Professional Documents
Culture Documents
MEANING:
The name bank derives from the Italian word banco, desk, used during
the Renaissance by Florentines bankers, who used to make their transactions
above a desk covered by a green tablecloth
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with banks carefully analysing the financial condition of their business clients
to determine the level of risk in each loan transaction. Banking services have
expanded to include services directed at individuals, and risks in these much
smaller transactions are pooled.
CURRENT SCENAREO:
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With the growth in the Indian economy expected to be strong for quite some
time-especially in its services sector, the demand for banking services-
especially retail banking, mortgages and investment services are expected to be
strong. M&As, takeovers, asset sales and much more action (as it is unraveling
in China) will happen on this front in India.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase
its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the
first time an investor has been allowed to hold more than 5% in a private sector
bank since the RBI announced norms in 2005 that any stake exceeding 5% in
the private sector banks would need to be vetted by them.
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BANKING IN INDIA:
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Preface
The emerging economies in post colonial era faced the difficult choice of
appropriate mechanism for chanalizing resources into the
development effort. Many of them had inherited capital
starved primitive financial systems. Such system could not
be relied upon to allocate resources among competing
demands in the economy. The task of institution building
was too important to be left at the mercy of the market forces at the nascent
stage of development. In such a situation several governments in Continental
Europe and East Asian economies decided to take matters into their hands and
established institutions specifically to cater to the requirements of financial
resources for developmental effort. Such institutions were called Development
Financial Institutions.
Development financing is a risky business. It involves financing of
industrial and infrastructure projects which usually have long gestation period.
The long tenor of such loans has associated with it uncertainty as to
performance of the loan asset. The repayment of the long term project loans is
dependent on the performance of the project and cash flows arising from it
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rather than the realisability of the collaterals. The project could go wrong for a
variety of reasons, such as, technological obsolescence, market competition,
change of Government policies, natural calamities, poor management skills,
poor infrastructure etc. The markets and banking institutions were highly averse
to such uncertain outcome, besides not possessing enough information and
skills to predict with any certainty the outcome. There was also the cost
considerations associated with such risky ventures. The long term loan comes
with a higher price tag due to the term premium loaded into the pricing. In such
a situation the long term financing would be scarce as well as costly so as to
render the project financially unviable.
DFIs were established with the Government support for underwriting
their losses as also the commitment for making available low cost resources for
lending at a lower rate of interest than that demanded by the market for risky
projects. This arrangement worked well in the initial years of development. As
the infrastructure building and industrialization got underway the financial
system moved higher on the learning curve and acquired information and skills
necessary for appraisal of long term projects. It also developed appetite for risk
associated with such projects. The intermediaries like banks and bond markets
became sophisticated in risk management techniques and wanted “a piece of
the pie” in the long term project financing. These intermediaries also had
certain distinct advantages over the traditional DFIs such as low cost of funds
and benefit of diversification of loan portfolios. The Government support to
DFIs, in the meanwhile, was also waning either for fiscal reasons or in favour
of building market efficiency. Therefore, towards the end of twentieth century
the heydays of DFIs were over and they started moving into oblivion. In several
economies, having attained their developmental goals, the DFIs were both
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restructured and repositioned or they just faded away from scene. The Indian
experience has also more or less traversed the same path. Although India cannot
said to have achieved the developmental goals yet, the Government's fiscal
imperatives and market dynamics has forced a reappraisal of the policies and
strategy with regard to the role of DFIs in the system.
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PROFILE
SIDBI's statute provides that it should serve as the principal financial institution
for:
• Promotion
• Financing and
• Development of industry in the small scale sector and
• Co-ordinating the functions of other institutions engaged in similar
activities.
The Small Scale Industry (SSI) sector, which is a vibrant and dynamic
sub-sector of the India's industrial economy, comprises the area of SIDBI's
business. The contribution of the SSIs in terms of production, employment and
export earnings has been significant. The objectives of Government policy have
been to impart vitality and growth impetus to the sector by removing
bottlenecks that affect the growth potential. In the liberalised era and emerging
economic scenario, the sector is assured of continued support.
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• Promotion
• Financing
• Development of industry in the small scale sector
• Co-ordinating the functions of other institutions engaged in similar activities
Since its inception, SIDBI has been assisting the entire spectrum of SSI
Sector including the tiny, village and cottage industries through suitable
schemes tailored to meet the requirement of setting up of new projects,
expansion, diversification, modernization and rehabilitation of existing units.
FUNCTIONS OF SIDBI:
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MISSION
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SIDBI Foundation for Micro Credit (SFMC) was launched by the Bank
in January 1999 for channelising funds to the poor in line with the success of
pilot phase of Micro Credit Scheme. SFMC’s mission is to create a national
network of strong, viable and sustainable Micro Finance Institutions (MFIs)
from the informal and formal financial sector to provide micro finance services
to the poor, especially women
OBJECTIVE OF SIDBI:
The preamble to the Small Industries Development Bank of India Act, 1989
defines the
Objective of SIDBI as:
"The principal financial institution for the promotion, financing and
development of industry in the small scale sector and to co-ordinate the
functions of the institutions engaged in the promotion and financing or
developing the industry in the small scale sector and for the Matters connected
therewith or incidental thereto”
In the SIDBI charter, four basic objectives are set out. They are:
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• Financing
• Promotion
• Development
• Coordination
For orderly growth of industry in the small scale sector.
CHANNELS OF ASSISTANCE:
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SIDBI Trustee Co.Ltd. [STCL] has been set up to carry out trusteeship
functions for Venture Capital Funds. Presently STCL is acting as Trustee of
National Venture Fund for Software and Information Technology.
Associate Organisations:
Credit Guarantee Fund Trust Scheme for Small Industries [CGTSI]
promoted jointly by Government of India and SIDBI, was launched by the
Hon'ble Prime Minister on August 30, 2000. The credit guarantee scheme of
CGTSI aims at helping the new and existing industrial units in SSI sector, in
getting collateral free credit by way of both term loan and working capital from
eligible member lending institutions. Member Lending Institutions include
scheduled commercial banks, select Regional Rural Banks and such of the
institutions as may be approved by Government of India.
Technology Bureau for Small Enterprises [TBSE] was set up by SIDBI in
1995 in collaboration with United Nations Asian & Pacific Center for Transfer
of Technology. The Bureau aims at helping SSI units to attain international
competitiveness through transfer of latest available technologies from both
within and outside the country
The Bank extends development and support services in the form of loans and
grants to different agencies working for the promotion and development of SSIs
and tiny industries. Over the years, the initiatives of SIDBI under promotional
and developmental activities have crystallized into the following important
areas:
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RANGE OF SERVICES
SIDBI REFINANCES:
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APPROACH:
SFMC is the apex wholesaler for micro finance in India providing a
complete range of financial and non-financial services such as loan funds, grant
support, equity and institution building support to the retailing Micro Finance
Institutions (MFIs) so as to facilitate their development into financially
sustainable entities, besides developing a network of service providers for the
sector. SFMC is also playing significant role in advocating appropriate policies
and regulations and to act as a platform for exchange of information across the
sector. The launch of SFMC by SIDBI has been with a clear focus and strategy
to make it as the main purveyor of micro finance in the country. Operations of
SFMC in the next few years, is not only expected to contribute significantly
towards development of a more formal, extensive and effective micro finance
sector serving the poor in India but also ensure sustainability at all levels viz. at
the apex level (SFMC), at the MFI level and at the client level to ensure
continuance of such arrangement. Most importantly, SFMC has strived to create
a mechanism in which there should be no barriers to growth. Under the
dispensation, there is a focus on innovation and action research.
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RATING OF MFIs:
Most micro finance programmes are being operated by NGOs and are not
subjected to regulation and supervision as they are registered as Societies or
Trusts. Non-regulation of these institutions has worked to their detriment in that
these institutions are not able to have smooth access to funds from the financial
sector which is wary of lending to such entities. This constraint coupled with
the fact that SFMC was launched with a view to upscale the flow of micro
credit with enabling policy modifications relating to simplification of the
procedures in availment of assistance and substantial relaxation in the security /
collateral requirement posed a difficult challenge. Therefore, to meet the
requirements of the revised dispensation which called for selection of suitable
micro finance intermediaries which could be trusted with bulk assistance
without collateral constraints, Capacity Assessment Rating [CAR] was
introduced by SFMC as a supplementary tool to judge risk perception.
On SFMC’s initiative, the rating of MFIs has been started by two agencies. Till
March 31, 2005 224 ratings have been commissioned to MCRIL/CRISIL.
SFMC has also organized two trainings on CAMEL methodology of ACCION
to build the internal capacity of SFMC officers. In addition to SFMC officers,
officials from CRISIL, IIFM, Sa-Dhan, RBI, FWWB, and AFCL also attended
the above training.
MINIMAL SECURITY REQUIREMENT:
Credit worthiness is based on the rating of the borrowing institutions
instead of availability of security/ collateral requirements. Term Deposit
Receipts (TDRs) issued by Scheduled Commercial Banks for an amount
equivalent to 10% /5% /2.5% (depending upon geographical area of operation
and duration of partnership with SIDBI).
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PROMOTIONAL ACTIVITIES
OBJECTIVE:
As an apex financial institution for promotion, financing and
development of industry in the small scale sector, SIDBI meets the varied
developmental needs of the Indian SSI sector by its wide-ranging Promotional
and development (P&D) activities.
P&D initiatives of the Bank aim at improving the inherent strength of
small scale sector on one hand as also economic development of poor through
promotion of micro – enterprises.
In pursuance of its multifaceted P&D activity, synergistic with its
business activities aimed at development of the small industries, SIDBI looks
forward to a partnership with NGOs, associate financial institutions, corporate
bodies, R&D laboratories, marketing agencies, etc., for national level
programmes.
SIDBI has identified the following thrust areas of P&D activities, which
are being undertaken in partnership with various institutions, agencies, and
NGOs.
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OBJECTIVE:
APPROACH:
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professionals at the field level for a period of five year. IA also provides support
during post implementation period to ensure sustainability of enterprises.
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INTRODUCTION:
Recently announced National Strategies for accelerating the flow
of credit to farm sector include doubling the flow of agricultural credit in 3
years, increase in disbursement from Rs.80,000 crores in 2003-04 to
Rs.1,05,000 crores in 2004-05, financing of Atleast 100 new farmers and 2-3
new investment projects in various sub-sectors of agriculture by each of the
rural and semi-urban branches of Commercial Banks.
In the above context, NABARD's strategies, inter alia, cover
formulation and circulation of Model Bankable Schemes and Location Specific
Bankable Schemes to the financing banks. NABARD also proposes to identify
highly potential zones for undertaking investment activities in various states
and organize interactive workshops in these potential zones.
The Technical Services Department of NABARD is preparing
and bringing model bankable agricultural projects in the areas of Minor
Irrigation, Land Development, Plantation & Horticulture, Agricultural
Engineering, Forestry and Wasteland, Fisheries , Animal Husbandry and
Biotechnology. Besides these traditional areas, State specific area development
projects and profiles in the emerging thrust areas of Medicinal & Aromatic
Plants, Processing of Fruits & Vegetables have also been prepared for
dissemination among financing banks.
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GENESIS :
MISSION
OBJECTIVES
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ELIGIBLE PURPOSES
• Farm Sector – Production Credit (Crop Loans) and Investment Credit
• Non-farm Sector – Investment activities of Artisans, Small Scale
Industries, Tiny Sector, Village and Cottage Industries, Handicrafts,
Handlooms, etc.
• Micro Credit – Revolving Fund Assistance to SHGs, Voluntary
Agencies/NGOs.
• Loans to State Governments
o For Infrastructure Development under RIDF
o For Share Capital Contribution to Cooperative Credit
Institutions
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However, if land is purchased for setting up a dairy farm, its cost can be
treated as party's margin upto 10% of the total cost of project.
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The scheme should also include information on the number of and types
of animals to be purchased, their breeds, production performance, cost and
other relevant input and output costs with their description. Based on this, the
total cost of the project, margin money to be provided by the beneficiary,
requirement of bank loan, estimated annual expenditure, income, profit and loss
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statement, repayment period, etc. can be worked out and shown in the Project
report.
ANNEXURE-I
Background
Deeply concerned with the problems being faced by the growers of coffee,
tea, rubber and tobacco due to continued low prices of these commodities for
quite some time, Government of India (GoI) has taken a series of measures
to ameliorate the hardships being faced by the growers of these crops. The
Price Stabilization Fund Scheme is yet another step in the direction of the
GoI to demonstrate its commitment to safeguard the interests of these
growers.
The PSFS aims at providing financial relief to the growers when prices of
these commodities fall below a specified level without resorting to the
practice of procurement operations by the Government agencies.
The Scheme will be operational for a period of ten years subject to a review
after five years.
Mode of Intervention
Under the Scheme, a fund called the Price Stabilisation Fund will be
established with contributions from the GoI and entry fee @ Rs.500/- from
each grower desirous of participating in the Scheme. The corpus of the Fund
shall remain undisturbed and interest earnings alone will be utilized for
operational sing the PSFS.
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Initially, the Scheme will be open to growers of tea, coffee, rubber and
tobacco having operational holdings of 4 hectares or less. Subsequently,
coverage of other growers could be considered.
The Commodity Boards shall select the members on first come first serve
basis with preference being given to the members with the least holding size.
The Commodity Board shall also inform the concerned bank branch for
opening the account in the name of the member.
GoI contributions to the account would be made not later than 31st May
every year.
At the end of the duration of the Scheme the entire balance in the account
would be payable to the member.
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ANNEXURE-II
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ENCLOSURE 1
To
The_________
________Board
____________
Sir,
1. Name:
2. Father’s Name:
3. Full address:
b) Survey No.
7. Remarks:
I do solemnly declare that to the best of my knowledge and belief, the above
stated information is true, complete and correct. Further, I have read,
understood and hereby agree to the terms and conditions of the Price
Stabilization Fund Scheme.
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Place:
Date:
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ENCLOSURE II
To
THE MANAGER
I wish to apply for opening of a bank account in your branch under the Price
Stabilization fund Scheme. My details are as under:
1. Name:
2. Father’s Name:
3. Date of Birth:
4. Address:
5. Telephone No. :
I have been enrolled as a member under the Price Stabilization Fund Scheme
by the __________ Board (Name of the Commodity Board). I have read,
understood and hereby agree to the terms and conditions of the Price
Stabilization Fund Scheme. Further all the particulars and information given
above are true, correct, and complete and upto date in all respect.
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Date:
We certify that Shri/Smt. has been enrolled as a member under the Price
Stabilization Fund Scheme and he/she has paid the entrance fee. He/she may
be allowed to open a bank account under the Price Stabilization Fund
Scheme in your branch.
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BIOTECHNOLOGY:
INTRODUCTION
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disadvantages. Plants raised from seeds may not repeat good performance of
mother plants. Many horticultural plants take a long time to produce seeds/fruits
and many of them do not produce viable seeds or desired quality of seeds.
Plants propagated vegetative do not suffer from these disadvantages. However,
vegetative propagation is rather a slow, time and space consuming process.
Besides, it is usually infected with latent diseases. Some plants are also not
amenable to vegetative method of propagation, for example, coconut, papaya,
oil palm, clove etc.
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On July 29, 2004, the Board of Directors of IDBI and IDBI Bank accorded in
principle approval to the merger of IDBI Bank with the Industrial Development
Bank of India Ltd. to be formed incorporated under the Companies Act, 1956
pursuant to the IDB (Transfer of Undertaking and Repeal) Act, 2003 (53 of
2003), subject to the approval of shareholders and other regulatory and statutory
approvals. A mutually gainful proposition with positive implications for all
stakeholders and clients, the merger process is expected to be completed during
the current financial year ending March 31, 2005.
IDBI would continue to provide the extant products and services as part
of its development finance role even after its conversion into a banking
company. In addition, the new entity would also provide an array of wholesale
and retail banking products, designed to suit the specific needs cash flow
requirements of corporate and individuals. In particular, IDBI would leverage
the strong corporate relationships built up over the years to offer customised
and total financial solutions for all corporate business needs, single-window
appraisal for term loans and working capital finance, strategic advisory and
“hand-holding” support at the implementation phase of projects, among others.
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PROMOTIONAL ACTIVITIES:
In fulfillment of its developmental role, the Bank continues to perform
a wide range of promotional activities relating to developmental programmes
for new entrepreneurs, consultancy services for small and medium enterprises
and programmes designed for accredited voluntary agencies for the economic
upliftment of the underprivileged. These include entrepreneurship development,
self-employment and wage employment in the industrial sector for the weaker
sections of society through voluntary agencies, support to Science and
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RECENT DEVELOPMENTS:
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QUESTIONAIRE
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BIBLIOGRAPHY
www.Google.com
www.Sidbi.com
www.idbi.com
www.nabard.com
www.wekipedia.com
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