1.

i.

SME Policy
Preamble
Micro, Small & Medium Enterprises sector constitute the growth engine of the countrys economy It account for
almost 45% of manufacturing output, 95% of the number of industrial unit, 40% of the export and provide employment
to almost 60 million people making it largest source of employment after the agriculture sector. The MSMEs lead to
entrepreneurial development and diversification of the industrial sector, and also provide depth to industrial base of
the economy. More employment opportunities are generated and the capital cost per employee is low. With the
Services sector dominating the MSME, and MNCs outsourcing their various requirements to Indian service providers,
the scope for MSME finance has increased even further.

ii.

There is also a more favourable environment now with the Govt. committed to give fillip to this
sector through infrastructure development, skill set development/entrepreneurship development, technology
upgradation etc,. MSMEs have been quite enthusiastic after the dismantling of the textiles quota. Other sectors like IT
and IT-enabled services, bio-tech, footwear etc,. have also shown promising potential. With the deregulation of the
financial sector, the general ability of the banks to service the credit requirements of the MSME sector depends on
the underlying transaction costs, efficient recovery processes and available security. There is an immediate need for
the banks generally to focus on credit and finance requirements of MSMEs. Although the banks are allowed to fix
their own targets for funding MSMEs they are advised to achieve a 20% year on year growth in credit to micro
and small enterprises and a 10% annual growth in the number of micro enterprise accounts. Also, Credit risk in the
MSME sector is widely dispersed and Banks get better yield from MSME advances as against the traditional
advances where the spread is getting gradually reduced. The MSME clientele base could also be utilised by the
Branches to step-up cross selling of various other products including technology-enabled products.

iii.

The MSMED Act 2006, which came into effect from 02/10/2006, aims to remove the several
bottlenecks faced by the MSME sector, particularly the Micro Enterprises, such as :

competition from both domestic and multi-national? companies:

inadequate access to finance due to lack of? financial information and non-formal
business practices

lack of access to private equity and venture? capital;

lack of access to inter-state and international? markets;

limited access to secondary market instruments;?

fragmented markets in respect of their inputs as well as products;

vulnerability to market fluctuations

limited access to technology and product? innovations;

lack of awareness of global best practices

considerable delays in the settlement of???? dues/payment of bills by the large scale
buyers;

iv.

The role of Banks, in general, has become very important in the above context and, Bank of India
formulated its MSME Policy in October 2005, which was duly approved by the Banks Board of Directors on
28/10/2005 and reviewed annually, the last review done on 27-07-2009 encompassing the various schemes and
norms within the overall ambit of the Govt./RBI directives. The MSME sectors demands were comprehensively taken
care of by the Bank through several initiatives such as :

Single Window dispensation,

Quick decision with least Turnaround Time through? specially constituted MSME Cells,
and above all,

Better service.
Cluster-based Schemes are also on the list of the Banks initiatives.
The Bank prioritised the following more particularly :-

Cluster-based Schemes are also on the list of the Banks initiatives. The Bank prioritised the following more
particularly :-

v.

Provision of timely and adequate credit to the? MSMEs,

Encouraging Technology Up gradation, for better? quality and competitiveness of their

product(s), and

Proactively detecting sick and viable units in time so as to nurse them back to health
through appropriate re-structuring.

Financing of Clusters with adequate and? concessionary Bank finance on liberal terms
in several pockets for specified activities concentrated in these pockets, which would
result in reducing transaction cost and greater economies of scale.

The Banks MSME Policy covered all credit-related exposures (both Fund-Based and Non-Fund
Based) and the policy guidelines relating to Credit Risk Management, Credit Delivery, Credit
Monitoring and Recovery were made uniformly applicable to the MSME Policy as well to the extent
these have not been modified under the Banks MSME Policy. In case of modifications, the
modified provisions of the MSME Policy would prevail over the other Policy Guidelines of the Bank.
With changes in any of these other policy guidelines, at appropriate levels, the MSME Policy would
also automatically stand amended.

MSME Definition
The MSMED Act 2006, which came into force w.e.f. 02/10/2006, defines the Micro, Small, and Medium Enterprises.
As per the Act, the activities are classified into Manufacturing and Service Category. Initially the MSMED Act 2006
had not given the definition of Services sector and RBIs guidelines were awaited. However, subsequently RBI has
defined the services sector and the activities that can be covered under MSME (Services) Sector. An illustrative list is
furnished in Annexure III
The following chart indicates the threshold investment levels for both Manufacturing sector (INVESTMENT IN PLANT
& MACHINERY)* and Services sector (INVESTMENT IN EQUIPMENT)* for the above three categories of
Manufacturing and Services Enterprises :

Enterprise

Engaged in Manufacturing / Preservation of

Goods (incl. Processing Units)

Engaged In Providing/ Rendering of

Services

Micro
Enterprise

Not to Exceed Rs. 25 Lakhs.

Not to Exceed Rs. 10 Lakhs.

Small
Enterprise

More than Rs.25 lakhs but does not exceed

Rs. 5 Crores.

More than Rs.10 lakhs but does not

exceed Rs. 2 Crores.

Medium
Enterprise

More than Rs.5 Crore Rupees but does not

exceed Rs. 10 Crore.

More than Rs. 2 Crore Rupees but

does not exceed Rs. 5 Crore.

* While calculating the investment in plant and machinery/equipment referred to above, the original price thereof
shall be taken into account, irrespective of whether the plant and machinery/equipment are new or second hand..
In case of imported machinery/equipment, the following duty/charges/costs shall be included in calculating their
value :

Import Duty (not to include miscellaneous expenses such as transportation from the port to the site of the
factory, demurrage paid at the port);

Shipping Charges;

Customs Clearance charges; and Sales Tax or Value-added Tax.

Cost of the following plant & machinery/equipments etc would be excluded :;

equipments such as tools, jigs, dies, moulds, and spare parts for maintenance and the cost of consumable
stores;

installation of plant &machinery

research and development and pollution control equipments;

power generation set and extra transformer installed by the enterprises as per the Regulations of the State
Electricity Board;

Bank charges and Service Charges paid to the National Small Industries Corporation or the State Small
Industries Corporation;

Procurement or Installation of cables, wiring bus bars, electrical control panels (not mounted on individual
machines)

Oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical
power to the plant and machinery or for safety measures;

Gas producer plants;

Transportation charges (other than sales tax or value-added tax and excise duty) for indigenous
machinery from the place of their manufacture to the site of the enterprise);

Charges paid for technical know-how for erection of plant machinery;

Such storage tanks which store raw materials and finished products only and are not linked with the
manufacturing process;

Fire-fighting equipment; and

Such other items as may be specified, by notification from time to time.

In case of Service Enterprises, the original cost to exclude furniture, fittings and other items not directly related to the
services rendered. Land and Building would also not be included while computing the machinery/equipments cost.
MSME would henceforth be meant to include Micro Small and Medium Enterprises (MSMEs). The above definitions
of Micro, Small and Medium Enterprises would be in place of the existing definitions of Small & Medium Industries
and SSSBEs/Tiny Enterprises.

Micro Enterprises would include Tiny Industries also.

Small Enterprises (Manufacturing) would mean Small Scale Industries (SSIs).

Medium Enterprises (Manufacturing) would mean Medium Industries (MIs).

Small Enterprises (Services) and Medium Enterprises(Services) would mean other Small & Medium
Enterprises

Thus, MSME Advances would be categorized as under :

All advances to segments viz. Micro, Small and Medium Enterprises in the Manufacturing sector
irrespective of sanctioned limits, (including advances against TDRs/Govt. Securities etc for business
purposes to these categories of Borrowers), and

Advances to Services Sectors such as Retail Traders, Professional & Self-Employed, Small Business
Enterprises,
and
Small
Road/Water
Transport
Operators
and
other
enterprises

engaged in providing/rendering of services,

conforming to the above investment criteria and

enjoying borrowing/non-borrowing facilities with the Bank (including advances against

TDRs/Govt. Securities etc for business purposes to these categories of Borrowers).

Those enterprises exceeding the investment ceilings would be categorized as Large Enterprises and be
outside the purview of MSME.

The sanctioned limits would no longer be the criteria determining the status as micro or small or medium
enterprises in these cases.

As per RBI guidelines, advances made to micro & small enterprises would be categorized as Priority
sector advances whereas lending by banks to medium enterprises will not be included for the purpose of
reckoning of advances under the priority sector.

While RBI had excluded Retail Traders vide their Master Circular dt. 02-07-2007from the scope of MSME Sector, it
has subsequently included vide cicular no. RBI/2009-10/164 RPCD.CO.Plan.BC. 24 /04.09.01/2009-10 dt 18-09-2009
included Retail Traders [i.e. advances granted to retail traders dealing in essential commodities (fair price shops),
consumer co-operative stores without any ceiling on the credit limit; and advances granted to private retail traders
with credit limits not exceeding Rs. 20 lakh) as part of the MSME (Service) Enterprises.

3.

Specialised

MSME

Branches

All the then-existing Specialised SSI Branches at 32 Centres were designated as MSME Branches as per Board
Approval dated 30/06/2005 with a view to increase the credit flow to MSME segment in these Centres by giving a
special thrust on marketing. As on 30.06.2009 the number of designated MSME Branches were 85 . Its number was
increased to 100 with the identification of additional 15 more Branches as specialized MSME branches. The same
has been approved by the then General Manager vide Memorandum No. SME /BBJ/09-10/61 dated 29.10.2009
4.

MSME

Cells

at

Zonal

Offices

Specialised MSME Credit Cells called MSME hubs were set up at Zonal Offices in all key centres having good
potential
for
MSME
advances,
with
the
following
functions:

Processing of all proposals where the limits are beyond the Branch Managers delegated
authority. Branches would forward all related papers for an evaluation at MSME Cell with their
recommendations. Branches should own responsibility for the borrowers credentials and activity
and ensure existing procedures/processes to continue if proposal falls within the Branch
Managers Delegated Authority

Branches would be free from processing of such proposals and sanction formalities and be
responsible only for obtention of security documents from the borrower and for perfection of other
securities as well as monitoring of the units operations.

Proposals processed by the Cell would be dealt directly at the Zonal Office, without any
intervening authority;

5.

Turnaround time would thus be reduced, ensuring that stipulated time schedules are strictly
followed by both- Branches and MSME Cell;

The critical parameter for measuring the Cells performance would be the reduced Turnaround
time and MSME business growth with the introduction of the centralised processing at the MSME
Cell.

Delayed

Payment

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

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

In case the buyer fails to make payment of the amount to the supplier, he shall be liable to pay
compound interest with monthly rests to the supplier on the amount from the appointed day or, on
the date agreed on, at three times of the Bank Rate notified by Reserve Bank.

For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the
interest as advised at (ii) above.

In case of dispute with regard to any amount due, a reference shall be made to the Micro and
Small Enterprises Facilitation Council, constituted by the respective State Government

Further, banks have been advised by Reserve Bank of India to fix sub-limits within the overall working capital limits to
the large borrowers specifically for meeting the payment obligation in respect of purchases from MSMEs. Accordingly,
we shall advise branches to set up sub-limits for this purpose
6.

Credit

Thrust

In order to ensure that sufficient credit is available to micro enterprises within the MSE sector, it is to be ensured that ;

40% of the total advances to MSE sector should go to micro (manufacturing) enterprises having
investment in plant and machinery upto Rs.5 lakh, and micro (service) enterprises having
investment in equipment upto Rs.2 lakh..

20% of the total advances to MSE sector should go to micro (manufacturing) enterprises with
investment in plant and machinery above Rs.5 lakh and upto Rs.25 lakh, and micro (service)
enterprises with investment in equipment above Rs.2 lakh and up to Rs.10 lakh. Thus, 60% of
MSE advances should go the micro enterprises

The aforesaid allocation of 60% of the MSE advances to the micro enterprises is to be achieved
in stages viz 50% in the year 2010-11, 55% in the year 2011-12 and 60% in the year 2012.-13
In tune with RBI Directives to increase the outreach of formal credit to the MSME sector, our

Semi-urban and Urban branches were advised to make concerted efforts to provide credit cover
on an average every year to at least 5 new micro/small/medium enterprises each.

7.

Cluster-Based

Lending

Approach

Cluster based approach for financing MSMEs is expected to result in less transaction costs, and risk mitigation,
besides providing an appropriate scale for improvement in infrastructure. Of the 388 UNIDO-identified clusters for
intensive development, 92 clusters were identified for active financing by us at centres where we are already
represented
8.

Credit

Tenure

The Banks Term Loan exposure to MSME sector would generally have a 7-10 year maturity.
9.

Credit

Acquisition

Apart from direct/primary credit acquisition, we may also consider take-over of advance accounts from other
Banks/FIs if the following minimum financial parameters and conditions are complied with :

Accounts should be eligible for a credit rating of minimum AA / SBS-5 (total score 180) for
manufacturing units and SBS-5.5 (total score 196) for service units as per our credit rating model treating the account
as a new one.

The accounts to be taken over should be standard accounts with the existing Bank.

The firm/company continuously registering increasing trend in sales volume and making cash profit
for at least last three years.

Maximum debt equity ratio of 4:1 in the case of Micro & Small Enterprises enjoying working capital
limits upto Rs.5.00 Crores; and 3:1 in the case of Micro and Small Enterprises enjoying working capital limits over
Rs.5.00 Crores.

Maximum debt equity ratio of 3:1 in the case of Medium Enterprises irrespective of the WC limit.
Current Ratio of 1.20:1 for accounts with limits up to Rs 5 crores, where Turn Over Method alone
would be applied for assessment of the Working Capital (as against 1.33 prescribed normally).

Minimum Interest Service Coverage Ratio (ISCR) of 1.50:1 as against 1.75:1 prescribed normally.

If Term Loan is also proposed to be taken over, the minimum Debt:Service Coverage Ratio (DSCR)
should be 1.25.

The Asset Coverage Ratio should not be less than 1.50.

Authority

for

Approval

of

Takeover

If all terms are complied with, the Zonal Manager will be the minimum authority to approve takeover and sanction can
be accorded by the respective delegated authority. For proposals falling within the authority of Zonal Manager and
above,
respective
sanctioning
authority
will
approve
the
take
over.
Authority

for

approval

of

deviation

in

Take

Over

norms

Any deviation in takeover norms shall be approved by two levels higher than the authority under whose power the

sanction would otherwise fall subject to minimum authority of General Manager. Sanctions falling within the delegated
authority of GM shall be approved by ED and those falling within the delegated power of ED/CMD can be approved
by the respective authority. (Approval-BM 30-03-2011)
10.

Credit

Appraisal

Although same appraisal norms cannot be uniformly applied to Micro, Small and Medium Enterprises, broadly the
appraisal
would
involve.
Proper identification of the Proponent(s) and?? his/her/their antecedents in accordance with KYC Norms/Guidelines,
the proponents experience, educational and social background, technical/ professional competence, integrity,
initiatives,
etc,.

11.

Checking out for Willful Defaulters List of RBI,? Specific Approval List (SAL) of ECGC etc,.

The acceptability of the product manufactured,? its popularity/market demand, market

competitors.

Evaluation of State and Central Govt. Policies? (enabling environment) with specific reference to
the Enterprise in question, Environmental stipulations, Availability of necessary infrastructureroads, power, labor, raw material and markets.

Techno-economic Appraisal of units? where it is felt absolutely necessary by the Zonal Managers.

Project Cost, the Proponents own financial? contribution, projections for three years, and other
important parameters which would include the BEP, liquidity, solvency, and profitability ratios, etc,.

Working

Capital

Assessment

For working capital limits up to Rs.5 Crores , Turnover Method would be applicable as mandated under Nayak
Committee Recommendations for financing working capital needs of the SMEs @ 20% of the projected turnover
based on the assumption of a three month operating cycle. It is abundantly clarified that this 20% is the minimum WC
limit to be sanctioned even if the proponents operating cycle is shorter than 3 months. Branches should, however,
ensure to restrict the drawings in such cases to actual drawing power. MPBF method may be resorted in specific
cases with longer operating cycle. Branches should obtain and scrutinize latest audited financials of the constituent in
all cases of WC limits above Rs.10 lakhs. In case provisional balance sheets are submitted by the constituent,
adverse variation between the provisional and audited financials should not exceed 5%. In the event of deviation
beyond 5%, branches should have a discussion with the constituent to find out the reason for such variation and
report
to
the
sanctioning
authority.
The next years sales projections made by the borrower, however, would have to be corroborated by the trend in
sales over 2 years, last year actual sales through verification of the following indicative parameters (besides the
financial
data
submitted
by
the
borrower)
:

Sales Ledger/Sales Turnover.

Credit Summation in the account

Sales Memos or Invoices/Delivery Challans.

Sales Tax Paid/Turnover Tax/Excise Register,as applicable,

Electricity Bills wherever applicable.

Orders on hand/expected orders.

Installed capacity vis--vis the projections.

Overall market trend etc,

Such projections should be within reasonable limits say 25% over last years sales. However, in exceptional cases
deviations from this may be allowed if supported by LCs/Firm orders on hand etc,.

Current

Ratio

While a benchmark current ratio of 1.33:1 is always desirable, it is felt that some relaxations are provided to SMEs in
their Current Ratio. They may be permitted to maintain a minimum current ratio of 1:1 as against 1.25-1.33:1
stipulated for others. Classification of Current Assets and Current Liabilities under MPBF method would be based on
extant RBI/Bank guidelines.

Financial

Ratios

The following may be accepted as the benchmark in this regard :

Ratios

Benchmar
k

Current Ratio

1:1

Debt Equity Ratio/ Debt Quasi Equity Ratio for accounts with WC limits upto
Rs.5 crores for micro & small enterprises.

4:1

Debt Equity Ratio/ Debt Quasi Equity Ratio for accounts with WC limits above
Rs.5 crores for micro & small enterprises.

3:1

Debt Equity Ratio/ Debt Quasi Equity Ratio for medium enterprises

3:1

Interest Service Coverage Ratio

1.50

Debt Service Coverage Ratio (Average)

1.25

Asset Cover Ratio

1.50

Sanctioning authority may accept Debt Equity/Debt Quasi Equity Ratio of upto 4:1 for all accounts if he is satisfied
with the performance of the account and stipulates a definite time period within which to improve the position

Authority for Approval of Deviation :

Parameter

Benchmark

Maximum Relaxation

Debt Equity/ Debt Quasi Equity Ratio

4 (Maximum)

6 in respect of MSME

Current Ratio

1:1

0.80:1

Debt Service Coverage Ratio

1.25

1.1 for all cases

Interest Service Coverage Ratio

1.50 (Minimum)

1.25

Of the 4 parameters stated above, relaxation in any one of the parameters can be permitted by DGM
within the permissible bandwidth for sanctions which fall within the delegated powers upto Scale V and
those sanctions within his/her delegated powers

12.

In respect of proposals which normally would fall within the delegated powers of TEG VI but where more
than one financial parameter are to be relaxed within the permissible bandwidth, the proposal should be
sent to GM NBG/GM SBU (HO) for consideration and sanction.

GM NBG/ GM SBU and above can sanction relaxations in one or more than one financial parameter within
the permissible bandwidth while sanctioning/reviewing the proposals within their respective delegated
powers.

In respect of all proposals where financial parameters are beyond the permissible bandwidth of relaxation
as shown above, the accounts falling upto 3 notches below entry level may be considered and sanctioned
for review at the existing level or below by one level above the delegatee under whose powers they would
otherwise fall stating clearly as to the need for continuing the limits. Any proposal with additional limits with
financial parameters beyond the permissible bandwidth has to be sanctioned by M.Com. (Approval-BM 3003-2011)

Credit

Rating

Model

Govt./RBI had advised that Banks may 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 the enterprise. The
following credit rating models will be used.
a.

Hybrid Large Corporate Model (Fund/Non-Fund based limits of Rs.30 Crores and above );

b.

Hybrid Mid Segment Model ( Fund / Non Fund based limits of Rs.5 Crores and above but below
Rs.30 Crores ;

c.

SBS Model (Fund/ Non-Fund based limits of Rs.10 Lakhs and above but below Rs.5 Crores);

The ratings given by reputed Credit Rating agencies such as SMERA, CRISIL etc, which have been approved by the
National Small Industries Corporation, are also considered for granting concessions in the interest rates, in tune with
such credit ratings, based on parameters such as turnover, market position, operating efficiency, existing financial
position, and management evaluation
13.

Pricing

Risk of Default in the MSME sector is spread amongst a wider base of borrowers and therefore the pricing would be
linked to the Credit Rating of the constituent keeping also the RBI directives from time to time.
14.

Exposure

Norms

Banks extant exposure norms would be applicable. Accordingly, the Banks exposure is not to exceed :

a.

15% of Banks Capital Funds to Individual Borrowers including PSUs. (20% in case of exposures
to Infrastructure Lending).

b.

40% of Banks Capital Funds to Group Borrowers (50% in case the additional exposure of 10% is
on account of Infrastructure projects, i.e. Power, Telecommunications, Roads Ports etc)

Collateral

Security

and

Margin

Norms

Credit facilities extended to a single Micro & Small Enterprises, Borrower (i.e. erstwhile SSI), either by way of Term
Loan or Working Capital or both, without any collateral security or third party guarantee, will be covered, if eligible,
under SIDBIs Credit Guarantee Fund Trust for Micro & Small Enterprise (CGTMSE ). A composite limit of Rs.1 Crore
will be considered by branches to meet working capital and term loan requirements of Micro & Small Entrepreneurs.
As per extant RBI guidelines, Micro & Small Enterprises with limits up to Rs.10 Lakhs may be sanctioned credit
facilities without any collateral security. For customers with good track record, this waiver of collateral security may be
extended
for
limits
up
to
Rs.25
Lakhs
with
the
approval
of
the
Zonal
Manager.
However,

the

issue

of

collateral

security

would

be

addressed

on

case-specific

basis.

Currently, credit limits upto Rs.100 lakh per borrower in the Micro & Small Enterprises sector get covered under
Credit Guarantee Scheme of CGTMSE. The present position of one-time Guarantee (Joining) fee and Annual
Service fee is as under

Limit

One
time
Guarantee Fee
(GF)

Annual Service
Fee (ASF)

To be borne by

Upto Rs.5 lacs

1.00%

0.50%

50% of GF will be
borne by Bank.
However, in the case
of
PMEGP
borrowers
with
limits upto Rs.5 lacs,
entire GF and ASF
will be borne by the
Bank.

Above Rs.5 lacs upto Rs.50

lacs

1.50%

0.75%

50% of GF will be
borne by Bank.

For borrowers of North

eastern
region
including
Sikkim, for limits upto Rs.50
lacs

0.75%

0.75%

50% of GF will be
borne by Bank.

Above Rs.50 lacs to Rs.100

1.50%

0.75%

Both GF and ASF to

lacs for all borrowers

be fully borne by the

borrower.

Margin requirements, which normally are 25%, would vary depending on the nature of the special Schemes.

16.

Time

Norms

for

Disposal

of

Applications

With the switchover to the simple Turnover Method for all advances in the SME segment up to Rs.5 Crores, the time
for processing of the applications and sanction has to be curtailed as under (from the date of submission of complete
papers by the borrower) :

Limits

Time Limit Not Exceeding

Up to and including Rs.25,000/=

4 Business Days.

Over Rs.25,000/= and up to Rs.10 Lakhs

8 Business Days.

Over Rs.10 Lakhs up to Rs.5 Crores

12 Business Days.

Over Rs.5 Crores

20 Business Days.

17.
In case of rejections, approval shall have to be obtained from the next higher authority, not below the level of Zonal
Manager.
A register should be maintained at the branches to record the dates of receipt of applications/ sanction/
disbursements/ rejections with reasons therefore
18.

External

Credit

Rating

To Encourage Small & Medium Enterprises to avail the service of external rating Agencies to the units obtaining credit
rating from agencies empanelled by the National Small Industries Corporation (NSIC) viz, Dun & Bradstreet,
ONICRA, ICRA, CARE, FITCH,CRISIL and SMERA concessions in the applicable rate of interest to the extent of

0.50% in respect of units obtaining the Highest & 2nd Highest ratings and to the extent of 0.25% in respect of units
showing the 3rd Highest rating is given.
19.

Delegation

This will be as per the banks scheme of delegation circulated by the Risk Management Department of the Bank. The
present scheme of delegation is adequate to take care of the needs of MSME borrowers at various levels.
20.

Marketing

A dedicated Sales Force Team is already in place in all potential centres to market MSME Credit. Relationship
Managers at the Branches would take care of the clientele requirements and do up-sell/cross-sell at the identified
Branches.
21.

Training

Credit officials at the various levels have been trained adequately, with a view to up date themselves and also give
renewed thrust to the SME lending. Training programmes on an on-going basis is proposed at MDI,CBD Belapur and
other STCs, for all the Managers and Senior credit officials at all branches handling MSME credit so that the bank
staff would be equipped with the necessary skill/expertise to achieve the required MSME business growth.
22.

Tie-Up

For

SME

Financing

MOU for a strategic alliance with various Original Equipment Manufactures (OEMs) such as Tata Motors Ltd., Piaggio
Vehicles Private Ltd , JCB India Ltd, Mahindra Navistar Automotive Ltd., Ashok Lyland Ltd. etc has been entered into
for giving boost to financing in MSME sector more particularly to SRTOs. In order to make the tie ups more effective,
moves are afoot to map the regional sales heads of the OEMs with Nodal Officers for MSMEs in different Zones
through National Banking Group Centers. We have also tied up with Dun & Bradstreet for carrying out due diligence
exercise for prospective client as well for existing borrowers with limit of Rs.1 Crore and above in select 10 centres to
provide additional comfort to the branches in decision making, on pilot basis. The same will be rolled out to pan India
upon receiving the feedbacks from the selected centers. Such strategic tie ups will continue to be our thrust area in
order to maintain our pace in MSME financing.
23.

Bank's

MSME

Schemes/Products

To assist and promote the growth of the SME sector, Bank has recently revamped the existing Star Laghu Udyami
Samekit Loan (a composite loan product) extending the coverage pan India and increasing the quantum of Loan to
Rs.100 lacs and also launched a new scheme on the eve of 105th centenary celebration of banks foundation day
with attractive and simplified features. The nomenclature assigned to the new scheme is Star MSE Demand / Term
Loan. There will be continuous review of schemes, products, and procedures for improvement and for matching
market expectations.
24.

Rehabilitation

of

Sick

units

&

Debt

Restructuring

Rehabilitation involves pre-emptive identification of causes of sickness, assessment of the sick units viability, and
nursing viable sick unit back to health to ensure that the unit generates adequate surplus to service the debt including
interest burden and also to wipe off the past losses. The Banks extant instructions and RBI guidelines on the
Rehabilitation
of
Sick
Units
would
be
applicable
mutatis
mutandis.
Banks Policy document on Debt Restructuring and Rehabilitation for SMEs was adopted by the Board on 16-052008. We may continue the same policy without any change, as the existing one is on the lines suggested by
Reserve Bank of India in their latest Master Circular.
25.

Monitoring

&

Reporting

to

Top

Management

The progress of the MSME Branches and the MSME Credit expansion as also the units under nursing would continue
to be submitted to the Board on a quarterly basis to ensure that the required emphasis at the highest forum of the
bank is given to the MSME sector.

26.

Display

of

MSME

Policy

For wider dissemination and easy accessibility, the reviewed MSME policy guidelines would be displayed on the
Banks website. The various schemes are already on display at all the identified MSME branches and in the Banks
website.
27.

Banks
The

Commitment

Bank

is

committed

to

:
the

following

To provide checklists along with applications to? SME Proponents.

To issue acknowledgements upon proponents submission of application forms.

To comply with the stipulated time norms for disposal of applications.

To consider composite loans up to Rs.1 Crore.?

To cover all eligible MSE advances up to Rs.25 Lakhs without any collaterals or third party
guarantee under Credit Guarantee Fund Trust for Micro & Small Enterprises

No collateral Security for loans to Mircro? & Small Enterprises up to Rs.10 Lakhs.

The issue of collateral security would be dealt? with on account-specific basis.

To adopt Turnover Method prescribed by Nayak? Committee for all Working Capital advances up
to Rs.5 Crores or MPBF method for specific cases with operating cycles longer than 3 months.

To offer interest concession up to 1% to Women? Entrepreneurs under Priyadarshini Scheme

Annexure III
List of Industry-Related Service Activities

1.

Advertising Agencies.

2.

Marketing Consultancy.

3.

Industrial Consultancy.

4.

Equipment Rental & Leasing.

5.

Typing Centers.

6.

Xeroxing.

7.

Industrial Photography.

8.

Industrial R & D Labs.

9.

Industrial Testing Labs.

10.

Auto Repair, Services and Garages.

11.

12.
13.

Documentary Films on Themes like Family Planning, Social Forestry, Energy Conservation, and Commercial
Advertising.
Laboratories engaged in testing of Raw Materials and Finished Goods.
Servicing Industry Undertakings engaged in maintenance, repair, testing or servicing of all types of
vehicles and machinery of any description including Electronic/Electrical Equipments/Instruments i.e.
measuring/control instruments, televisions, tape recorders, VCRs, Radios, Transformers, Motors, Watches, etc Press

14.

Laundry & Dry Cleaning.

15.

X-Ray Clinic.

16.

Tailoring.

17.

Servicing of Agriculture Farm Equipment e.g.. Tractor Pump Rig Boring Machines etc.

18.

Weigh Bridge.

19.

Photographic Labs.

20.

Blue Printing and Enlargement of Drawing/Designs, Facilities.

21.

ISD/STD Booths.

22.

Teleprinter/Fax Services.

23.

Creation of Data Bases suitable for Foreign/Indian Markets. Software Development.

24.

Data Conversion, Data Mining, Digitization, Data Entry, Data Processing, Data Warehousing.

25.

Digitisation of spoken material (e.g. legal and medical transcription)

26.

Computerised Call Centers.

27.

Geographic Information Systems Mapping/services.

28.

Web-Designing/Web Content Development Services.

29.

Computer Aided Design/CAD/CAM Services. 0.E-Mail, Data, Internet, Fax Service Provider.

30.

ISP Services(Communication channels like V-Sat, Optical FiberNOT included ).

31.

Computerised Desk Top Publishing.

32.

Web Service Providers, including web hosting and website management.

33.

USDN Service Providers.

34.

Computer Systems AMC Service Providers.

35.

Multi Media Development Units (including e.g. animation and special effects, video and photo digitization)

36.

IT Solution Providers/Implementers (such as and including server/data banks, Application Service Providers,
Internet/Web-based e-Commerce service providers, Smart Card customization service provider, systems integration
service providers).

37.

Cyber Caf/Cyber Kiosks/Cyber Parlors and Video Conferencing Centres/Parlours.

38.

Back Office Operations relating to Computerised Data.

39.

Other Services provided with the intensive use of computers (such as and including telemedicine services,
remote access cyber services, remote diagnostic and repair services)

40.

Multi Channel Dish Cable TV with Dish Antenna.

41.

Video Shooting.

42.

Hot Mix Plant (irrespective of mobile or immovable).

43.

Research and Development.

The list is illustrative only and not exhaustive