BABA GHULAM SHAH BADSHAH UNIVERSITY, RAJOURI

SCHOOL OF MANAGEMENT STUDIES

Project Report on

FINANCING OF SSI BY J&K BANK

In partial fulfilment of the requirements for the award of degree of

BACHLEROS of Business Administration (BBA)

BY

Danish nabi

Roll No. 09-BBA-2017

Under the supervision of

DR JAVEED IQBAL

DEPARTMENT OF MANAGEMENT STUDIES

BABA GHULAM SHAH BADSHAH UNIVERSITY

RAJOURI, J&K

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 UND ER TAK ING
This is to certify that DANISH NABI student of bachelor of business Administration during
the academic year 2017-2020 under roll number 09_BBA_2017 has completed the training
project on “FINANCING OF SSI BY J&K BANK” under the guidance of Mr.ARIF
FIRDOS QAZI JK BANK CLUSTER II KHANABAL ANANTNAG and DR.JAVID
IQBAL (internal guide). This project is the original work of the student and the information
presented is true to the best of my knowledge. Also, that he has attended in the bank from 6th
June 2019 to 21st July 2019 for the statuary period of 6 weeks.

Signature of Guide

Dated:

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 ACKN OW LEDG EM ENT
First of all, I owe my sincere gratitude to the Almighty with immense regards and respects in
the honour of the J&K BANK, I am very grateful towards this esteemed organization for
assisting me in completion of my summer training. Today J&K BANK stands for its brand
name in the hearts of the people of Jammu & Kashmir. It is also among one of the leading
and fastest growing banks in India. This project is the outcome of sincere and pains taken by
humble and dignified people and it makes me feel elated to mention them.

Primarily I would like to express my deep sense of gratitude to persons of extra ordinary
importance, without them this project would not have been possible. So I take this
opportunity to express my sincere and humble thanks to executive staff at the help of affairs

in credit department and entire staff of posted at J&KBANK, shopian. I am also grateful

towards my Guide who with great dedication taught and assisted me in every respect ranging
from corporate culture to very basics of my project. I would also add my word of thanks to
Professor Prof. NASEEM AHMAD (Dean School of Management Studies & Economics)
& Assistant Professor Dr javeed iqbal as they provided me each and every possible support.

Danish nabi

PREFACE

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Since without the training the study of bachelors of Business Administration
remains incomplete. One has to sharpen the edge of theoretical knowledge through practical
experience in true business dynamics sense. The present report reflects an image of what I
done and observed during the course of practical training programmed. Working with
“Jammu and Kashmir Bank” was simply thrilling.

Assigned topic has special implications for Jammu and Kashmir Bank that embodies
greater significance in the long run. The reason behind the “FINANCING OF SSI BY J&K
BANK” with special reference to Jammu and Kashmir Bank has to be briefly analysed in
order to bring out certain judicious justifications. This report is a simple step towards the
same per destined goal.

Gone are the days when one could easily sell at he/she has produced. Today’s market
is more consumers oriented and the firm has to dance to the tune of the complex forces in the
market. If it has to achieve the desired growth, profitability and survival, marketing has
become the most important and challenging mechanism for any business organization

Things have become more complicated with the mind-boggling speed of technological
advancement, ballooning size and complexity of the market, increasing awareness of the
consumer inflationary trends in prices and the dawn of an era of free market economics.
Liberalization being yet another, “straw on the camel’s back”.

Corporate Executives have to keep pace with the changing environment and ever-increasing
competition. I guess my unbiased strife to pick up the “pearl from the deep dive” will be of
some use to Business Executives of Jammu and Kashmir Bank.

I have tried hard to be systematic in approach and methodical in bringing out the very
best in me.

“To err is Human” and I’m not an exemption. Valuable comments on this report are more
than welcome.

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 List of Abbreviations used

 J K: Jammu and Kashmir.

 JKB: Jammu Kashmir Bank
 SSIs: Small Scale Industries.
 MSME: Micro Small and Medium Enterprises.
 SIDBI: Small Industries Development Bank of India.
 IDBI: Industrial Development Bank of India.
 SFC: State Financial Corporation.
 PSUs: Power Supply Units.
 SIDCO: State Industrial Development Corporation.
 SICOP: Small Scale Industries Development Corporation.
 SISI: Small Industries Service Institute.
 CST: Central Sales Tax
 VAT: Valve Added Tax
 DICs: Department of Industries and Commerce.
 NOC: NON-Objection Certificate
 GOI: Government of India.
 RBI: Reserve Bank of India.
 SCBs: Scheduled Commercial Banks.
 PCBs: Public Sector Banks.

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 LIST OF CONTENTS
S.no Topic Page no.
01 Executive Summary 7-8
02 Introduction
 Industrial Profile of J&K State
 Department of Industries & Commerce 9-19
 Introduction of SSI’s
 Guidelines for financing of Small and Medium Enterprises(SME’s)
 Processing of loan applications by J&K Bank
03 Company profile
 Banking industry in India
 Challenges faced by Indian banking industry
 Performance of J & K Bank
20-28
 Vision
 Mission
 Unique characteristics and services of J&K Bank
 Product profile
04 Literature Review 29-32
05 Research methodology
 Title Financing of SSI’s by J&K Bank.
 Scope of the study.
 Objectives of the study.
 Methodology of the study.
33-35
 Plan of the analysis.
 Data collection.
 Sample Size

06 Analysis and Data Interpretation 36-43

07 Findings, Suggestions &Recommendations 44-46

08 Limitations of the study 46

09 Conclusion and Bibliography 47-48

10 Annexure 49-53

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 Executive Summary
This study was done in J&K Bank, (Credit Department) Zonal Headquarters, M A Road
Srinagar. The study firstly is concentrated on introduction to industrial profile of Jammu &
Kashmir. Then the research design of the work carried out is briefly given followed by the
profile of the Jammu and Kashmir Bank Ltd .Lastly the analysis and interpretation of the data
available has been done followed by findings, suggestions and conclusion. The title of the
study undertaken for the research work is “Financing of Small Scale Industries by J&K
Bank Ltd in Kashmir Division”. The study is confined to five small scale industries in
Kashmir ( Handi -Crafts, Sericulture ,Cement Khadi and Food Processing industries). The
study is related to the role played by the J&K Bank Ltd in financing the small-scale industries
operating in Kashmir to ascertain how far the bank has succeeded in fulfilling the working
capital financial requirements of these industries and what factors influence the loan
disbursement to small‐scale industries. Objectives of a project tell us why project has been
taken under study. It helps us to know more about the topic that is being undertaken and helps
us to explore future prospects of the topic. It essentially tells what all has been studied while
drafting the project. The various objectives of the study are:

 To study the key role of J&K Bank in financing SSI.

 To study the problems faced by small scale industries in availing the

credit facility.

 To Study the level of satisfaction of SSI’s holders with J&K bank

regarding the financial help provided by the bank.

 To find out the present requirements of financing products by SSI’s.

 To study the incentives provided by the Department. Of Industries &

Commerce J&K for SS’s in the Valley.

The industrial sector plays an important role in the economic growth of both developed and
developing countries. The Small-Scale Industrial (SSI) sector is very important for any
country irrespective of the level of development because, SSI contributes maximum socio-
economic benefits with low level of investment and results in employment creation, income
generation, poverty alleviation and restricts migration of unemployed and underemployed
workers into cities. It is also one that maximizes the utilization of local resources and results

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in innovations, new technology and is a pathway to emerging entrepreneurs. It is a starting
point for industrial growth. The main aim behind making this project report is to know how J
& K Bank is operating its business and how the corporate play their role to its operations.
This study has become necessary due to the following reasons:

 The project was done to know the compatibility between J&K bank & SSI’s regarding
financing of SSI’s
 The project was done to know the present expectations of SSI’s from J&K bank.
 The project was done to know the current arrangements/ schemes made by the bank
to help SSI’s
 The project was done to identify the problems of financing of SSI in Kashmir.
 The project was done to identify the reason why there is less number of industries in
Kashmir.

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 INTRODUCTION
INDUSTRIAL PROFILE OF JAMMU & KASHMIR STATE

Jammu and Kashmir is an Indian state that has its own distinct and peculiar cultural ethos.
The state has a predominant place as it shares the international boundary with Pakistan and
China. It is enriched with the boundless beauty of snow-clad mountains, large natural lakes,
forests, rivers and springs. It comprises three main natural regions, namely, Jammu, Kashmir
and Ladakh Jammu and Kashmir is an industrially backward state without a strong
industrial base. However, many small and medium-scale industries have come up both in the
traditional and new areas in the state. With the government’s support in the form of loans and
incentives to set up industrial units, their number increased from 35,641in 1995 to 42,808 in
March 2001. At the same time, employment increased from1,54,621 persons in March 1995
to 1, 87,399 in March 2001. Though the number of SSIs in the state has gone up, there are
also cases of sickness of units as some of the units are dysfunctional and missing. Due to the
difficulty in recovery of loans along with law-and-order problems, industrial financing has
come down drastically in the state. In fact, SIDBI and IDBI stopped refinance from 1992-93
till 1995-96though SFC has marginally increased the disbursement of loans in 1998-99.
Mineral deposits available in the state are bauxite, limestone, sapphire, gypsum, coal-land
marble, and most being located in border areas and in difficult terrain. Roadways are the only
means of transportation since railways are not well developed in the state. Therefore, it
cannot compete with other states like Rajasthan due to high transportation cost. The fragile
ecology of the state also inhibits the setting-up of large industries based on minerals. Among
the twenty PSUs, majority are running into losses with the exception of four that are earning
revenues to meet their day-to-day expenses. The state, however, does not have any functional
policy towards restructuring / revival of the loss-making PSUs. Though the concerned
departments were asked to come up with the proposal to restructure or revive the PSUs, the
finance department has not yet received any such proposal. Disinvestments, as another
option, are also being explored and the state has initiated the process by disinvesting in a few
units owned by Jammu and Kashmir Industries Ltd. Industrial promotion agencies such as
SIDCO, SICOP, Small Industries Service Institute (SISI) and Directorate of Industries and
Commerce perform various functions to promote industrialization in the state. Both central
and state governments announced a package of incentives to attract industrial investments in
J & K. Still, the industrial scenario of the State has been very dismal and an action plan
would therefore consist of the following:

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 a) Sector-specific strategies should be adopted to promote industries in Jammu and
Kashmir keeping in mind the climate, accessibility, raw material availability, human
resources and consumption pattern.

b) To encourage investments in the state, Government should play a lead role to build up
the confidence of the private investors
c) A comprehensive and analytical review of existing industrial estates in the state is
required so that reasons for the failure or non-performance of units located in the
industrial estates can be ascertained and corrective action taken.
d) Common Facilities Centres should be provided to the industrial units set up in the
estates.
e) Better infrastructure including uninterrupted power supply and connectivity should be
provided to the units.
f) A restructuring fund could be created by the Central Government to downsize or
restructure the financially non-viable public sector corporation in a phased manner.
Jammu &Kashmir has not been able to attract investments in this sector and remained an
industrially backward state due to its unique economic disadvantages arising out of
remoteness and poor connectivity, hilly and often inhospitable terrain, weak resource base,
poor infrastructure, sparse population density, shallow markets and most importantly the
political uncertainty. Moreover the natural factors are more conducive for handicrafts, village
and Small Scale Industries and less to large and heavy industries. Nevertheless, despite all
odds and limitations the Jammu &Kashmir State is on the path of industrialization in a
modest way. Many small and medium-scale industries have come up basically in the
traditional sectors along with some new areas like food processing, agro-based units and
metallic and non-metallic products. Besides, due to saturation of employment opportunities in
the government/traditional non-governmental sectors like Agriculture, Industrial sector has
been declared as the main vehicle for accelerating economic tempo besides providing
employment to the educated unemployed youth in the State
Industrial development always remains a thrust area in the Government agenda.
Government’s endeavour is to provide efficient and cost effective infrastructure, skilled
human resources, stable environment and good governance which are the pre-requisites for
creating a proper investment environment for sustainable industrial growth. Dispersal of
industries to the 266 underdeveloped areas in the state through creation of necessary
infrastructure and providing financial/fiscal incentives is focused. In the perspective of
industrial growth, Industries and Commerce Department has been established with a well

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knit system for carrying its activities effectively. The Industries and Commerce Department
is concentrating to attract investment in the State for developing world class infrastructure to
achieve objectives like:
1. To explore available resources in the State.
2. To create conducive industrial employment.
3. To promote labour intensive industries to lessen the pressure on unemployment market in
the State.
4. To improve industrial performance by providing necessary inputs so as to reduce the
dependence of the State on imports.
The department is focusing on key sectors like food processing, pharmaceuticals,
biotechnology, textiles, sports goods, information technology etc. to accelerate industrial
growth in the State. Industrially, J&K State is lagging behind and occupies the place on the
lowest side when compared to other states of the union India. The industrial sector of the
State is confined to small scale & medium industries. The large-scale & heavy industries do
not exist in the State. This sluggish industrial growth is mainly attributing to lack of sufficient
infrastructure and considering the extreme geographical location of the State. The cost of raw
material & transportation adds to manufacturing cost, thereby making the J&K products
uncompetitive. The number of small scale industrial units as on 31.03.2012 registered with
the State Directorate of Industries & Commerce has reached to forty seven thousands
providing employment opportunities to 2.32 lakh people. The availability of land is a major
constraint in developing new industrial estate. State Package Fiscal Incentives
 100 percent subsidy on purchase of new Diesel Generating sets.
 100 percent subsidy on project report and quality testing equipment.
 75 percent subsidy on Research and development.
 3 percent interest subsidy on working capital.
 5 percent rebate on interest on term loan for technocrats.
 Special incentive for brand promotion and modernisation
 Land and Power at concessional rates.
 30 percent capital investment subsidy on land, building and plant and
Machinery.
Tax Incentives
 Toll tax exemption on import of raw material and export of finished products.
 CST exemption
 VAT remission

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  Stamp duty exemption

Central Package Fiscal Incentives

 15 percent subsidy on capital investment on plant and machinery.
 3 percent interest subsidy on working capital.
 100 percent insurance cover to Industrial units.
 90 percent Transport subsidy

DEPARTMENT OF INDUSTRIES AND COMMERCE

The Department of Industries & Commerce has a history of hundreds of years. However, the
department was organized in the systematic manner after independence. The last official
document available in the department is of year 1945. Since then Department is continuously
making efforts to promote and develop industrial activity in the state of Jammu & Kashmir.
The Department provides authorization to consultancy set up by unemployed but skilled and
educated youth. At present there are about twenty two consultancy units functioning under
the said departmental authorized to encourage new entrepreneurs to establish new industrial
units. The department has the following approach & strategy to augment industrial activities.

i) Rehabilitation of potentially viable sick industrial units.

ii) Enabling manufactures of quality consistent products to augment their sales within and
outside the state by brand promotion.
iii) Export promotional measures to augment export of products of the state outside the
country.
iv) Environment protection, to conform to state, national & global regulations.
v) Entrepreneurship development in the state, to provide opportunities to educated but
unemployed.
vi) To encourage research and development.

Objectives:

 To achieve sustainable industrial development in all regions for increasing the

rate of growth, value of output, employment, income & overall economic
development of the state.
 To strive towards balanced economic and social development in all regions of the
state by promoting industrialization particularly of the industrially backward
areas.

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  To encourage and sustain the cottage and tiny industrial sector which, with law
investment, is able to provide employment to a large number of people in the
state.
 To create a supportive environment with transparency and easy access n
information, technology and financial resource.
 To revive potentially viable sick industrial units so as to put to optimum use the
capital and other resources already employed in such enterprises.
 To promote the growth of thrust and export oriented industries and encourage
high tech and knowledgeable based industries including information technology.
 To take necessary steps in the field of Human Resources Development to make
available skilled/ technical man power as per the needs of Industry.
 The Directorate of Industries and Commerce is the premier organisation which
deals with all the aspects of Planning and Development of small scale/tiny
industrial units in the State of J&K. It acts through 14 District Industries Centres,
one in each districts of the state.

Apart from creating infrastructural facilities for industrial development in the shape of
Establishing Industrial Estates/Areas/Growth Centres, where fully developed land, power,
water roads etc. are available and where prospective entrepreneurs are encouraged to
establish their industrial ventures, by allotting land in their favour, the organisation provides
the facilities of according various registrations, imparting training to entrepreneurs, licensing
with different sister agencies, granting of different state Govt./central Govt. incentives to the
various industrial unit s etc.

An effort has been made to help the entrepreneurs know the procedure for provisional
registration, obtaining of various NOCs from Pollution Control Board, Power Development
Department, procedure for land allotments and how to get loan cases sanctioned from
different financial institutions including State Financial Corporation, State Industrial
Development Corporation etc. The readers are requested to get in touch with the General
Manager of the nearest DICs for any further clarification.

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INTRODUCTION OF SMALL SCALE INDUSTRIES
Small and medium scale industries (SMIs) have been considered essential for economic
development not only in less developed countries (LDCs) but also in more developed regions
of the world. Since they are seen as being more dynamic, innovative and have higher labor
absorptive capacities than their corporate counterparts, the SMI sector has been the backbone
of industrial development in many developed countries. However, systematic economic
policies have not been designed for the development of small‐scale industries yet, in
Kashmir. Therefore, small‐scale industries face a lot of difficulties with regard to financial,
marketing, cost of production, skilled labor and lack of technology. Lack of access to credit is
recognized as one of the most pressing problems faced by small scale industries (SSI).

DEFINITION OF SMALL SCALE INDUSTRY

Previously the definition of SSI was any industrial undertaking in which the investment in
fixed assets in plant and machinery whether held on ownership terms on lease or on hire
purchase does not exceed Rs 10 lakh. But after the enactment of MSME Act 2006 from in
order to ensure the balanced developed of the industrial sector throughout the country. Under
this act the erstwhile “Industry” has been replaced by the nomenclature “Enterprise” and this
has been done with the view to emphasise the importance of service sector. The act has
classified the enterprises into two categories:
1) Enterprises engaged in the manufacturing of goods
2) Enterprises engaged in providing of services
Manufacturing industries have been defined in terms of investment in machinery and
equipment as under and further classified into:
MICRO ENTERPRISES INVESTIMENT UPTO RS. 25.00 LACS
SMALL ENTERPRISES INVESTIMENT ABOVE RS.25.00 LACS UPTO
RS. 5 CRORE
MEDIUM ENTERPRISES INVESTIMENT ABOVE RS.5.00 CRORE UPTO
RS. 10.00 CRORES

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 J&K BANK FINANCING FOR SSI

Guidelines for financing of Small & Medium Enterprises (SME’s)

The small-scale industries produce about 8000 products, contribute 40% of the industrial
output and offer the largest employment after agriculture. The sector presents an opportunity
to the nation to harness local competitive advantages for achieving global dominance. In
recognition of these aspects Govt. of India has decided to give greater technological,
investment and marketing support to small-scale industry. A comprehensive legislation,
which would enable the paradigm shift from small-scale industry to small and medium
enterprises, is under consideration of Parliament. The Humble Finance Minister Government
of India has announced certain measures in the Parliament on August 10, 2005 for stepping
up of credit to small and medium enterprises. Accordingly, the Reserve Bank of India has
issued detailed guidelines to the banks for increasing finance, debt restructuring mechanism
and one-time settlement (OTS) for the SME sector. Up till now there was no definition of
Medium Enterprises. In order to segregate the small and medium enterprises the Reserve
Bank of India has come out with a definition of Medium Enterprises till enactment of Small
and Medium Enterprises Development bill. As per the definition given by RBI, the units with
investment in plant and machinery in excess of SSI limit and up to Rs.10.00 crore shall be
treated as Medium Enterprises (ME). Till outcome of parliamentary bill definition of SSI will
remain unchanged. At present, a small-scale industrial unit is an industrial undertaking in
which investment in plant and machinery does not exceed Rs.1.00 crore except in respect of
certain specified items under hosiery, hand tools, drugs and pharmaceuticals, stationery items
and sports goods where this investment limit has been enhanced to Rs.5.00 crore. However,
loan to SSI sector will be categorized under priority sector.
In order to increase the outreach of formal credit to SME sector, RBI has issued policy
package for financing, debt restructuring and one-time settlement in respect of SMEs. RBI
has advised the Banks as under:
 To initiate necessary steps to rationalize the cost of loans to SME sector by adopting
a transparent rating system with cost of credit being linked to the credit rating of
enterprise. SIDBI has developed a Credit Appraisal and Rating Tool as well as a Risk
Assessment Model and a comprehensive rating model for risk assessment of

15
 proposals for SMEs. The banks have been advised to consider taking advantage of
these models as appropriate and reducing their transaction costs.
National Small Industries Corporation has recently introduced credit rating scheme
for encouraging SME units to get themselves credit rated by reputed agencies. Banks
may consider these rating models for rating the SME borrowers.
 To make concerted efforts to provide credit cover on an average to at least 5 new
small/medium enterprises at each of their semi urban/ urban branches per year.
 To formulate a comprehensive and more liberal policy with the approval of their
Board of Directors in respect of loans to SME sector.
 To consider cluster based approach for financing SMEs as it offers possibilities of
reduction in transaction cost, mitigation of risks and also provide an appropriate scale
for improvement in infrastructure.

PROCESSING OF LOAN APPLICATIONS:

 Viability:
The borrowers should invariably provide a detailed project report prepared by a
reputed project Consultant covering all aspects of its viability. The borrower should
provide all the necessary details and required information regarding the proposal.
 Issue of Acknowledgement of Loan Applications:
Branches should give acknowledgement for loan applications received from the
Borrowers.
 Disposal of Applications:
All loan applications received under SME Sector shall be disposed Off by the branches
within a maximum period of 4 weeks provided the loan applications are complete in all
respects. In case the proposal of the borrower does not fall within the competence of branch,
the branch should send one advance copy of the proposal to the sanctioning authority
followed by final copy with recommendations from the branch.
Proposal received register:
A register should be maintained at branch wherein the date of receipt,
sanction/rejection/disbursement with reasons therefore etc., should be recorded. The
register should be made available to all inspecting agencies.
 Rejection of applications for fresh limits/enhancement of existing limits should not be
done without the approval of the next higher authority.

16
  Sanction of reduced limits should be reported to the next higher authority immediately
with full details for review and confirmation.
Security
Branches should not insist for any tangible collateral security for limits upto Rs 5. For limits
beyond Rs 5.00 lacs branches may obtain adequate tangible collateral security.

Debt Equity ratio

Debt equity ratio of 2:1 is desirable. However in well-managed SSI’s units ratio of 3:1 can
be considered on merits.

Rate of Interest:

S. No Sector Rate of
Interest (%
per annum)
w.e.f.
01.07.2017
A. Interest rate structure for loans and advances with aggregate limits exceeding Rs.
20.00 lacs and other than those under Special Schemes
Rating Grade 1 (SME Sector) MCLR- 2.00
Rating Grade 1 (Small Business & Trade ) MCLR- 2.50
Rating Grade 2 (SME Sector) MCLR - 2.25
Rating Grade 2 (Small Business & Trade ) MCLR -2.75
Rating Grade 3 (SME Sector) MCLR- 2.75
Rating Grade 3 (Small Business & Trade ) MCLR-3.25
Rating Grade 4 (SME Sector) MCLR – 3.00
Rating Grade 4 (Small Business & Trade ) MCLR- 3.50
Rating Grade 5 (SME Sector) MCLR- 3.50
Rating Grade 5 (Small Business & Trade ) MCLR- 4.00
Rating Grade 6 (SME Sector) MCLR
-4.00

Sector Rate of Interest

Agriculture & 1% below the rate prescribed for each Rating
Allied activities Grade
SMEs 0.50% below the rate prescribed for each Rating
Grade

Loans and Advances W.E.F. 01.07.2017

17
 MCLR Rate 7.85 to 9.15 W.E.F. 01.07.20017

13.

Interest rate structure for loans and advances with aggregate limits up toRate of Interest
Rs.20.00 lacs and those under Special Schemes. (% p. a.)
B. w. e. f.
01.07.2017

01. Micro & Small Enterprises (Manufacturing)

a) Up to Rs.0.50 lacs XXX
b) Above Rs.0.50 lacs &upto Rs.2.00 lacs XXX
c) Up to Rs.2.00 lacs PLR- 2.00
d) Above Rs.2.00 lacs & up to Rs.5.00 lacs PLR- 1.50
e) Above Rs.5.00 lacs & uptoRs.20.00 lacs PLR- 1.00
Loans under Craft Development Scheme
a) Up to Rs.0.25 lacs XXX
b) Above Rs.0.25 lacs & up to Rs.0.50 lacs XXX
c) Up to Rs.0.50 lacs 10.00
d) Above Rs.0.50 lacs & up to Rs.1.00 lacs 11.00
02. Other Micro and Small Services Sector
a) Up to Rs.0.50 lacs XXX
b) Above Rs.0.50 lacs & up to Rs.2.00 lacs XXX
c) Up to Rs.2.00 lacs PLR- 2.00
d) Above Rs.2.00 lacs & up to Rs.5.00 lacs PLR-1.50
e) Above Rs.5.00 lacs & uptoRs.20.00 lacs PLR-1.00

18
  Disbursement:
The borrower shall provide an implementation schedule beforehand and all the disbursement
of term loans shall be made as per the progress of implementation. As far as possible the
payments shall be made directly to the suppliers/contractors. In respect of working capital
loans, the branches shall first ensure completion/commissioning of unit.

TYPES OF LOANS PROVIDED TO SSI:

1Term loans:
The bank loan to the industry, with a fixed maturity and often featuring amortization of
principal.
2Working capital loans:
The bank provides loan whose purpose is to finance everyday operations of a company.
3 Cash Credit: This account is the primary method in which Banks lend money against the
security of commodities and debt. It runs like a current account except that the money that
can be withdrawn from this account is not restricted to the amount deposited in the account
Instead, the account holder is permitted to withdraw a certain sum called "limit" or "credit
facility" in excess of the amount deposited in the account. Cash Credits are, in theory,
payable on demand. These are, therefore, counter part of demand deposits of the Bank
4 Letter of Credit:

Letter of Credit, document issued by a bank authorizing the bearer to receive money from one
of its foreign branches or from another bank abroad. The order is nonnegotiable, and it
specifies a maximum sum of money not to be exceeded. Widely used by importers and
exporters, the letter of credit is also made available to tourists by their home banks so that
they may draw foreign currency while travelling abroad. When the instrument is directed to
more than one agent, it is called a circular letter of credit.

Similarly, bank is also providing facilities like bank of warrantee, bill purchase limit working
capital term loans etc to the industry.

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COMPANY PROFILE
BANKING INDUSTRY IN INDIA

Banking in India originated in the last decades of the 18th century. The oldest bank in
existence in India is State Bank of India, a government-owned bank that traces its origins
back in 1886 and is the largest commercial bank in the country. Central banking is the
responsibility of the Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India, regulating it to commercial banking
functions. The Reserve Bank of India acts as a centralized body monitoring any discrepancies
and shortcoming in the system.

 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 in retail
banking and mortgages are expected to be strong. The Reserve Bank of India is the
foremost monitoring body in the Indian financial sector.
 The liberalize policy of Government of India permitted entry to private sector in the
banking, the industry has witnessed the entry of nine new generation private banks.
The major differentiating parameter that distinguishes these banks from all the other
banks in the Indian banking is the level of service that is offered to the customer.
 With years, Private Banks are also adding services to their customers. The Indian
banking industry is passing through a phase of customers market. The customers have
more choice in choosing their banks. A competition has been established within the
banks operating in India. With stiff competition and advancement of technology, the
service provided by bank has become easy and convenient.
 The popularity of these banks can be gauged by the fact that in a short span of time,
these banks have gained considerable customer confidence and consequently have
shown impressive growth rates. Today, the private banks corner almost four per cent
share of the total share of deposits. Most of the banks in this category are concentrated
in the high-growth urban areas in metros (that account for approximately 70% of the
total banking business). With efficiency being the major focus, these banks have
leveraged on their strengths and competencies viz. Management, operational
efficiency and flexibility, superior product positioning and higher employee
productivity skills.

20
The private banks with their focused business and service portfolio have a reputation of being
niche players in the industry. India has 88 scheduled commercial banks (SCBs) - 28 public
sector banks (that is with the Government of India holding a stake), 29 private banks (these
do not have government stake; they may be publicly listed and traded on stock exchanges)
and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000
ATMs. According to a report by ICRA Limited, a rating agency, the public-sector banks hold
over 75 percent of total assets of the banking industry, with the private and foreign banks
holding 18.2% and 6.5% respectively Financial System is the most important institutional and
functional.vehicle for economic transformation of any country. Banking sector is reckoned as
a hub and barometer of the financial system. As a pillar of the economy, this sector plays a
predominant role in the economic development of the country.

In a country like India where reach is the biggest issue, banking technology plays a major
role. “In the past 10-15 years, technology has made a significant difference to the way
banking functions. Technology is purely used to offer our customer the choice and a positive
experience. It has been seen that Indian banks aren’t lacking behind when it comes to
technology. Technology has become a great leveler and now it has become productive, and
one can get access to technology which results in cost efficiency.

21
CHALLENGES FACED BY INDIAN BANKING INDUSTRY

Developing countries like India, still has a huge number of people who do not have access to
banking services due to scattered and fragmented locations. But if we talk about those people
who are availing banking services, their expectations are raising as the level of services are
increasing due to the emergence of Information Technology and competition. Since, foreign
banks are playing in Indian market, the number of services offered has increased and banks
have laid emphasis on meeting the customer expectations.

Now, the existing situation has created various challenges and opportunity for Indian
Commercial Banks. In order to encounter the general scenario of banking industry we need to
understand the challenges and opportunities lying with banking industry of India.

Rural Market

Banking in India is generally fairly mature in terms of supply, product range and reach, even
though reach in rural India still remains a challenge for the private sector and foreign banks.
In terms of quality of assets and capital adequacy, Indian banks are considered to have clean,
strong and transparent balance sheets relative to other banks in comparable economies in its
region. Consequently, we have seen some examples of inorganic growth strategy adopted by
some nationalized and private sector banks to face upcoming challenges in banking
industryof India. For example, recently, ICICI Bank Ltd. merged the Bank of Rajasthan Ltd.
in order to increase its reach in rural market and market share significantly. State Bank of
India (SBI), the largest public-sector bank in India has also adopted the same strategy to
retain its position. It is in the process of acquiring its associates. Recently, SBI has merged
State Bank of Indore in 2010.

22
Financial Inclusion
Financial inclusion has become a necessity in today’s business environment. Whatever is
produced by business houses, that has to be under the check from various perspectives like
environmental concerns, corporate governance, social and ethical issues. Apart from it to
bridge the gap between rich and poor, the poor people of the country should be given proper
attention to improve their economic condition. Dev (2006) stated that financial inclusion is
significant from the point of view of living conditions of poor people, farmers, rural non-farm
enterprises and other vulnerable groups. Financial inclusion, in terms of access to credit from
formal institutions to various social groups. Apart from formal banking institutions, which
should look at inclusion both as a business opportunity and social responsibility, the author
conclude that role of the self-help group movement and microfinance institutions is important
to improve financial inclusion. The study suggested that this requires new regulatory
procedures and de-politicisation of the financial system
Interest rate risk:
Interest rate risk can be defined as exposure of bank's net interest income to adverse
movements in interest rates. A bank's balance sheet consists mainly of rupee assets and
liabilities. Any movement in domestic interest rate is the main source of interest rate risk.
Banking in the recent years had been reduced to a trading operation in government securities.
Recent months have shown a rise in the bond yields has led to the profit from treasury
operations falling. The latest quarterly reports of banks clearly show several banks making
losses on their treasury operations. If the rise in yields continues the banks might end up
posting huge losses on their trading books. Given these facts, banks will have to look at
alternative sources of investment.
Competition in retail banking:
The entry of new generation private sector banks has changed the entire scenario. Earlier the
household savings went into banks and the banks then lent out money to corporate. Now they
need to sell banking. The retail segment, which was earlier ignored, is now the most
important of the lot, with the banks jumping over one another to give out loans. The
consumer has never been so lucky with so many banks offering so many products to choose
from. With supply far exceeding demand it has been a race to the bottom, with the banks
undercutting one another. A lot of foreign banks have already burnt their fingers in the retail
game and have now decided to get out of a few retail segments completely. The nimble
footed new generation private sector banks have taken a lead on this front and the public
sector banks are trying to play catch up. The PSBs have been losing business to the private
sector banks in this segment.

23
ABOUT J&K BANK

Jammu and Kashmir Bank Limited was incorporated on 1st October, 1938 and commenced
its business from 4th July, 1939 at in Kashmir (India). The Bank was first in the country as a
State-owned bank. According to the extended Central laws of the state, Jammu & Kashmir
Bank was defined as a govt. Company as per the provision of Indian companies’ act 1956. In
the year 1971, the Bank received the status of scheduled bank. It was declared as "A" Class
Bank by RBI in 1976. The Jammu and Kashmir Bank is one of the fastest growing banks in
India with a network of more than 556 branches spread across the country offering world
class banking products/services to its customers. Today the bank has status of value driven
Organization and is always working towards building trust with shareholders, Employees,
Customers, borrowers, regulators, and other diverse stakeholders for which it has adopted a
strategy directed to developing a sound foundation of relationship and trust aimed at
achieving excellence, which of course comes from the wombs of good corporate governance.
Good governance is a source of competitive advantage and a critical input for achieving
excellence in all pursuits. JK Bank considers good Corporate Governance as the SINE QUA
NON of a good banking system and has adopted a policy based on all the four pillars of good
governance-transparency, disclosure, accountability and value, enabling it to practice
trusteeship, transparency, fairness and control leading to stakeholder delight, enhanced share
value and ethical corporate citizenship. It also ensures that bank is managed by an
independent and highly qualified board following best globally accepted practices,
transparent disclosure and empowerment. Besides ensuring to meet shareholders aspirations
and societal expectations following the principles of management executive freedom to drive
the bank forward. The bank has recently bagged three very prestigiousawards for fair
business practices and commitment to social obligations.

24
CORPORATE HEADQUARTER

25
 CORPORATE GOVERNANCE

J&K Bank has been committed to all the basic tenets of good Corporate Governance well
before the Securities and Exchange Board of India and the Stock Exchanges pursuant to
Clause 49 of the Listing Agreement mandated these. Now, it is our Endeavour to go beyond
the letter of the Corporate Governance codes and apply it innovatively in a more meaningful
manner thereby making it relevant to the organization that is operating in a specific
environment, which is different from the generic Anglo-Saxon one. In line with the vision,
J&K Bank wants to use Corporate Governance innovatively in a transitional economy like
Jammu and Kashmir. The Bank wants to use Corporate Governance as an instrument of
economic and social transformation. In due course, we would set our self-targets of social and
economic reporting as a part of annual disclosures. This will help us conceptualize and
contextualize the form and content of Corporate Governance in a developing state. Given the
fact that J&K Bank is and is seen as a great success of” public-private partnership”, our Bank
as a business is expected to play a role in social transformation of the economy. This lends
urgency to implementation of good governance practices which go beyond the Corporate
Governance code. Operating in an environment that is emerging from a situation of civil
strife, the issue of Corporate Governance assumes a different and greater relevance. We, as
the prime corporation of Jammu and Kashmir, have a vested interest in making the state a
safe place for business. J&K Bank has a key role to play in providing public and private
services, financial infrastructure and employment. As such, the efficiency and accountability
of the corporation is a matter of both private and public interest, and governance, therefore,
comes at the top of the agenda. The fact that the bank is state owned but professionally
managed, having a large size of international investors, governance is critical of our directors
to make J&K Bank an engine of social transformation. As an eminent corporate jurist
(Chancellor William T. Allen) from US says, “A corporate director has civic responsibility.
The people, who accept this responsibility, do it conscientiously and well deserve our respect
as they are serving a nation. But those who as directors are passive and view their role as
mere advisers, are pliable and pleasant but do not insist on a real monitor’s role, do small
service to anyone and deserve little respect”. Our directors belong to the former category.

26
Vision statement

The Bank's vision is to be financially sound, profitable, growth and technology oriented,
committed to building and maximizing sustainable value for all its stakeholders. The Bank is
committed to achieve healthy growth in profitability and simultaneously to remain consistent
with the Bank's risk appetite and at the same time ensuring the highest levels of ethical
standards, professional integrity and regulatory compliance. “To catalyze economic
transformation and capitalize on growth”. Our vision is to engender and catalyze economic
transformation of Jammu and Kashmir and capitalize from the growth induced financial
prosperity thus engineered. The bank aspires to make Jammu and Kashmir the most
prosperous state in the country, by helping create a new financial architecture for the J&K
economy, at the center of which will be the J&K Bank.

Mission Statement

The mission of the bank is two-fold: To provide the people of J&K international quality
financial service and solutions and to be a super-specialist bank in the rest of the country. The
two together will make us the most profitable bank in the country.

Unique Characteristics & Services of Jammu & Kashmir Bank Ltd.

 J&K Bank carries out banking business of the Central Government

 In spite of a government equity holding of 53 per cent, Jammu & Kashmir Bank (J&K
Bank) is regarded as a private sector bank

 J&K Bank is the one and only banker and lender of last resort to the Government
of J&K

 Plan and non-plan funds, taxes and non-tax revenues are routed through the J&K Bank

 J&K Bank claims the distinction of being the only private sector bank that has been
designated as agent of RBI for banking

 The services of J&K Bank are utilized for the purposes of disbursing the salaries of
Government officials

 J&K Bank collects taxes pertaining to Central Board of Direct Taxes, in Jammu &
Kashmir

27
PRODUCT PROFILE

Support Services

 Anywhere Banking

 Internet Banking

 MS Banking

 ATM Services

 Debit Cards

 Credit Cards

 Merchant Acquiring

 e-Payment of Tax for JK Bank e-banking customers

 E-commerce facility for JK Bank e-banking customers

Depository Services

 DE mat Account

 Other Services

Third Party Service

 Mutual Funds

 Insurance Services - Life & Non-Life

 Remittance Services

Cash Management Services

 Real Time Gross Settlement (RTGS)

 National Electronic Fund Transfer (NEFT)

28
 REVIEW OF LITERATURE
Review of literature:
Magnus Magnusson et.al (May 2012): In this paper, the researcher concludes that the most
developing countries face a shortage of long-term, local-currency financing for small-scale
infrastructure projects impedes local economic development. Inadequate fiscal transfers, little
own source revenue and low creditworthiness make it difficult for local governments to fully
fund projects on their own. Though the paper proposes the use of project finance as a means
to attract financing from domestic banks and institutional investors. Donors can play a
catalytic role by providing technical assistance to develop projects and credit enhancement to
attract commercial financing.
Keywords: infrastructure finance, issuers, investors, financial sector, structured finance
C. Gonza leset et.al (Dec 2001):In this paper researcher urges that in many industrial
projects in Asia, financing is becoming the single-most important factor for their successful
implementation. Companies, many of which are having liquidity problems, are finding it
difficult to provide the equity needed for the projects, much less to pay for the project costs
from their internal funds only. Commercial lenders, on the other hand, having experienced -
and are still battling with - the effects of “non-performing loans” brought about by the recent
economic crisis in Asia, are cautious in providing new loans particularly to projects involving
technologies.
Rubayat:In this research paper the researchers finds that the three has emerged a greater
interest in understanding firms’ access to finance and the financing of small scale industries
(SSIs) in particular. Various studies have indicated that one of the major obstacles for the
formation and development of SSI is related with the SSI’s access to financing. The industrial
units belonging to the SSI sector, many of which are having liquidity problems, are finding it
difficult to possess the equity needed even to run the day-to-day business. Commercial
lenders, on the other hand, having experience - and are still battling with – the effects of
"non-performing loans", are cautious in providing loans particularly to the SSIs. Therefore, in
Bangladesh, the SSIs face difficulties having access to financial facilities and typically rely
on their own savings and loans from friends and relatives, especially during the start-up
phase. This paper examines the issues involved and the options related to the financing of SSI
in the country. The first part of the paper aims to provide an understanding of the present
financing environment, various financing mechanisms and experiences in the country.
Subsequent to this, practical suggestions and options are presented on the ways whereby

29
certain financing mechanisms and supports can promote greater access to financial services
and efficient use of funds provided. The issue of financing the SSIs is probably the most
talked about one, but compared to the demand, very less has so far been done in this area.
Nayak, Purusottam:In this research paper this researcher urges that, the movement of
entrepreneurship promotion and development in the past few decades has gone a long way in
North East India, particularly in the state of Assam. Both governments and various industrial
promotion and support institutions are making considerable efforts to facilitate the process of
emergence of new entrepreneurs for setting up enterprises in small scale sector. These efforts
involved making attractive schemes of availability of finance and various other assistances
including technical knowhow, training, sales, purchases, etc. It is believed that these efforts
have made a favourable impact on the growth of these enterprises in the State as well as in
the region. There are today a large number of organizations like North Eastern Industrial and
Technical Consultancy Organization (NEITCO), National Institute of Small Industry
Extension Training (NISIET) [till it was merged with the Indian Institute of Entrepreneurship
(IIE)]and the North Eastern Industrial Consultants Ltd (NECON) who has been actively
involved in entrepreneurship development activities in the region. Their efforts have been
supported by the North-Eastern Council (NEC) in general and financial institutions like
Industrial Development Bank of India (IDBI), Small Industries Development Bank of
India (SIDBI), North Eastern Development Finance Corporation Limited (NEDFi) and
various commercial banks in particular. The present paper in this regard is an attempt to
examine the role of financial institutions in promoting small scale and tiny industries in terms
of growth of entrepreneurs, enterprises and its contribution to State Domestic Products.
G T, Fatunla et.al (jan1999):in this paper, the researchers conclude that industrial
development involves the development of a technical arrangement that moves an economy
from the traditional method of production to a more complex system of mass manufacture of
a variety of goods and services involving technology and management techniques It enables
country to utilize fully its factor endowments and depend less on the external sector for its
growth and sustenance. Through industrialization, an economy gains the versatility and
resistance that enable it to raise the standard of living of its people and cope better with
internal stress and strains. While the importance of the industrial sector in modern economies
is universally accepted, the developing countries have since the 1970s shown greater interest
in the promotion of the growth of small and medium scale industries (SMSI) for three main
reasons; the failure of past industrial policies, which are anchored on the establishment of
large firms, to generate efficient self-sustaining growth; increased emphasis on self-reliant,
approach to development; and the greater attention paid to aspects of development other than

30
investment and output growth. These other elements of growth which SMSI contribute to
include more economic use of resources, more employment creation per unit of capital
investment; mobilization of domestic entrepreneurship; personnel development, greater
utilization of local resources and more equitable income distribution.
Saikia,Hemanta (sep 2011): In this paper researcher urges that Globalization of Indian
economy and fast and large industrialization questioned the sustainability and endurance of
small scale industries (SSIs) from 1991. In this regard productivity and performance is
remaining an issue that needs analysis for their development. However economic
underdevelopment is remain a problem for the development of small scale industries. In this
paper an attempt has been made to examine the productive performance of in small scale
industries in India in underdeveloped areas with special reference to Assam. In modern era
with the development of Indian economy and rapid expansion of trade, the small scale
industrial sector has emerged as a vibrant and dynamic segment in the process of
industrialization which is considered not only as a key factor to lift up the per capita income
but also a vital mechanism for a larger transformation of Indian economy. The small scale
sector has played a very important role in the socio-economic development of India during
the past 50 years. It has significantly contributed to the overall growth in terms of the Gross
Domestic Product (GDP), employment generation and exports. The performance of the small
scale sector, therefore, has a direct impact on the growth of the overall economy. In India this
sector constitutes 95% of the industrial units and contributes 40% to the total industrial output
of the country and 35% of the direct export.
There are about 3.6 million small scale industrial units in India and these have employed
approximately 19.3 million people, which is second highest next to agriculture. However, the
growth of small scale industries in the country is not evenly distributed among the states.
The growth of Small-Scale Industries in The North Eastern Region is slow in comparison to
the other parts of the country. The development pattern of the small-scale industries of the
region is far from encouraging and these are plagued by innumerable of problems.
The level of sickness of the sector is quite high and this is being aggravated by the basic
structure of the small scale industrial sector. In case of state Assam, the scenario of small
scale industry is very underprivileged with regards to growth and production is concerned
Key words: Small scale Industry, Total factor productivity, underdevelopment.
Laturkar,Dr. V.N. et.al (Aug 2011): In this journal the writers conclude that theSmall-Scale
industries encompass vast scope covering activities like manufacturing, servicing, financing,
construction, infrastructure etc. In view of Government of India’s ever-increasing importance
given to the small-scale industries in the national economy more & more small-scale

31
industries are to be set up in the years to come. By contributing it’s increasing share to the
national production, employment & exports, small scale industries also contribute to the
economic development of the country. However, these industries are also plagued by the
problems of raw material, finance, marketing, underutilization of capacity, etc. cash has
become a big problem for small & even big businesses today. Lack of finance has driven
many small business units into bankruptcy. Unfortunately, many small businesses will
become bankrupt because their owners have neglected the principal of cash management
which normally determines their successes or failure. Cash is like oxygen to a business. Small
scale enterprises, given their small resources find it difficult to have these own. Finance has
been the important resource to start & run an enterprise4because it facilitates the entrepreneur
to procure land, labour, material, machine& so on from different parties to run his/her
enterprise. Report of third all India censuses also clearly indicate that lack of demand&
shortage of working capital are the main reasons behind sickness/ incipient sickness of
registered & unregistered small-scale industries. Developing cash forecast is essential for new
business because early sales do not generate enough cash to keep the company afloat. Better
financial management can lead the company ahead in competition as well as it will help the
entrepreneur to avoid the situation of bankruptcy & industrial sickness. This paper is an
attempt to understand various financial techniques to help the entrepreneurs to avoid the
situation of industrial sickness.

32
 RESEARCH METHODOLOGY
TITLE: Financing of Small Scale Industries by J&K Bank Ltd in Kashmir Division.
The title of the study undertaken for the research work is “Financing of Small Scale
Industries by J&K Bank Ltd in Kashmir Division”. The study is confined to five small
scale industries in Kashmir (Handi-Crafts, Sericulture, Cement, Khadi and Food Processing
industries). The study is related to the role played by the J&K Bank Ltd in financing the
small-scale industries operating in Kashmir to ascertain how far the bank has succeeded in
fulfilling the working capital financial requirements of these industries and what factors
influence the loan disbursement to small‐scale industries

SCOPE OF THE STUDY

This study is confined to fives mall scale industries (Handi-Crafts, Sericulture, Cement,
Khadi and Food Processing industries), operating in the Kashmir division. This study is
related to the role played by The Jammu & Kashmir Bank in financing the small-scale
industries in Kashmir.

OBJECTIVES OF THE STUDY

The various objectives of the study are:

 To study the key role of J&K Bank in financing SSI.

 To study the problems faced by small scale industries in availing the credit
facility.

 To Study the level of satisfaction of SSI’s holders with J&K bank

regarding the financial help provided by the bank.

 To find out the present requirements of financing products by SSI’s.

 To study the incentives provided by the Department. Of Industries &

Commerce J&K for SSI, s in the Valley.

RESEARCH METHODOLOGY OF THE STUDY

Survey method and personal interview is used to collect data from the randomly selected five
small scale industries by using the close‐ended structured questionnaire. This study is

33
empirical and mostly depends on primary data. Study is based on the various data provided
by bank officials and data from research literature is thoroughly studied and interpretations
made thereof. Primary data has also been collected from anonymous bank staff. The
responses of all the questions in the questionnaire were tested by using the five-points Likert
scale.

PLAN OF ANALYSIS

The data collected is raw and it is compiled, classified, tabulated and then analyzed using
financial techniques and statistical tools. Graphs and charts are used to highlight the statistics.
Based on this data and analysis, inferences were drawn.

SOURCES OF DATA COLLECTION

Data collection method is highly influenced by the methodology chosen.

Following are the methods of collecting data:

PRIMARY DATA:

Questionnaire was used to collect primary data from respondents. The questionnaire was
structured type and contained questions relating to different dimensions of banking. The
questions included in the questionnaire were close-ended. Personal interview and
observational methods were also adopted to collect primary data.

SECONDARY DATA

Secondary data has been collected through various search engines like goggle, yahoo, etc.
Additionally many finance blogs were consulted including some books and some journals,
pump-lets published by DIC as well. Some research papers on financing of small scale
industries also proved to be of very great help.

SAMPLE SIZE
In the study the sample size was 60, the respondents were selected from different regions
across the valley. For the study I have targeted respondents from major areas.
These areas were selected for the data collection due to certain reasons. Here I have easy
access to the targeted people, easily targeted different income group respondent. The target
respondents were Entrepreneurs, Managers and employees of SSI’s. I have targeted
respondent from different Managerial levels and occupations. The technique of sampling
used is Simple Random Sampling

34
DATA COLLECTION

Respondent were given a questionnaire and the interviewer noted down the responses after
giving the information about the purpose of the study and instruction about the questions.

DATA INTERPRETATION

The data collected was analysed with the help of using Microsoft Excel

 Pie Chart
 Bar Chart
 Mean

35
 ANALYSIS AND INTERPRETATION OF DATA
Analysis & Interpretation

1: Age of the industry [SSI unit financed by j k bank?

0-10yrs 10-20yrs 20-30yrs 30-40yrs Above 40yrs

15 6 29 7 3

Age of the Industry

Above 40yrs
5.00%
30-40yrs 0-10yrs
12% 25% 0-10 yrs
10-20 yrs
20-30 yrs
10-20yrs
10.00% 30-40 yrs
20-30yrs Above 40 yrs
48.33%

2: Investment in the industry for establishment of the unit?

0-15 15-30 30-45 45-60 60-75 75 lacs-1 cr

Lacs Lacs lacs Lacs lacs
15 25 10 6 3 1

36
 Investment
100

80

60
41.66%
40 Banking Relations
25%
16.66%
20 10%
5% 1.66%
0
0-15 lacs 15-30 lacs 30-45 lacs 45-60 lacs 60-75 lacs 75lacs-1cr

3:Your Banking Relationship?

JK BANK HDFC PNB SBI None

50 4 2 2 2

Banking Relations
100
83.33%
80
% age of SSI's

60

40 Banking Relations

20
6.66% 3.33% 3.33% 3.33%
0
JK bank HDFC PNB SBI None

4: Amount of loan taken from the JK bank:

Rs 0-5 5-10 10-15 15-20 20-25 25 -30 30-35 Above

Lacs lacs lacs lacs lacs Lacs lacs 35 lacs
For Term loan 12 17 20 8 2 1 0 0
For Working 24 20 9 4 2 1 0 0

37
 Capital loan

100
95
90
85
80
75
70
65
60 40% 33.33%
% age of SSI's

55
50 15%
45
40 W.C Loan Working Capital
35 33.33%
30 Term Loan Loan
25 28.33%
20 20% 6.66%
15 13.33%
10
5 3.33%
3.33% 1.66
1.66%
0
0-5 lacs 5-10 lacs 10-15 lacs 15-20 lacs 20-25 lacs 25-30 lacs

5: Satisfaction level with the JK bank?

Fully Somewhat Neutral Somewhat Fully

satisfied Satisfied unsatisfied unsatisfied
10 25 15 7 3

30

25

20

15 Column1
Series 1

10

0
F.S Sw. S Neutral Sw. NS F.Us

38
6: Awareness about the RBI guidelines (regarding SSI loans)?

Fully Somewhat Neutral Somewhat Fully

Aware aware unaware unaware
6 10 21 19 4

Awareness
100
80
%
age 60
of 40 35% 31.66%
SSI's 16.66%
20 10% 6.66%
0
Fully aware Somewhat aware Neutral Somewhat fully unaware
unaware
7:
7: Satisfaction with the security demanded by the JK Bank for loans?

Fully Somewhat Neutral Somewhat Fully

satisfied Satisfied unsatisfied unsatisfied
28 10 10 8 4

39
 Satisfaction

6.6%

13.3%
fully satisfied
somewhat satisfied
46.66%
neutral
16.66%
somewhat unsatisfied
fully unsatisfied

16.66%

8: JK bank keeps privacy & confidentiality of your business & personal information?

Strongly Disagreed Neutral Agreed Strongly

disagreed agreed
7 8 11 20 14

S.A
.
S.D.A
23.33% 11.66%
D.A
13.33% Strongly disagreed(S.D.A)
Disagreed(D.A)
N Neutral(N)
A 18.33%
33.33% Agreed(A)
Strongly agreed(S.A)

9: How much of your profitability has been increased by getting loan?

0-5% 5-10% 10-15% 15-20% Above 20%

40
 29 15 10 5 1

100
Profitability
90
80
70
60
50 48.33%
40
30
25%
SSI's
age

20
%

of

16.66%
10 8.33%
0 1.66%
0 5 10 15 20 25

10: Which measure will be more effective to improve SSI’s?

Implementation Decreasing Introduction Advertiseme Decreasing

of schemes Interest new nt Demand for securities
rate schemes
8 26 6 13 5

100
Effectiveness
90
80
70
% age of SSI's

60
50 43.33%
40
30 21.66%
13.33% .
20 10% 8.33%
10
0
Implementation of Decreasing int.rate Itroduction of new Advertisement Decreasing Demand
schemes schemes for security

41
11: Does J&K bank maintain transparency?

Strongly Disagreed Neutral Agreed Strongly

disagreed agreed
15 10 5 20 10

Transparency

S.A Strongly disagreed(S.D.A)

16.66% S.D.A
25% Disagreed(D.A)
Neutral(N)
A
33.33% D.A Agreed(A)
16.66% Strongly agreed(S.A)
Neutral
8.33%

Q12: Most effective type of Working capital loan?

Cash Credit Letter of Credit Bank of Bill of Purchase

warrantee
40 10 7 3

100
Effective working capital
% age of SSI's

80 66.66%
60

40
16.66%
20 11.66%
5%
0
Cash Credit Letter of Credit Bank of Warrantee Bill of Purchase

13: Is the bank advertising their schemes regarding financing of SSI’s to make you
aware about these schemes?

Yes No

42
 40 20

100

80
Advertising
% age of SSI's

60

40

20 .

14: what type of Promotional mix will be effective to make you aware about the schemes
regarding financing of SSI’s?

Sales promotion Advertisement Publicity Personal Social

selling mobalisation&
ownership capital
2 18 5 15 20

43
 Effectivness
100

80

60

40 33.33 .
30%
25%
20
8.33%
3.33%
0
Sales promotion Advertisement Publicity Personal selling SM&OC

FINDINGS And SUGGESTIONS

FINDINGS
 JK Bank is the bank providing loans to SSI’s at very low interest rate.

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 The study reveals that about 90% of Small Scale Industries in Kashmir have
maintained their relationship with JK Bank and only 10% of SME’s have maintained
their relationship with other (i.e. SBI ,PNB etc) banks.
 The study reveals that most of the SSI’s have investment not greater than 20 lacks i.e.
these industries are at the bottom of given value of investment given by RBI for an
industry for being an SSI (i.e. 1 corer).
 The study reveals that most of the SSI’s are satisfied with the overall contribution of
JK bank towards SSI’S.
 The study reveals that most of the SSI’s are not fully aware from the guidelines given
by RBI to the banks for financing SSI’s.
 About 70% of SSI’s are not satisfied with securities demanded by the bank for getting
loans. According to them bank is demanding collateral securities which is about two
times greater than the actual loan to be taken, While as other banks are demanding
less collateral securities in comparison to JK Bank.
 The study reveals that 70-75% Management of SSI’s in Kashmir are not satisfied with
the Privacy & confidentiality of their information(both of business & personal) kept
by the bank.
 About 85% of SSI’s are saying that they are making a reasonable increase (from 5-
15%) in the profit by getting loan from the bank.
 Most of the SSI’s are more interested in getting working capital loan rather than Term
loans .Only about 25% of SME’s are interested in taking Term loans for purchasing
the new technological machineries.
 Most of the SSI’s want decrease in the Interest rate, also are unsatisfied with
commitments of the bank to implement new schemes & also are unsatisfied with the
Advertisement strategy of the bank for the new schemes.
 Most of the SSI’s are more interested in the Cash credit type of working capital loan.
 About all SSI’s are complaining about the low consideration by the government.
 Bank is continuously taking steps to improve SME’s.
 SSI managers are also complaining about the slow service & overall behaviour of the
bank staff.
 This time bank is continuously organizing meetings with the entrepreneurs of SSI’s in
order to discuss the new steps that should be taken to improve SSI’s.
 The managers of SSI’s are also complaining about the non-implementation of the
scheme i.e. lower down rate and also rescheduling the instalment schedule.

45
  The managers of SSI’s are also complaining about the winding up of Business
Development Promotion Cell (BDPC) and are not satisfied with Cluster making
strategy by the bank.
 Most of the Sick industries are winded up in the valley because of 30% margin kept
by bank to sick industries.
 .Most of the %age of the managers of SME’s are complaining about the editing of
Project plan (deposited by SME’s to the bank for which they have applied for loan) by
the bank.
 Most of the %age of the managers of SSI’s are not satisfied with the Marketing
strategies of the bank.

Suggestions and Recommendations

 RBI should make new strategies to make Industries and SSI’s particularly aware
about their guidelines to the banks for financing Industries and SSI’s in the Valley.
 The formalities for SSI’s for getting loan should be reduced.
 The Securities especially Collateral securities demanded for getting loans, which are
about twice the actual amount of loan, should be decreased.
 Although the bank is providing loan to SSI’s at low rate of interest in comparison
with the other banks , but SSI’s have more expectations on J&K Bank ,so the bank
should decrease the interest rate which is PLR-1.50 for 2-5 lacks should be
decreased to PLR-2.
 J&K Bank should keep Privacy & confidentiality of information (both of business &
personal) of SSI’s.
 Bank should not do any kind of editing in SME’s Project plan for which they have
applied for loan because it can make failure of that plan.
 All loan applications received under SSI Sector should be disposed Off by the
branches with in minimum period of time
 The bank should follow sharply all the RBI guidelines in financing SSI’s .
 The bank should make available, free of cost, simple standardized, easy to understand,
and application form for loans.
 The bank should focus more on improvement of SSI’s and should achieve targets in
Priority Sector Lending.

46
  The bank should restore Business Development Promotion Cell (BDPC).If BDPC is
restored their focal point should be industries.
 The bank should locate branches in every industrial area for the convenience of SSI’s.
 Every SSI Entrepreneur should be given rights to present their grievances and
suggestions to the bank.
 Government should help SSI’s through providing Subsidy, good Infrastructure and
also should help them in the marketing of their products.
 The new schemes/policies should be implemented which needs sharp supervision on
middle and lower management.
 Bank should do proper recruitment, and train the staff about the proper and quick
service.
 Bank should make regular advertisement of their new schemes for SSI’s in order to
make them familiar with the new schemes introduced by the bank.
 There should be more than 20 lacks sanctioning competence to the branch placed in
the industrial area.
 The bank should introduce new schemes for SSI’s in order to improve them.
 Government intervention is very must for the Small Scale industries in the valley.
 Sound government policy is required for the promotion of this industrial sector.
 Financial institutions need to be strengthened.
 Entrepreneurs of SSI’s need to come forward with their innovative projects.

LIMITATIONS OF THE STUDY

 Some of the information is considered confidential and not available for study
 The data taken for interpretation is for a limited period.
 The study is limited to the Kashmir region only.
 As the questionnaire was self-administered personal bias of administrator may be
a limiting factor.

CONCLUSION

 The industrial sector plays an important role in the economic growth of both
developed and developing countries.

47
  The Small Scale Industrial (SSI) sector is very important for any country irrespective
of the level of development because, SSI contributes maximum socio economic
benefits with low level of investment and results in employment creation, income
generation, and poverty alleviation and restricts migration of unemployed workers
into cities.
 SSI’s is also one that maximizes the utilization of local resources and results in
innovations, new technology and is a pathway to emerging entrepreneurs.
 SSI’s are the starting point for industrial growth.
 Small and medium scale industries (SMIs) have been considered essential for
economic development not only in less developed countries (LDCs) but also in more
developed regions of the world. Since they are seen being more dynamic, innovative
and have higher labour absorptive capacities than their corporate counterparts, the
SMI sector has been the backbone of industrial development in many developed
countries.
 SMIs have played a significant role in Valley’s economic development. In Kashmir,
SSI’s have been estimated as providing 21% of total employment and have fulfilled
important functions suchas being the foundation for local entrepreneurship and
innovation, as critical supporting industry.
 Problems faced by the SMI sector in the Valley can be divided into those from the
demand and supply side.
 Constraints of the demand side cover competition from domestic and foreign sources,
non-availability of market information and inadequate market access
 The working in DIC is slow which should be streamlined for disposal of cases of
SSI’s
 The unit holders require share free services from DIC for clearness and registration of
cases
 J&K Bank should categorize its credit policy towards the SSI sector ,this sector has
high potential in the Valley.
 The performance of the J&K Bank is quite satisfactory.

BIBLIOGRAPHY AND ANNEXUARE

Websites

 https://www.jkbank.net
 http://shodhganga.inflibnet.ac.in/bitstream/10603/684/7/07_chapter-i.pdf
 https://www.preservearticles.com.
 https://moneycontrol.com

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Research Papers
 Daniel L. Bond, Daniel Platz and Magnus Magnusson, “Financing small-scale
infrastructure investments in developing countries ”,may 2012.
 Alan Dale C. Gonzales, “Financing Issues and Options for Small-Scale Industrial
CDM Projects in Asia”.
 Jesmin, Rubayat, “financing the small scale industries in bangladesh: the much-talked
about, but less implemented issue”,vol 16 ,no1.
 Purusottam Nayak, “Role of Financial Institutions in Promoting Entrepreneurship
In Small Scale Sector in Assam.”
 HemantaSaikia, “Total Factor Growth in Small Scale Industries Some Evidences
from India,the Romanian Economic Journal,sep2012.
 DamayanthiMenike MGP, “Role of bank in financing SSI’s in srilanka.”
 Annul Report 2011-2012, “MSME-DI Jammu Kashmir.”
Magazines/Journals
 Prof.Jayshri J Kadam,Prof.Dr. V.N. Laturkar, Lecturer, IBMRD, A.Nagar, India
Reader, SRTMU, Nanded, India,(aug 2011), Intrernational Journal of Exclusive
Management Research”,A study of Financial Management in Small Scale Industries
in India vol 1, issue 3,pp.1 -8.
 Dr. K.A. Goyal & Vijay Joshi,(2012) Indian Banking Industry Challenges And
Opportunities .International Journal of Business Research and Management
(IJBRM), Vol 3, no 1, pp.30 -48
 Dr k Ramakrishnan,(2013)The Indian Banker.the Monthly Journal Published by the
Indian Bank’s Association,vol 8, no 7, pp. 44-48
Newspapers
 https://www.greaterkashmir.com
Books
 A.K.Dewani (2005),j&k state industrial policy 2002-2015,Avinash &Avinash.,pp 19-
25
 Bajpai ,Naval,Business Research Methods,Pearson publishers Ltd.,pp 70-86, 93-
95,699-705

ANNEXAURE

QUESTIONNAIRE

Dear Respondent,

49
I am currently working on a project titled “Financing of Small-Scale Industries in
Kashmir”. Your cooperation in this project will help me to fulfil my academic requirement
and will also provide you a chance to register your valuable thoughts.

I assure that your identity will not be disclosed and your valuable views will be used for
academic purpose only. The data collected with the help of this survey would be analysed and
only the aggregate results will be discussed. Further, the information you will provide will be
kept confidential.

1. Kindly complete the questionnaire fully in one session.

2. The boxes in front of each question provide a range of answer. Please indicate your

answer by placing a tick in the relevant box.

DANISH NABI
BGSB, University, Rajouri

50
Name of the Industry___________________________________________

___________________________________________

Location of the Industry___________________________________________

Job Profile ___________________________________________

1) Age of the Industry?

□ 0-10 years
□ 10-20 years
□ 20-30 years
□ 30-40years
□ Above 40 years

2) Investment in the industry for establishment of the unit.

□ 0-15 lac
□ 15-30 lac
□ 30-45 lac
□ 45-60 lac
□ 60-75 lac
□ 75 lac -1 crore

3) Your banking relations:

□ J&K bank
□ HDFC
□ PNB
□ SBI
□ None

4) Amount of loan taken from J&K bank:

□ 0-5 lac
□ 5-10 lac
□ 10-15 lac
□ 15-20 lac

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 □ 20-25 lac
□ 25-30 lac
□ 30-35 lac
□ Above 35 lac

5) Satisfaction level with the J&K bank?

□ Fully satisfied
□ somewhat satisfied
□ Neutral
□ Somewhat unsatisfied
□ Fully unsatisfied

6) Awareness about RBI guidelines?

□ Fully aware
□ Somewhat aware
□ Neutral
□ Somewhat unaware
□ Fully unaware

7) Satisfaction with the security demanded by the J&K Bank for loans?

□ Fully satisfied
□ somewhat satisfied
□ Neutral
□ Somewhat unsatisfied
□ Fully unsatisfied

8) Does J&K Bank maintain your privacy?

□ Fully satisfied
□ Satisfied
□ Neutral
□ Unsatisfied
□ Fully unsatisfied

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9) How much of your profitability has been increased by getting loan?

□ 0-5%
□ 5-10%
□ 10-15%
□ 15-20%
□ Above 20%

10) Which measure will be more effective to improve SSIs?

□ Implementation of schemes
□ Decreasing interest rate
□ Introduction of new schemes
□ Advertisement
□ Decreasing demand for securities

11) How much satisfied are you with the transparency of J&K Bank?

□ Fully Satisfied
□ Satisfied
□ Neutral
□ Unsatisfied

12) Most effective type of working capital loan?

□ Cash credit
□ Letter of Credit
□ Bank warrantee
□ Bill of purchase

13) Is the bank advertising their schemes regarding financing of SSI to make you aware about
the schemes?

□ Yes
□ No

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14) What type of promotional mix will be effective to make you aware about the schemes
regarding financing of SSIs?

□ Sales promotion
□ Advertisement
□ Publicity
□ Personal selling
□ Social mobilisation and owners capital

THANK YOU FOR YOUR PARTICIPATION

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