mid age people in the age group of 36-45 years are very much aware to avail loan facility
from bank, than other group age.

69

iii) From the survey conducted it was very clear that the Self- Employed/Own Company was
very interested to avail MSME loan.
iv) From the information collected in the survey conducted, it is found that the urban people have
availed the MSME loans than the other group of people.

Main Questionnaire: 1. In this survey, majority of Respondents have Current accounts rather than other types of
accounts in the Bank.
2. It was revealed from the survey that most of the respondents prefer Nationalized Banks to
MSME loans..
3. It was clear from the survey conducted that majority of respondents faced problems while
they applied for MSME loan.
4. It was revealed from the survey that most of the respondents faced problem from too much
paper work requirements.
5. From the information collected in the survey conducted, it is found that 49 respondents
who said No, majority of respondents faced financial position obstacles.
6. It was revealed from the survey that most of the respondents availed the MSME loan
facilities more than two times.
7. It was clear from the survey conducted that the majority of the respondents said they want
to get above Rs. 1000000 amount for MSME loan.
8. From the survey conducted it is found that the most of the respondents were having their
Own Decision to apply the MSME loan in PNB.
9. From the collected information it was found that the majority of respondents got 100%
amount they applied for MSME loans.
10. From the survey conducted, it was very clear that PNB provide loans for more than 7
years.
11. It was revealed from the survey that most of the respondents were satisfied with the
amount they got from PNB for MSME loans.
12. It was clear from the survey conducted that majority of respondents had knowledge about
interest rate they paid to PNB for MSME loans.
13. From the collected information it was found that the majority of respondents paid 11%
interest it may vary with the amount they get.
14. It was revealed from the survey that most of the respondents prefer to borrow a MSME
loan in future whenever you needed.
70

15. From the survey conducted it was clear that the more of the respondents were satisfied
with services delivered by the PNB regarding MSME loans.

Chapter: - 7
SWOT
ANALYSIS

71

SWOT Analysis:-

72

STRENGTHS:
Diversified operations with 5100 branches
Strong I. T support with best fit approach
Schemes for small and medium scale businesses
It is the second largest state-owned commercial bank in India with about 5000 branches
across

764 cities

Its 56,000+ workforce serves over 37 million customers

WEAKNESS:
Less penetration in the urban areas
Inadequate advertising and branding as compared to other banks.
Legal issues regarding employees caused a bad name of PNB

OPPORTUNITIES:
Fast growing Indian economy
High growth in banking sector
Liberal markets
Micro financing

73

THREATS:
Large number of market player
Most of higher salary populations go for private banks for education and other loans
because of flexibility in lending terms and norms

Chapter 8
Conclusion
and
Recommendations
74

Conclusion of the study

The Indian retail banking industry is still a nascent stage, but it is undergoing tremendous
changes, though not-in-line with global proportions. As the players in the market adapt to retail
banking, they need alter their product mix, delivery channels and corporate structure to better
equip themselves to face the stiff competition ahead. To increase their foothold in the retail
finance market, banks will have to learn that changes should not be only limited to product
profile and competitive pricing. Retail banking has changed the relationship between banks and
customers. Service and speed of delivery and equally important. Moreover, the credit is no
longer a scarce commodity and bankers are operating in the buyer market. Now almost all the
banks are laying the thrust in the terms of MSME and this is mainly attributed to the fact that
customer is the key in the industry. Innovative methods should be brought so that the customers
are satisfied with the banks service.
From the study it was concluded that the male population avail MSME loans more frequently.
The majority of the respondents were more interested for availing MSME loans from
nationalized banks. This study concludes that most of the respondents have current account with
PNB. Different schemes of MSME loan facilities were availed by the respondents from PNB,
Post loan servicing of the PNB was very good and PNB has affordable EMI and very less
processing charges.
It was cleared from the study that more of the respondents were satisfied with PNB MSME
schemes and willing to avail MSME loans from PNB in future.

75

Recommendations of the study

Everything has its own advantages and shortcomings. Shortcomings can be removed by making
some changes in the system. Some suggestions are there to improve the schemes of MSME of
Punjab National Bank , which are following:
1) As part of the Marketing strategy, banks could organize special exhibitions, trade shows in
strategic locations at time of festival celebrations/events, etc, to create awareness among
people but the various MSME loan schemes provided because there are number of MSME
loan schemes provided by PNB which people are not aware of it.
2) Small pamphlets (containing specific MSME products, features, EMI structure both on
floating and fixed interest basis, repayment periods, required documentations, etc.) can be
distributed while customer visit to the branches to avoid delay in processing of loans as to
educate them on the importance of MSME loan schemes.
3) Depending up on the quantum of loan and credit rating of customer, softer repayment
terms/schedule, especially for availing various schemes, could be thought of which would
result in more satisfaction among MSME customers.
4) Interest should be attractive so that more and more and more people can avail MSME loan
easily.
5) PNB should make efforts to further improve the quality of service so as to yield more
customer satisfaction.
6) Banks should take advantage of the present low interest rate scenario and try to build up
lending volumes through effective Marketing and various delivery channels.
7) Quick payment and easy recovery should be there making it more customer friendly.

76

References
77

Anonymous (n d). The MSME (Micro, Small and Medium Enterprises) Schemes of Punjab
National Bank
PNB Book of instructions on MSME.
PNB loan Compendium on MSME.
Sanjeev Sharma, Senior Manager Punjab National Bank Circle office: Kapurthala, Credit
Section
Dhruv Dhir, Assistant Lecturers Innocent Hearts Group of Institutions Loharan,
Jalandhar
www.pnbindia.com
www.pnbindia.in
WWW.Wikipedia.com

www.studymode.com

I.

Gender of the Respondents

78

 Male
Female
II.

Age Group of Respondents

Age group
18-25 year
26-35 year
36-45 year
III.
46-55 year
Above 56 year
Total
Occupation

No. of respondents

Occupation of Respondents
of No. of Respondents

Respondents
Professional
Sales Marketing
Clerical/ Administrative
College/Graduate Student
Self-employed/Own
Company
Other

v)

Residential Status of Respondents

Residential status

NO. of
respondents

Rural
Urban
Total

79

1. Which kind of account you have with PNB?

Kind of Accounts
Current Account
Recurring Deposit Account
Fixed deposit Account
Saving Account
Total

No. of response

2. According to you which bank you will prefer while availing MSME loan?

Bank
Private Bank
Nationalized Bank
Co-operative Bank
Total

No. of Respondents

3. Do you have a MSME loan from PNB?

Options
Yes
No
Total

No. of Respondents

4. Did you face any problem while applying for MSME loan?

Options
Yes
No
Total

No. of Respondents

5. If yes, what problems did you face regarding the loan?

80

Problems
Interest Rate
Paper work required
Time taken to extend the loan
Payments conditions
Total

No. of Respondents

6. If no, what were the obstacles that you faced when you applied for the loan?
Obstacles
Collaterals
Financial Position
Cash Flow that is not

No. of Respondents

consistent with the banks

requirements
Presenting the
proposal
Lack of standardized
accounting system and books
Total
7. How many times you have availed the MSME loan facilities from PNB?

Time
One Time
Two Time
More than two times
Total

No. of Respondents

81

8. How much amount you want to get in the form of MSME loan?

Amount
Below Rs 100000
Rs. 100000-200000
Rs. 200000-400000
Rs. 400000-600000
Rs. 600000-800000
Above Rs. 1000000

No. of response
9. With

whose

reference you applied

the MSME loan in
PNB?

Reference
Family
Friends
Relatives
Agent
Own decision

No. of respondents

10. How much MSME loan has been sanctioned by the bank against the amount
applied by you?

Sanctioned amount%
100%
80-99%
50-79%
30-49%
Less than 30%
Total

No. of Respondents

11. For what time period have you availed your loan?

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Time Period
1 year
2 years
3 years
4 years
5 years
Above 7 years
Total

No. of Response

12. Are you satisfied with the amount of MSME loan provided by the PNB?

Satisfied Scale
Satisfied
Neither satisfied nor

No. of response

dissatisfied
Dissatisfied
Total

13. Do you have knowledge about the interest rate you paid for MSME loan?

Options
Yes
No
Total

No. of Response

14. How much interest rate you have paid for your loan?

83

Rate of Interest
10%
11%
12%
Total

No. of Response

84

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