CREDIT FACILITIES FOR SMALL AND MEDIUM ENTERPRISES

DISSERTATION SUBMITTED TO ANNAMALAI UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF PHILOSOPHY IN COMMERCE

By

PUTTU GURU PRASAD
(Enrolment No: 4090601818)

Research Guide

Dr.N.CHANDRASEKHAR RAO
M.Com., M.B.A., Ph.D., Head, Dept of Commerce, Post Graduate Center P.B.Siddartha College of Arts & Science Vijayawada

Annamalai

University

DIRECTORATE OF DISTANCE EDUCATION
ANNAMALAINAGAR – 608 002 2008

DECLARATION

I hereby declare that the dissertation entitled “Credit facilities for Small and Medium Enterprises” submitted for the Degree of Master of Philosophy in Commerce is my original work and the dissertation has not formed the basis for the award of any degree, diploma, associate ship, fellowship or similar other titles. It has not been submitted to any other university or institution for the award of any degree or diploma.

Signature of the scholar Name : P.Guru Prasad En.No : 4090601818 Place: Date:

ACKNOWLEDGEMENT
It is with real pressure that, I record my indebtedness to my research Guide, Dr.N.CHANDRASEKHAR RAO, M.Com.,
M.B.A., Ph.D., Head, Dept of Commerce, Post Graduate Center,

P.B.Siddartha College of Arts & Science, Vijayawada for his counsel and guide during the preparation of this dissertation. I am grateful to Sri. R.Prasad, Director, INC, Hyderabad, Sri M.Bhaskar rao, Dean, INC, Hyderabad, Sri. G. Anantha Raman, Vizag, Regional T. Coordinator, INC, Vizag Sri INC, V.V.Ajith Guntur, Kumar, Regional Academic Coordinator, INC, AP.RO (East), Sri. Sitha Ramaiah, Principal, Dr.D.Nagayya, Consultant on small enterprises, Guntur and Dr.M.S.Narayana, Principal, Nalanda Institute of P.G Studies, Sattenapalli for their valuable suggestion during my research study. I wish to record my sincere thanks to my colleagues P.S.Chokka Babu and Lingam, Mrs.Nagamani, Mahe Ms.Ch.Hyma, and to D.Sudhir my wife Ms.Tasleem Jabeen

Smt.P.Lakshmi Latha and my children Gurudarsan and Deepthi Nayani, who cooperated in completing this work. My thanks are due to C.Roop Kumar, P.Madhavi and K.Kundan Kumar who have helped in collecting the data, and Mr.K.L.Koteswara Rao for his skillful typing of the thesis.

Signature of the scholar Name : P.Guru Prasad En.No : 4090601818 Place:

Date:

CERTIFICATE
Certified that the dissertation “Credit facilities for Small and Medium Enterprises” is a record of research work done by Mr.P.Guru Prasad during the period of his study under my guidance and that the dissertation has not

previously formed the basis for the award of any degree, diploma, associate ship, fellow ship or similar other titles and that it is an independent work done by him.

Signature of the Guide Name : Dr.N.Chandra Sekhara Rao
Head, Dept of Commerce, Post Graduate Center P.B.Siddartha College of Arts & Science Vijayawada, Andhra Pradesh.

Place: Date:

CONTENTS
Chapt er Acknowledgement List of Tables List of Diagrams List of Appendices 1 INTRODUCTION (i) (ii) (iii) (iv) (v) (vi) (vii) 2 Need for the Study Objective of the Study Review of Literature Hypothesis Limitations of the Study Sample, Source and Methodology Chapterization 16 Particulars P age No. I II IV VI 1

Credit - The lifeline of the business Indian and Asian Prospective of SMEs, The Development of SMEs in India, The contribution of SMEs to Indian Economy, The Problems of SMEs, and The Emerging trends in SMEs, Common characteristics of SMEs. Credit Facilities for SMEs, SME Promoting Agencies, Various credit schemes available to SME, Credit the life line of the business, Innovative Strategies to finance SMEs, Recent developments, The List of Key Financial Institutions, State Bank, Bank of Baroda & Andhra Bank.

3 4

Analysis and Discussion Findings, Conclusions and Suggestions for further Research Bibliography Appendices

87 117

LIST OF TABLES
Table No Title of the Table Data on Small and Medium Industries in India in the last decade Small and Medium industries in Guntur District About Line of Activity About Form of organization Sources of Borrowed Capital Investment Outlay Working Capital Vs Fixed Assets Categories of Units Sources of Borrowed Capital Problems faced by the SMEs in obtaining the credit Agencies help in solving Financial Problems Problems experience in securing loans Utilization of the credit Types of Subsidy enjoyed by the SMEs Quick Disbursal of Credit from various commercial banks Behavior of Financial Agencies in granting loan Page No 26

Table- 2.1

Table- 2.2 Table- 3.1 Table- 3.2 Table- 3.3 Table- 3.4 Table- 3.5 Table- 3.6 Table- 3.7 Table- 3.8

36 89 90 91 92 93 94 95 96

Table- 3.9 Table- 3.10 Table- 3.11 Table- 3.12 Table- 3.13

97 98 99 100 101

Table- 3.14

102

Table No Table- 3.15 Table- 3.16 Table- 3.17

Title of the Table Amount Sanctioned Time taken for sanction Facilities provided by them to repay the loan Awareness of credit facilities given by government Amount that you looking from the Government Payback period opted by you Capacity Utilization Causes for under Utilization Awareness of SIDBI; SIDO; NSIC; SFC; NABARD Awareness of below Schemes Suggestions

Page No 103 104 105

Table- 3.18

106

Table- 3.19 Table- 3.20 Table- 3.21 Table- 3.22 Table- 3.23 Table- 3.24 Table- 3.25

107 108 109 110 111 112 113

LIST OF DIAGRAMS
Fig. No Title of the Diagram Data on Small and Medium Industries in India in the last decade About Line of Activity About Form of organization Sources of Borrowed Capital Investment Outlay Working Capital Vs Fixed Assets Categories of Units Sources of Borrowed Capital Problems faced by the SMEs in obtaining the credit Agencies help in solving Financial Problems Problems experience in securing loans Utilization of the credit Types of Subsidy enjoyed by the SMEs Quick Disbursal of Credit from various commercial banks Behavior of Financial Agencies in granting loan Amount Sanctioned Time taken for sanction Page No 26 89 90 91 92 93 94 95 96

Table- 2.1 Table- 3.1 Table- 3.2 Table- 3.3 Table- 3.4 Table- 3.5 Table- 3.6 Table- 3.7 Table- 3.8

Table- 3.9 Table- 3.10 Table- 3.11 Table- 3.12 Table- 3.13

97 98 99 100 101

Table- 3.14 Table- 3.15 Table- 3.16

102 103 104

Fig. No

Title of the Diagram Facilities provided by them to repay the loan Awareness of credit facilities given by government Amount that you looking from the Government Payback period opted by you Capacity Utilization Causes for under Utilization Awareness of SIDBI; SIDO; NSIC; SFC; NABARD Awareness of below Schemes Suggestions

Page No 105

Table- 3.17

Table- 3.18

106

Table- 3.19 Table- 3.20 Table- 3.21 Table- 3.22 Table- 3.23 Table- 3.24 Table- 3.25

107 108 109 110 111 112 113

CHAPTER – 1

INTRODUCTION

CHAPTER – 2

CREDIT – THE LIFE LINE OF THE BUSINESS

CHAPTER – 3

ANALYSIS AND DISCUSSION

CHAPTER – 4

FINDINGS, CONCLUSIONS AND SUGGESTIONS FOR FURTHER RESEARCH

BIBLIOGRAPHY

APPENDICES

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