“A STUDY ON MSME LOANS AND ADVANCES WITH SPECIAL

REFERENCE TO CANARA BANK -THRISSUR”

Dissertation submitted in partial fulfilment of the requirements for the
award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
OF
BANGALORE UNIVERSITY

By
ABHISHEK K P
REG NO: 17X8CMD035
Under the guidance of
DR. B LAKSHMA REDDY
(MCA,MCM,M.sc(IT),M.Phil,MBA,Ph.D)

SJES COLLEGE OF MANAGEMENT STUDIES,

MEDAHALLI,BANGLORE – 49
2018-2019
 DECLARATION BY THE STUDENT

I hereby declare that „A STUDY ON MSME LOANS AND ADVANCES WITH

SPECIAL REFERENCE TO CANARA BANK -THRISSUR” Is the result of
the project work carried out by me under the guidance of Prof: B. LAKSHMA
REDDY In partial fulfilment for the award of Master‟s degree in Business
Administration by Bangalore university.

I also declare that this project is the outcome of my own efforts and that it has not
been submitted to any other university or institute for the award of any other
degree or diploma or certificate.

Place: Bangalore Name: ABHISHEK K P

Date: Reg.No: 17X8CMD035

 GUIDE CERTIFICATE

This is to certify that Mr: ABHISHEK K P is a student of SJES COLLEGE OF

MANAGEMENT STUDIES, BANGALORE, has been prepared a dissertation
report titled on “A STUDY ON MSME LOANS AND ADVANCES WITH
SPECIAL REFERENCE TO CANARA BANK -THRISSUR” under the
guidance of Prof: LAKSHMA REDDY. This report is being submitted to the
department of management in partial fulfilment of the requirements for the award
of “MASTER OF BUSINESS ADMINISTRATION” BANGLORE
UNIVERSITY, during the academic year 2018-2019.

Place: BANGALORE Prof: B. LAKSHMA REDDY

Date: (Principal & Guide)
 ACKNOWLEDGEMENT
I take this opportunity to express my post-graduation to all those who extended their co-
operation and support during the course of this project.
This project is a product of the value insights, facts and experience, I had with various people. I
express my sincere thanks to our beloved principal „Dr.B.LAKSHMA REDDY‟, COLLEGE OF
MANAGEMENT STUDIES, BANGALORE. For providing me with the academic support and
his valuable guidance and advice, which helped me in completing the project work, in time, He
inspired me greatly to work on the project, his willingness to motivate me contributed
tremendously to my project.
I also express my sincere thanks to the, “CANARA BANK THRISSUR” for their constant
support and time of their busy schedules, for giving me an opportunity to gain fruitful experience
in their esteemed corporation.
I express my deep gratitude to my parents for their encouragement. I finally thank all those who
have helped me directly or indirectly inspired me in complete this project.

PLACE: BANGALORE NAME: ABHISHEK K P

DATE: REG NO: 17X8CMD035
 CANARA BANK
ABA PLAZA, KOORKANCHERRY
THRISSUR, KERALA 680007

CERTIFICATE

This is to certify that Mr ABHISHEK K P a student of SJES College of Management Studies,

Bangalore has carried out a project entitled “A STUDY ON MSME LOANS AND
ADVANCES WITH SPECIAL REFERENCE TO CANARA BANK” has been prepared by
him in partial fulfilment of the requirement for Degree of Master of Business Administration

We wish all the best for his future

Date Signature of the Manager

Place
 ABSTRACT
PURPOSE: The purpose of this study is to check the various MSME loans and advances provided
from CANARA bank and its benefits and advantages for various micro, small and medium
enterprises in Thrissur district of Kerala region. This study also concerned with the role of
various factors influencing loan approval and rejection and its benefits
METHODOLOGY: The study is designed as descriptive one based on both primary and secondary
data. The study is mainly based on primary data collected from Customers and employees of
Canara Bank at thrissur region by questionnaire. The tool used for analysis is simple
mathematical tool and statistical tool like percentage and average for data analysis.
FINDINGS: Total of 50 questionnaires has been distributed to the customers an bank employees
of canara bank at thrissur region. After analysing the data very efficiently, we find the benefits
and advantages of MSME loans.
RESEARCH LIMITATION: The study is limited to only Canara Bank employees and various
customers at Thrissur region.
 CONTENTS

SL NO. CHAPTERS PAGE NO.

1 INTRODUCTION 10 – 13

2 REVIEW OF LITERATURE 14 – 20

3 PROFILE OF THE ORGANIZATION 21 – 24

4 DATA ANALYSIS AND INTERPRETATION 25 – 47

5 FINDINGS, SUGGESTIONS AND 47– 52

CONCLUSIONS
 LIST OF TABLES
Figure TITLE Page no.
no.
1 Various products related to the SME finance 33

2 Profile of the Entrepreneur and Enterprise 44

 LIST OF FIGURES

igure TITLE Page no.

no.
1 Category of business 37

2 Age of client 38

3 Business required loan 38

4 Purpose of loan 39

5 Interest rate satisfactory level 40

6 Security preference 41

7 Time requirement for loan 42

8 Client repayment 42

9 Business expansion 43
 CHAPTER:-1
INTRODUCTION
 INTRODUCTION
Worldwide, the wind has been dynamical within the finance sector normally
and banking-investment sector specially. Such a panorama teaches that currently,
is that the time of cooperation instead of a contest, currently it‟s a time of
convergence instead of cutting every other‟s neck over customers and markets,
currently it‟s a time of consolidation instead of antagonism. India needs
prominence of tiny and medium enterprises for action its downside of low
economic process as developed nations.
To cure the general malady of lack of acceptable growth of Indian MSMEs –
small, tiny and Medium Enterprises, India desires many tiny pills like adequate
credit delivery to MSMEs, higher risk management, technological up gradation of
Banks clairvoyance. Public Sector Banks, attitudinal modification in Bankers then
on. Among them, the key downside of inadequate funding to MSMEs desires
associate degree and imperative attention. Having aforementioned this, it's
pertinent to say that Industrial Development Bank of India has achieved landmark
leads to the domain of small and medium enterprise funding and fulfilling their
credit needs time to time in varied forms like long run project finance, capital
finance, bill discounting etc.
However considering the amount of craving for credit facilities of Indian
tiny and medium enterprises, personal associate degree public sector banks in India
ought to compute a distinctive and innovative model of funding to the current
important sector (MSME) of Indian Economy. In today‟s dynamical world, retail
commerce, MSME funding, rural credit and overseas operations are the key growth
drivers for Indian industry. The scene has modified since the adoption of monetary
sector restructuring programme in 1991.
 The reform within the monetary sector in India beside the general second
generation economic reforms in Indian economy has remodelled the landscape of
industry and monetary establishments.

With the introduction of the reforms particularly in monetary sector and in

implementation of them resulted into the marked improvement within the
monetary health of the business banks measured in terms of capital adequacy,
profit, quality and provisioning for the uncertain losses.
The ray of hope is little associated with Enterprises (MSMEs) one that is a
rising, inevitable and profitable target marketplace for the financers‟ i.e. monetary
establishments and banks. However, that require not mean banks and monetary
establishments can back-up the social banking. Instead of being seen as directed
and philanthropic-like funding, such loaning ought to are currently additional
business driven.
On the contrary, the authors believe that each one the sources or market of
revenues haven't been non-existent however. The MSMEs sector is taken into
account to be associate degree untapped marketplace for monetary establishments
in India. It tend to simply ought to combat sure obstacles. The hurdles which
require to be removed are:-
1. Diminution of chances of skew returns from MSMEs by higher risk
management
2. Eradicate inconsistency within the data of MSMEs business. As an
example, entrepreneurs might possess additional info regarding the character and
characteristics of their product and processes than potential financiers.
3. Absence of social control and technical experience of intermediaries
whose role is to monitor corporations
4. Lack of international infrastructure and experience in SME funding
 IMPORTANCE OF THE STUDY

Micro, little and medium Enterprises (MSMEs) play a big role in social and economic
development of a rustic. MSMEs represent a crucial section of the Indian economy in terms of
their contribution to the country‟s industrial production, exports, employment and
entrepreneurial base. However, one amongst the best obstacles to the expansion and development
of MSMEs in industrialized and rising economies is that the access to formal finance. the govt of
Bharat has taken many measures to confirm continuous growth of MSMEs, however lack of
finance has caused tons of illness within the sector. Therefore, an endeavor has been created to
check the connection between Credit Flow by scheduled business Banks (SCBs) and Growth of
MSME sector in Bharat victimisation multivariate analysis.. The study proceeds with the
comparative analysis of the Credit Flow to MSMEs by Canara bank in thrissur.

NEED FOR THE STUDY

It explores the financial performance and successfulness of MSME strategy. It also

compares the results obtained from the Financial Institutions and the MSMEs. The
analysis checks the most in evaluating whether the MSME loan applications are the
Investments in Fixed Assets, Value of Collateral, Financial Ratios.
 CHAPTER-2

REVIEW OF LITERATURE
 REVIEW OF LITERATURE

The micro, little associated medium enterprise (MSME) sector has been
recognised as an engine of growth everywhere the globe. This sector is defined by
low investment demand, operational flexibility, location-wise quality and import
substitution. MSMEs are most popular in developing countries for the strategic
role they play in economic process and development through their contribution
within the creation of wealth, employment and financial gain generation
MSMEs give the economy with a continuous offer of ideas, skills and
innovations that promote entrepreneurship, competition and economical allocation
of scarce resources.
The MSME sector is a vital constituent of the Indian economy, because it
contributes eight per cent of the country‟s value (Singh, 2011), forty five per cent
of the factory-made output and fifty per cent of the exports. It provides
employment to 66 million individuals through twenty nine million enterprises This
sector is anticipated to come up with fifteen million jobs (Indian Industries and is
targeted to grow at fifteen per cent annually throughout the twelfth 5 Year arrange
The labour-to-capital magnitude relation and therefore the overall growth are
abundant higher in the MSME sector than within the large-scale business. The
contribution of this sector in terms of fostering entrepreneurship is additionally
well recognised. MSMEs are essential for the national objective of growth with
equity and inclusion .
Despite its importance, the most important bottleneck within the growth of
the MSME sector in Bharat is lack of adequate access to finance (Thampy, 2010).
According to the fourth All Bharat Census of MSMEs (reference amount 2006–
2007, completed throughout 2010–2011), solely five per cent of MSMEs had
access to institutional finance, whereas simply a pair of per cent were helped by
non-institutional finance (see Figure 1). An awfully little percentage of registered
MSMEs got money help from institutional sources, that is, 11.21 per cent, whereas
the image was abundant worse within the case of unregistered units, that is, 4.80
per cent (Government of Bharat, 2011).
Hence, self-finance is that the main supply of finance for MSMEs. The lack
of finance has hampered growth and caused illness within the sector, as 77,723
small and little units are declared sick by March 2010. Around forty eight per cent
entrepreneurs/MSMEs have known shortage of assets as a very important reason
for the illness of their units which might simply be correlative with different issues
like non- handiness of staple, lack of demand, power shortage, labour, promoting
and instrumentation issues, etc. (Confederation of Indian business, 2011).
One of the most reasons for conversion of healthy units to sick units is non-
availability of adequate capital for investment from the banking sector similarly as
from the capital market (Ray, 2007). money constraints two-faced by Indian
MSMEs are thanks to a mix of things that embrace policy, legal/regulatory
framework (in terms of recovery, economic condition and con- tract enforcement),
institutional weakness (absence of fine credit appraisal and risk
management/monitoring tool) and lack of reliable credit info on MSMEs.
 STATEMENT OF THE PROBLEM
The study offers an insight into the standards utilized by the money establishments
named Canara bank in thrissur to manage the loan applications of MSMEs and into the
standards and also the internal analysis ways utilized by the MSMEs for their self-
assessment of loan application therefore that it will not get rejected.
It conjointly compares the results obtained from the money establishments and
also the MSMEs. The analysis checks the most in evaluating the MSME loan applications
square measure the Investment in fastened Assets, price of Collateral, money Ratios, and
also the criteria that MSMEs bear in mind to be vital from the bank‟s purpose of read
embrace gain, money ratios, and growth prospects.

OBJECTIVE OF THE STUDY

 This study attempts to assets the success the successfulness of M & A

strategy in banking industry.
 To study the internal evaluation of projects by MSMEs seeking finance in
Thrissur.
 To study the evaluation process and evaluation criteria of projects by FIs
financing the MSMEs

SCOPE OF THE STUDY

This study is concerned to check the

 Business consolidation

 Successfulness of MSME strategy

 Financial performance 

SIGNIFICANCE OF THE STUDY
It explores the financial performance and successfulness of MSME strategy.
It also compares the results obtained from the Financial Institutions and the MSMEs. The
analysis checks the most in evaluating the SME loan applications are the
Investment in Fixed Assets, Value of Collateral, Financial Ratios.

HYPOTHESES

 Analyzing the Financial position

 Analyzing the annual report of the companies
 Promoting company towards its position to improve
 Developing the financial status of the company

SAMPLING

Since the performance evaluation of the study area is unknown the research has
decided to follow sampling technique for the present research work. There are 4
respondent are selected for the study using convenient sampling technique The sample
size is decided after considering the financial position and time factor.

TOOLS FOR DATA COLLECTION

The study required the collection of the information from the both primary and
secondary which collected and analysed to come to a suitable conclusion and
interpretation.
The data has been collected both from the primary sources as well as from the
secondary sources.
1. Sources of primary data
 Primary data is original in nature. Primary data is the main source of data, which is
mainly collected through observation, survey, and interview from various organizations
in mutual funds industry.
The data is collected through personal interview with the managers of the financial
department and accountant of the company.
The primary data has been collected from the information provided by the
company and through consultation with various departmental heads and also through
observation.
2. Sources of secondary data
Secondary data are static that already exist. Those in existence or some other
purpose and they have been gathered not for immediate use.
This may be desired as those data that have been compiled by some agency other
than the user.
The secondary data has been collected from various online sources.
The data has been collected from:
 Company website
 Internet
 Journals
 Annual reports
 Company manuals

DATA ANALYSIS
Primary data and secondary data which were collected are clearly compiled,
classified and explained trough flowcharts, diagrams and illustrations, tables and graphs
to come to conclusions. Interferences are drawn from the findings & by those findings
suggestions have been presented.
The tools used for data analysis are as follows:
 Tables
 Diagrams
 LIMITATIONS OF THE STUDY

Research is always subject to inherent limitations. Following are the

limitation of the study,

 The major limitation of the project is the time frame. The analysis is just for one
year and one year is too less period to judge the effect.
 The analysis is based on various ratios hence all the limitations of the ratio
analysis become a part of the limitations of the study.
 Whole of the analysis is based on the balance sheets and profit and loss accounts,
which is a secondary data. Hence it suffers from being very reliable.

SCHEME OF THE STUDY

The study is set out of five chapters. The first chapter contains a description
of introduction, statement, objectives, scope, significance, research methodology
adopted and limitation of the study. The second chapter presents a review of
literature. The chapter three provides the case context. The forth chapter includes
data analysis and interpretation. Chapter five is the concluding chapter of the
study. It draws on the major findings and concludes within a few suggestions.
 CHAPTER: 3
PROFILE OF THE SELECTED ORGANIZATION
 CANARA BANK

The Canara Bank is one of the largest public sector banks owned by the
Government of India. It is headquartered in Bengaluru. It was established at
Mangalore in 1906 by Ammembal Subba Rao Pai. It is one of the oldest public
sector banks in the country. The government nationalized the bank in 1969. As of
30 October 2017, the bank had a network of 6639 branches and more than 10600
ATMs spread across all over India. The bank also has offices abroad in London,
Hong Kong, Moscow, Shanghai, Doha, Bahrain, South Africa, Dubai, Tanzania
and New York.
Widely known for customer centricity, Canara Bank was founded by Shri
Ammembal Subba Rao Pai, a great visionary and philanthropist, in July 1906, at
Mangalore, then a small port town in Karnataka. The Bank has gone through the
various phases of its growth trajectory over hundred years of its existence. Growth
of Canara Bank was phenomenal, especially after nationalization in the year 1969,
attaining the status of a national level player in terms of geographical reach and -
Bank. In June 2006, the Bank completed a century of operation in the Indian -
banking industry. The eventful journey of the Bank has been characterized by
several memorable milestones.

Ammembal Subba Rao Pai, a philanthropist, established the Canara Hindu

Permanent Fund in Mangalore, India, on 1 July 1906. The bank changed its name
to Canara Bank Limited in 1910 when it incorporated.

Canara Bank's first acquisition took place in 1961 when it acquired Bank of
Kerala. This had been founded in September 1944 and at the time of its acquisition
on 20 May 1961 had three branches. The second bank that Canara Bank acquired
was Seasia Midland Bank (Alleppey), which had been established on 26 July 1930
and had seven branches at the time of its takeover.

In 1958, the Reserve Bank of India had ordered Canara Bank to acquire G.
Raghumathmul Bank, in Hyderabad. This bank had been established in 1870, and
had converted to a limited company in 1925. At the time of the acquisition G.
Raghumathmul Bank had five branches. The merger took effect in 1961. Later in
1961, Canara Bank acquired Trivandrum Permanent Bank. This had been founded
on 7 February 1899 and had 14 branches at the time of the merger.

Next, Canara Bank acquired four banks in 1963: the Sree Poornathrayeesa Vilasam
Bank, Thrippunithura, Arnad Bank, Tiruchirapalli, Cochin Commercial Bank,
Cochin, and Pandyan Bank, Madurai. Sree Poornathrayeesa Vilasam Bank had
been established on 21 February 1923 and at the time of its acquisition it had 14
branches. Arnad Bank had been established on 23 December 1942 and at the time
of its acquisition had only one branch. Cochin Commercial Bank had been
established on 3 January 1936, and at the time of its acquisition had 13 branches.

The Government of India nationalised Canara Bank, along with 13 other major
commercial banks of India, on 19 July 1969. In 1976, Canara Bank inaugurated its
1000th branch. In 1985, Canara Bank acquired Lakshmi Commercial Bank in a
rescue. This brought Canara Bank some 230 branches in northern India.

In 1996, Canara Bank became the first Indian Bank to get ISO certification for
"Total Branch Banking" for its Seshadripuram branch in Bangalore. Canara Bank
has now stopped opting for ISO certification of branches.
Canara Bank established its international division in 1976. In 1983, Canara Bank
opened its first overseas office, a branch in London. Two years later, Canara Bank
established a subsidiary in Hong Kong, Indo Hong Kong International Finance. In
2008-9, Canara Bank opened its third foreign operation, this one a branch in
Shanghai. Later Canara Bank established a branch each in Leicester and Bahrain,
and converted its Hong Kong subsidiary into a branch. It also has a representative
office in Sharjah.

Together with State Bank of India, Canara Bank established a joint venture in
Moscow, Commercial Bank of India LLC.

Canara Bank provides the general manager and the branch managers for Al
Razouki Intl Exchange Co (LLC), which a number of business leaders and non-
resident Indians (NRIs) established in 1981 in the United Arab Emirates to
facilitate remittances to India by tourists and NRIs.

Since 1983, Canara Bank has been responsible for the management of Eastern
Exchange Co. WLL, Doha, Qatar, which Abdul Rahman M.M. Al Muftah
established in 1979.

Canara Bank opened its seventh overseas branch in New York, United States on 10
June 2014.
 CHAPTER: 4
PERFORMANCE EVALUATION OF MSME LOANS
PERFORMANCE EVALUATION OF MSME LOANS

Canara Bank has well outlined policy for disposal to small, little & Medium
Enterprises (MSMEs) with inbuilt concessions and incentives. The operative a part
of the MSME policy for the year 2013-14 is as under:
• The Bank shall still lay stress on finance small, little & Medium Enterprises and
our existing MSME credit portfolio shall be enlarged with special focus on
disposal to small Enterprises.
• Following recommendations of High Level Task Force accepted by Hon‟ble
Prime Minister on small, little & Medium Enterprises (MSME) Sector are going to
be implemented:
_ accomplishment of two hundredth year on year growth in credit to small and tiny
Enterprises.
_ The share of small Enterprises in small Enterprises disposal be enlarged to hour
by fast disposal to small Enterprises.
_ 10% annual growth in variety of accounts of advances to small Enterprises.

• The Federal Reserve Bank of Republic of India tips on finance to MSMEs shall
still be followed and be incorporated in varied schemes for finance MSMEs.
These tips on timely enabling of MSME applications, margin, rate of interest,
collateral security, etc shall still be adhered to.
• The Bank envisages MSEs credit growth through monetary inclusion by approach
of collateral free and while not third party guarantee disposal by leverage
CGTMSE.
As per tally obligatory tips, loans upto Rs.10- 100000 to small and tiny
Enterprises, that square measure eligible for coverage beneath Credit Guarantee
theme of CGTMSE, square measure to be thought of on deserves while not
acceptive any collateral security / third party guarantee and every one such cases
should be got coated beneath guarantee theme of CGTMSE. Further, as per Banks
tips, MSME proposals up to Rs.100 lakh, that square measure eligible beneath
Credit Guarantee theme
of CGTMSE, square measure to be sanctioned by the competent authority while
not taking any collateral security/third party guarantee.
• Disposal of Loan Applications among the prescribed cut-off date is to be ensured
as
under:
Upto Rs. a pair of 100000 a pair of Weeks
Above Rs.2 100000 & upto Rs.50 100000 four weeks
Above Rs.50 100000 & upto Rs.100 100000 5-6 weeks
Above Rs.100 100000 & upto Rs.100 large integer 6-7 weeks
Above Rs.100 large integer 8-9 weeks
• The Bank has approved Credit Rating agencies like SMERA, CRISIL, ICRA,
ONICRA and masonry for rating of the MSME units and is extending
interest concession of zero.50% for initial 2 rating grades and zero.25% to 3rd
rating
grade only. However, it's to be ensured that at a time just one concession can
be allowable to the borrowers having sensible rating of SMERA/
CRISIL/ICRA/ONICRA/BRICKWORK.
• just in case of MSEs (to new further on existing cases) wherever implementation
of project is current, liberal moratorium on term loan and dealing capital shall
be extended by together with interest additionally, throughout initial 6-12 months
of operation on case to case basis by the enabling authorities. As such, interest
debited during this era be treated as long run funding of project and instalments
once moratorium amount shall be fastened consequently.
• Special concession to girls in hand enterprises are extended in margin
requirement and interest rates, no matter to the quantity of loan.
• District-wise project profiles – With a read to obviate the requirement for TEV
studies
for each project, common industrial activities prevailing in a very district square
measure being
identified at Lead Districts of the Bank for preparation of normal project reports
for loans up to Rs. 1 crore. Wherever, these commonplace Project Profiles are
approved by the DLRC within the Lead Districts of the Bank, the Techno –
Economic
Viability Study isn't needed. equally project profiles approved by DLRC‟s in
other districts, wherever we have a tendency to don't seem to be banking company,
shall be adopted for finance and
TEV reports won't be needed.
• The Bank is finance Artisans, Craftsmen, Village Industries and
Industries falling beneath KVIC schemes like PMEGP (Prime Minister
Employment Generation Programme), Interest grant Eligibility Certificate cases
etc. These loans square measure to be classified beneath advances to small
Enterprises with none investment ceiling. the tiny non – farm sector units in rural
areas, minorities, SC/ST and different special teams square measure being
supported in terms of GOI/RBI policy and shall still be attention.
• spare lending Powers are unconditional to make sure quicker disposal of MSMEs
loan applications:
i) Branch Managers are unconditional with higher powers to directly lose proposals
at branch level for finance small Enterprises (manufacturing/service) coated
beneath CGTSME theme as follows:
_ Scale –II Managers unconditional with the powers of Scale-III Managers.
_ Scale –III Managers unconditional with one hundred and twenty fifth of their
unconditional lending powers.
(ii) Incumbents of all the specialised MSME branches could think about
takeover proposals to the extent of fifty of their regular lending powers in
case of MSME advances while not getting previous approval from future
higher authority.
• at the moment there's a system of on-line filing of loan applications by MSEs on
Bank‟s web site. The Bank is providing two hundredth concession in
processing/upfront fee, in case such applications received on-line.
• Simplified application for credit demand up to Rs. 50
Lakh for small Enterprises (Manufacturing & Service sector) has been made
obtainable at the side of the check list of documents. Loans Applications on top of
Rs. fifty 100000 are obtainable at the side of check list.
• Bank‟s tips give for extending money Credit facilities against combined
level of stocks and book debts. The sundry creditors square measure lacy against
the sundry debtors and surplus assets, if any, square measure thought of for
calculation of DP once providing for adequate margin. Similarly, surplus sundry
Creditors can be reduced from the worth of stock.
• The Bank is providing capital through simplified flip over methodology
(Nayak Committee) i.e. providing two hundredth of the flip over as bank finance
with five-hitter promoter‟s contributions to MSEs units (Manufacturing and
Service) for credit requirement up to Rs. 500 lakh. but just in case of Retail Trade
this limit is restricted up to Rs. 200 lakh. The Quarterly watching System (QMS)
forms have been simplified and Current magnitude relation norms relaxed to
one.25:1.
• The Bank has adopted Cluster based mostly disposal approach for MSME sector.
Under
Cluster based mostly approach, Bank has adopted fifty five MSME clusters and
additional square measure to
be adopted within the years to return. stress are going to be created for
customisation of
cluster specific schemes for enhancing MSME advances. to market cluster
based disposal approach, Bank can give funding to MSMEs, situated
in these clusters by approach of mapping of 1 of its specialised MSME branches
with these clusters. just in case of no MSME specialised branch is offered at the
center, endeavor are going to be created to covert one among its branches as
MSME
specialised branch at such centers wherever we have a tendency to square measure
banking company.
• The Bank has fifty nine specialised MSME branches & 465 MSME focus
branches to
support finance to MSME units. These branches shall be developed as centres
growth through MSME advances particularly advances to small Enterprises.
• The Bank has adopted the Code of Bank‟s commitment to small and little
Enterprises of Banking Code and Standards Board of Asian country (BCSBI).
• For distinguishing sick units in MSE sector, Bank has adopted following revised
definition of MSEs sick units:
A small or tiny Enterprise (as outlined within the MSMED Act 2006) are going to
be aforesaid to
have become Sick, if Any of the borrowal account of the enterprise remains
terrorist group for 3 months or a lot of there's erosion within the internet price
because of accumulated losses to the extent
of 50% of its internet price throughout the previous accounting year.
• The Bank has enforced tally tips of Debt Restructuring Mechanism for
MSMEs, to make sure timely and clear mechanism for restructuring of debts
of potentially viable units.
• Bank has conjointly started Rehabilitation-cum-Care Centers at Circle Offices to
guide
the MSME units on the matters regarding their money wants and therefore the
facilities available from the Banks/Govt./RBI.
• For objective deciding, Credit marking Models for loans up to Rs. 50 lakh
have been launched and created applicable in the slightest degree branches. These
Credit marking Models are placed on the server of the bank and on the market on
Finacle with link as PNB Score SME and PNB Score. These models i.e. PNB
Score SME or PNB Score, as applicable, ar getting used for marking of eligible
MSME accounts.
To track delinquency within the scored accounts, score card IDs ar essentially
being fed in MIS (V) details of accounts opened in CBS.
• The Bank is providing application following system to its MSME borrowers. All
MSME applications received with needed documents, ar being entered in
Credit Proposal following System (CPTS) that mechanically generate associate
degreeacknowledgement comprising of distinctive application serial range, user ID
andpassword for following the applying.
• to market advances to small Enterprises, there's associate degree scheme for
branches for funding to small Enterprises. prime 3 branches in the slightest degree
Asian country leveland one prime playing branch from every circle ar suggested
beneath thescheme.
• MSME campaigns ar being conducted each month within the cluster of six to
eightbranches in each circle and report of an equivalent is being sent to tally on
quarterlybasis. The progress of those campaigns is additionally being updated on
Bank‟s web siteon quarterly basis.
TYPE OF FACILITIES :
MSME Units may be granted a variety of credit facilities for their different needs
which will include the
following:
(a) Term Loan / Demand loan / Deferred Payment Guarantee:
For acquisition of capital goods (including second hand), fixed assets, vehicles,
plant & machinery,
purchase of land, construction of buildings etc.
(b) Working Capital by way of Cash Credit, Overdraft etc. for
1. Purchase of raw material, components, stores, spares and maintenance of stock
of these items at minimum level and stock in process and finished goods.
2. Finance against receivables including receipted challans / invoices.
3. Meeting marketing expenses where the units have to incur large-scale
expenditure towards marketing of their products.
(c) Bills Purchase / Discounting under L/C or outside L/C.
(d) Letter of Credit on sight/usance basis for purchase of raw material/capital
goods
(e) Bank Guarantees for Performance, Advance Payment, Tender Money Security
Deposit, Guarantees for
getting orders, for procurement of raw materials etc.
(f) New scheme for financing to Micro, Small and Medium Enterprises-(Loan limit
up to Rs. 1.00crore) :
Bank has formulated a new scheme for financing to MSME enterprises.
The scheme is available to cover credit facilities up to Rs. 100.00 lakhs to all
eligible MSMEs
(Manufacturing & Services) as defined under MSMED Act, 2006.However,
following categories will not be eligible under the scheme :
i) Retail Trade,
ii) Educational Institutes,
iii) SHGs,
iv) Hotel/Motel and lodges.
The scheme offers relaxation in margin, interest rate, rating and other charges for
MSME entrepreneurs.

ASSESSMENT OF WORKING CAPITAL LIMITS: FOR ENTERPRENEURS

OTHER THEN COVERED UNDER SCHEME
Limits up to Rs. 5.00crore :
The credit requirements of village industries, Micro Enterprises, Small Enterprises
and Medium Enterprises having aggregate fund based working capital limits up to
Rs.5.00crore from the banking system, will be computed on the basis of a
minimum of 20 % of their acceptable projected annual turnover for new as well as
existing units as per Committee recommendations.

Limits above Rs. 5.00crore :

For assessment of Working Capital requirements beyond Rs. 5crore of Small Scale
Industrial Units / Medium Enterprises, the guidelines on PBF method of lending
will be followed.
Techno-economic viability study: The guidelines of bank on TEV study will
continue to apply.
Composite Loan Scheme :
• As per RBI guidelines, Credit assistance to artisans, village and cottage industries
and other Small
Industrial unit‟s up to Rs.100.00lacs for equipment finance or working capital or
both should be considered
as Composite Term Loan.
• This will enable majority of Micro and Small Enterprises to avail loans from a
single window eliminating
the need for borrowing term loan from SFCs and working capital from banks.
• This will also facilitate to sign one set of documents only instead of signing
facility-wise separate
documents.

Customer eligibility to apply for SME Loan

Credit, whether secured or unsecured, must not be made available to a customer

whether is a lack an understanding of the customer or the customer or the
customer‟s business. The Bank will not extend credit products/ facilities which are
inappropriate to the nature and scale of the customer‟s business. The customer
should:
Have the age of 18 years or above.
Must have business aptitude and an account with valid trade license.
Understand the facilities and the associated risks.
Have the authority to enter into the facility.
The facility should be suitable for the customer needs.
The facility should not be speculative.
The size and structure of facilities is such that up- streaming or down-streaming
of funds to the owners or associate companies are not facilitated.
Borrower verification and selection of the clients
Before giving the SME loan Bank for fulfilling requirements of Know Your
Customer (KYC) to Verify of the individual or corporate entity.
Identification of the individual or corporate entity must be formally established
through legal documentation.
The borrower must be legally capable of entering a contractual credit relationship
and providing a charge over any asset in any from taken as security for a loan.
Bank must focus and priority that sectors of Small enterprises which are supposed
to create employment opportunities and contribution to economic and social
uplift as a whole.
The owner must have entrepreneurship quality.
The owner must be of integrity.

Various products related to the SME finance

Ø Term Loan (Industrial Fixed Asset –Long & Midterm)

Ø Capitalized Expenditure (Long &Mid Term)

Ø Converted (Long & Mid Term)

Ø Short/Mid Term Loan (Work Order)

Ø Short Term Loan (Import)

Ø Short Term loan (Procurement of Merchandise)

Ø Short/Mid Term Loan(Micro Credit)

Ø Short/Mid Term Loan (Purchase of Office

Appliances/Office renovation)

Ø Short/Mid Term Loan (Financial Obligation)

Ø Short Term Loan (Delivery Order)

Ø Short Term Loan (Converted)

Ø Cash Credit (CC) Hypo

Ø CC Pledge
Ø Export Cash Credit(Hypothecation)
Ø Export Cash Credit (pledge)
Ø SOD (Industrial)
Ø SOD (Contractors &Suppliers)
Ø SOD (CDR)
Ø SOD (Cheques & Pay Order)
Ø Loan against Import Merchandise(LIM)
Table 1: Various products related to the SME finance
Women Entrepreneurs: The management of the Bank will introduce different
loans schemes with different brand names for women entrepreneurs in order tom
encourage and develop women participation in business. The management will
take steps necessary for proper publicity of the schemes. Women entrepreneurs
can easily apply for loan through branches.

Different categories of business

In studies of survey analysis, it was found that 55% of the clients are involved on
trading business on the basis of banks enterprise scenario. Almost 30% sample
clients are carrying out manufacturing business in our country and few are
engaged in service business
Age Limit of the Client
According to the survey, most of the clients are carrying out business whose ages
are among 30 to 50. It has been found that few clients are on above 50. SME
believes that in studies of our age limit in this country it will be very risky to
provide loans above 60 aged clients

Business required any loans

78% clients demand small loans whether it can develop their own business, which
found in the survey. Few clients think that to take loan might be risky to carry out
the business.
Purpose of Loans

According to the survey, it can analyze that most clients want loan to meet their
working capital requirements. In our country most clients carry out trading
business rather than manufacturing business. Few clients demand manufacturing
loans to purchase of fixed assets. In this case clients require medium loans like 15-
30 lacs for purchasing fixed assets.

Rate of Interest

52% clients are satisfied on existing interest rate by comparing with other banks.
Most clients prefer reducing balance method that Canara Bank proportion in favor
of clients. 43% clients are not happy to get this loan with charged interest rate.
They think interest rate should be reduced. 5% clients disagreed to comment on
this regard. SME believe that they do not have any hidden costs and free from
bribes. It is a fresh organization whether clients can have for loans.
Duration of Loans
In spite of analysis, most clients want more duration or time to repay the SME
loan. More time means less amount of money to repay the loan whether clients
think beneficial of it. Very few clients demand short study or single payment loan
to repay.

Security Preference
According to the survey, it can imply that 75% of the clients want to provide
deposit hypothecation of business assets against loan which also they feel less
risky. If the clients go for big amount then they have to deposit registered or
equitable mortgage against loan which they feel too much risky. But land
property sometimes carry triples amount of security from loan amount. So it they
fail then they might sell their property.
Clients want fast service

According to the survey, it can be said that 55% of the clients avail the loan within
15 days. In studies of getting the loan clients buy the raw materials or order
suppliers. A good number of sample clients will be satisfied if
they get loan with 20-23 days. They are general clients and they do not have hurry
to carry out business. Very few clients opine more than 25 days because in this
case clients deposits land security. So automatically it
takes more time to avail the loan.
Repay Monthly Installment

Majorities of clients are happy to repay the loan by equal monthly installment.
Clients know when where and how they will repay the money. So there is not
botheration between clients and CRO.
Business Expansion from Trading to Manufacturing

In studies of survey, it has found that almost 55% of clients interested to expand
the business from trading to manufacturing. Purpose of the loan is economic
development in our country, which might divert the clients mind after having the
loan expansion. 30 clients are not interested to expand their business from trading
to manufacturing. 15% did not answer this question.
Profile of the Entrepreneur and Enterprise

Every MSME client of CANARA Bank Ltd, Branch had to fulfill a certain criteria
before getting the approval of enjoying their SME facilities. Mr. Md. Raj Kumar
also had to fulfill those criteria before getting his loan. The following are a
snapshot of his personal and professional profile:

Name of Entrepreneur Mr. Raj Kumar

Father‟s Name Kuddus
Mother‟s Name Ramani
Name of Business Organization M/S KONA FashionHouse
Type of Business Block Print, Embroidery and
Tailoring

Date of Established 25.11.2017

Constitution Proprietorship

Accounting Opening Date 11.09.2017

Introduce by Md. Mokhlesur Rahman
Starting Capital 5 lac

Present Capital 108.55 lac

Table 2 : Profile of the Entrepreneur and Enterprise

 Mr. Raj Kumar brought up lower middle class family where all family
members were fight to the poverty. His father Mr. Kuddus was a farmer. His father
was always being in extreme exhaustion for fulfilled of his family‟s basis needs.
That time Mr Raj Kumar and and his family were stay in the Netrokona. Mr
Raj Kumar was a elder brother among five brother and sister. So automatically
he had a lot of responsibility from childhood period.
He always saw his father and mother were tolerating lots Raj Kumar was
always thought he must do something for his family. In that situation it was
difficult to continue of his study. For helped his family and continued his study he
was teaching to the village school students, that time he was only 15 years old.
Then after a long hardship Mr. Raj Kumar passed S.S.C in 1990 and H.S.C in
1993. He was thinking about his family father, mother his sisters and little brother
also their previous privation situation.
All practical through was work as a real motivation for him to do great
things in life. The whole negative situation changed into a positive force and it
was his fortitude and self-esteem that he accepted the challenge thrown to him
from time with a smile.
Mr. Raj Kumar decided he expend But he was being extreme exhaustion to
delivery all order for deficiency of money. One day he talked with Md.
Mokhlesur Rahman about his problem he is owner of Siam Offset Press which is
nearest shop of the Kona Fashion. In that time Md. Mokhlesur Rahman said him
about the Canara Bank‟s MSME loan.
Which maily created for helping the entrepreneur? Mr. Raj Kumar had
absolutely no idea about the matter and he thought if he wants to know about
the matter he should personally visit the bank which is providing the scheme.
He took the suggestion seriously and visited CANARA Bank and firstly he opened
his own account and then spoke about the offer which they are providing
(MSME Loan). Bank‟s officer told him which paper will be submitted for loan and
which types of requirement are should be fulfill. Then he applies for loan with
an application. Then in 2017 March sanction his first MSME loan.
 CHAPTER: 5
FINDINGS, CONCLUSIONS AND SUGGESTIONS
 CONCLUSION
The study that has been done ideally makes mindfulness on the way This is
an entrenched proclamation that viable circumstances dependably contrast from
hypothetical clarification As an administration bank Canara Bank is attempting it's
best to stretch out their support of general society. An extremely working condition
was staying in the Canara Bank, Thrissur Branch. Amid the examination time
frame, it was discovered that the Thrissur Branch gave a wide range of business
managing an account administrations to its clients.

Remote Exchange Department rendering every one of the administrations

identified with global exchange and settlement. Advances and advances
investigations credit proposition and dispense credit if proposition is sound
.General keeping money is occupied with money receipt and installment, check
clearing, neighborhood settlement and so forth. The present MSME managing of
Canara Bank LTD is similarly satisfied.& by expanding their branches. Canara
Bank can exhaust their MSME benefit everywhere throughout the nation.

Credit is an essential component for development and maintainability of

MSMEs. Thusly, there is an open door for banks to upgrade credits to MSMEs in
light of the fact that in financing expansive corporate, the hazard is concentrated
among couple of units, while if there should arise an occurrence of same measure
of advances to the MSME area, the hazard would be spread over countless.
Appropriate foundation is required for the MSME area to encourage access,
accessibility and utilization of assets which would give MSMEs an equivalent
stage to MSMEs an equivalent stage to contend, oversee and continue in the period
of globalization.
 FINDINGS
MSMEs are habitually hailed as the foundation of the economy for their
huge commitment in the financial development and improvement. It is the need of
great importance that administration, banks and MSMEs should come up together
to improve the development of this part. Along these lines, a few measures have
been proposed for the equivalent:

The legislature ought to guarantee viable execution of strategies for late instalment
punishment to extensive undertakings and special acquirement by/from MSMEs.
The Agency Model can be used to give money related help to MSMEs in country
zones with the assistance of Micro Financing Institutions, Regional Rural Banks,
Co-agent Societies and Post Offices.

Government and money related foundations ought to give different motivating

forces, for example, extract obligation and expense exceptions, sponsored loan fee,
crude material at legitimized cost, help for R&D and innovation up degree, and so
on., for advancement and improvement of MSMEs. Other than money related
motivators, satisfactory preparing is additionally required for MSMEs to instill the
soul of polished skill in the executives and organization of business which thusly
would assist them with sustaining their activities over the long haul.

MSMEs must guarantee straightforwardness in money related information and give

a wide range of data required by the banks to avail credit. Except if reasonable
point by point data on little firms is accessible, banks would delay to go for broke.
 SUGGESTIONS

The area attempts to show certain recommendations acquired after the examination
of the investigation. The recommendations rose up out of the perceptions made on
the execution places of different smse reserves taken for the investigation.

Banks must be urged to open increasingly specific SME branches to give money
related help and different administrations for commencement, task and restoration

of MSMEs.

The group approach is a viable measure for all round improvement of the MSME
division and has conveyed astounding outcomes (SME Times News Bureau,
2012). Subsequently, bunch advancement ought to be stressed to decrease the
exorbitant expenses borne by MSMEs which would expand productivity and
diminish monetary reliance of MSMEs on outside fund.

Albeit medium endeavors are incorporated into the MSME area, the credit to
medium undertakings is excluded under the need part. To expand the stream of
credit to medium undertakings, these ought to be incorporated into the domain of
the PSAs. As far as possible for credit to MSMEs under the need

segment ought to likewise be settled.

Banks need to assume a key job in checking assets of MSMEs at standard interims
to guarantee great wellbeing of the endeavors.
The mindfulness dimension of MSMEs with respect to different administrations
like money related plans, promoting help, preparing and consultancy (on issues
like quality, innovation, the executives, evaluation), and so on., given by focal and
state governments, budgetary organizations and offices ought to be improved

It is seen that according to Sharpe execution estimation for the value support profit
conspire, the value finance development is lingering behind. Hence it is
encouraged to re-sort out the decent reserve profit and adjusted store development
speculation to make more returns.

In the event of value finance development, adjusted reserve profit may consider to
re-compose it's speculation as it is lingering a long ways behind when contrasted
with this portfolio to take the benefit of more comes back from the private part.

In the value finance profit examination, the reasonable reserve is put in the second
position, in this way this store might be considered for reproduction of the venture
that exploits more comes back from the private area.

All the value support development in contrast with alternate assets isn't fitting for
speculation according to the examination been made. Likewise the speculators are
encouraged to put resources into the assets in any value profit shared store.
 BIBLIOGRAPHY

News papers: -
The Economic Times
Business line
Magazines:- Business World
India Today
Web sites:

www.canaramsme.com