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Dear Sir/Madam,
MASTER CIRCULAR
SME BUSINESS UNIT
LOAN PRODUCT : SME SMART SCORE
We have been issuing Circulars/ Instructions containing operating instructions on the product
SME Smart Score from time to time. To enable the operating functionaries to have current
instructions at one place, a Master Circular incorporating all the existing Circulars/
Instructions has been prepared and is appended. We advise that this Master Circular
consolidates all the previous instructions issued up to 31/03/2009 vide the circulars listed in
the Annexure-V
Yours faithfully,
Sd/-
INDEX
SME SMART SCORE
Introduction
Loan approval to SMEs based on credit scores is widely prevalent in developed countries.
The product “SME Smart Score” has been developed for approving loans from Rs. 5.00 lacs
to Rs. 50.00 lacs under SME segment. The product is well designed and is able to generate
confidence amongst the operating staff and encourage them to sanction fresh advances
more confidently since it provides a well defined frame for evaluating the proposals.
This product is designed to avoid delays in credit delivery due to cumbersome assessment
processes. A simple Scoring Model (Annexure-III) has been designed for which all the data
required has to be furnished at one go by way of an Application Form (Annexure-I) which
has also been specially designed for this product.
The product takes into account all the critical inputs from Circles and Learning Centres.
�Working Capital loans can be sanctioned for two years subject to annual review,
specifying the limit requirement for each year. Documents are to be obtained for higher
of the two limits. The limits assessed and sanctioned for the second year should be
released after a satisfactory review of achievement of the projected level of operations
for the first year.
�Loan renewal: Working Capital loans can be renewed if credit score is 35 and above
out of 60 under business score. (Annexure-IV)
�The product is based on a set of most desirable characteristics and a set of least
tolerable characteristics of a borrower. These sets have been drawn on the basis of
extensive discussions with operational functionaries in circles and faculty at staff
colleges. The characteristics are grouped as Personal, Business (Existing &
Greenfield), Collateral and Renewal (WC). The Scoring Model for each of these is
mentioned in the Annexure I attached.
ii) Find out the eligibility of the applicant based on total cut-off and segment wise
cut-off (there is minimum score to be reached in personal and business segment)
iii) If eligible, verify the responses from the supporting documents for correctness
iv) Assess the limits required, repayment programme for the term loan and put up a
simple note to the sanctioning authority for sanction.
facilities
years (%p.a.)
below Rs. 25
Lacs
but up to Rs.
50 Lacs
**Override: Units that are not able to score 60% or more marks in the scoring model
will not
qualify for consideration under SME Smart Score Scheme. However, such loans not
approved under SME Smart Score Scheme can still be considered by the Branches
under
the normal credit dispensation based on specific considerations.
LOAN APPLICATION FORM
ANNEXURE-I
Please fill up this form only if the answers to all the following questions are “YES”
Whether the chief promoter / Chief executive is between 18 and 65 years of age
Whether the promoters are not defaulters to the banks financial institutions.
Whether all the clearances including but not limited to environmental clearance for
the
project has been obtained / satisfactory evidence of their being made available will
be
provided?
Whether the promoters being to the area of operation of the branch and have
satisfactory
references?
General :
Address (off.) (If factory and office are having different Addresses, Give the Address
Nearest to the branch First)
Plot/Building/Plat Name and Number
Street Name
City
Telephone No
Mobile
Fax:
Address(factory):
Plot/Building/Plat Name and Number
Street Name
City
Telephone no.
Mobile
Fax
repaid?
SME BU Master Circular as on 31.03.2009
Page 7 of 7
repaid?
Executive
Residential Address:
Plot/Building/Plat Name and Number
Street Name
City
Telephone No
Mobile
Fax:
Are you assessed the Income-Tax Yes /NO if yes PAN NO.
I certify that all incorporation furnished by me / us is true correct and complete. I have no
borrowing arrangement for the company / firm with any bank except so indicated in the
application form. There are no over dues / statuary dues by me or the firm / company. No
legal action has been taken against me / firm / company. I shall furnish all other information
that may be required by Bank in connection with my application. The Information may also
be exchanged by you with any agency you may deem fit you, your representative of any
other agencies as authorized by you may at any time inspect / verify my / our assets, books
of account etc. In our factory business premise as give above. You may take appropriate
safeguards / action for recovery of bank’s dues including publication of distributors name in
website/ submission to RBI. I further agree that my loan shall be governed by the rules of
Place :
BUSINESS DETAILS
premises
Does the product require special know how? If so, are you in possession of the know
Whether your line of activity falls under priority sector?
How do you plan to produces them? Are they available on credit? If so what are the
terms of credit?
How do you plan to ensure the quality of your product? Any special steps being
taken?
What about the utilities like water power etc? Please describe the requirements and
Whether you need skilled labour? Please describe your plants for skilled labour?
Any special reason to locate your business at the present location? Is there any
advantage in procuring the raw materials locally? Is the local market big enough to
competition?
Give the total outside liabilities for the last 3 years and your tangible network
TOL / TNW
hat is the quality of your receivables? How many months’ sales do they represent? Can
when produced? Are they kept in stock for long? How many months’ sales do they
represent?
What will be the time period between procurement of raw materials to realization of sale
proceeds? Can you cut short the cycle without increasing your liability?
Give the details of cost and the means of finance for your project
BE SATISFIED ABOUT
YOUR
MARGIN)
Bank loan
Others
Total
Has the project been vetted by consultancy cell of the Bank or consultants of repute?
Give details
What is the repayment period you are looking for the term loan? What will be the annual
cash accruals? What will be your liability towards payment of installments and interest on
term loan in a year? Whether the cash accruals will be sufficient to take care of the
repayment liability?
TOTAL
Please tell us about your future plans
What is the level of sales you are projecting? Briefly describe the basis
What is the level of receivables you are expecting in terms of month’s sale?
What is the level of furnished goods inventory you are expecting to maintain in terms of
month’s sale?
I certify that all information furnished by me / us is true, correct and complete. I have no
barrowing engagement for the company / firm with any bank except as indicated in the
application form. There are no overdues / statutory dues owed by me or the firm/company. No
legal action has been taken against me / us firm / company. I shall furnish all other information
that may be required by Bank in connection with my application. The Information may also be
exchanged by you with any agency you may deem fit. You, your representatives of any other
agencies as authorized by you may at any time inspect / verify my / our assets, books of account
etc. in our factory business promises as give above. You may take appropriate
safeguards/action
for recovery of bank’s dues including publication of defaulters’ name in web site/submission to
RBI. I further agree that my loan shall be governed by the rules of State bank of India as may be
LOAN APPRAISAL
ANNEXURE-II
Branch:
The proposal conforms to the extant instructions of the scheme. The scores awarded under
credit scoring criteria are as under
Greenfield ventures
(To be eligible under the scheme, the unit should get a minimum score of 60% with a
minimum of 50% under each sub-head)
1. PROPOSAL FOR
I. Sanction of
a.
b.
II. Approval for
c.
d.
III. Confirmation of
e.
2. Details of Credit limits Rs.in lakhs
Facility Existing Limits Facility Proposed Limits
CC(Hyp) CC(Hyp)
TL TL
of CC(Hyp)) of CC(Hyp))
Total limits Total limits
3.Name of the Borrower
5.Address
Factory
Office
SME BU Master Circular as on 31.03.2009
Page 14 of 14
Company
7.Line of activity
8.Year of Incorporation
9.Banking with SBI since
10.IRAC Status
11.Details of Associate Concerns/Family
14. Brief background & History :-( to be brief and in bullet points only)
(Comments on management, products, tie-up arrangement if any, quality
approvals/certifications etc)
15.Performance and financial indicators: Rs.in lakhs.
31 MARCH YR.BEFORE LAST CURRENT FOLLOWING
Domestic Sales
Export Sales
Net Sales
Paid Up Capital
TNW
TOL/TNW(times)
Current Ratio
SME BU Master Circular as on 31.03.2009
Page 15 of 15
16.Term Loan:
Project Details Project Cost Rs.
Comments:
19. Whether (a) the name(s) of the Individual/Directors appear(s) in RBI’s list of
defaulters/RBI’s list of willful defaulters & (b) the Individual/Directors name figures in
ECGC’s caution list
PARTICULARS LOCATION DATE
RBI Willful Defaulters
list(Non-Suit
Filed)Rs.25lacs and
Above
CIBIL List(Suit filed) Rs.25
lacs and above
ECGC specific approval list
20. Comments on I&A and other audit reports, which have an impact on credit risk on the
unit:, if any:
Name of report Date of report Serious irregularities/
Adverse features
remaining unattended
Comments in last I&A report
& its
present status
(Qualifications)
21. If the unit has scored less than 60% marks in any of the individual parameters in SME
Smart Score, please comment critically on those parameters (even though the aggregate score
may be more than 60%)
22. Recommendations;
Recommended for sanction of
Working Capital limit of Rs.
Term loan of Rs.
---------------------------
Total limit Rs.
On the terms and conditions as set out in Annexure-VI
Signature Appraised & Assessed by Sanctioned by
Name
Designation
Date
Enclosure:
Applicant’s application.& others
Statement of Credit Score arrived as Annexure -I.
Controlled by
Signature
Name
Designation
Date
2. Security
Primary WC:
TL:
Collateral
Personal Guarantee
compilation of opinion
reports)
3. Interest CC(HYP):
Receivables:
Cover Period:
BG/LC (cash
Margins):
TL:
6. Inspection Quarterly
8. Insurance
9. Processing fee
10. EM Charges
Term Loan:-
12. Penal Interest
any.
ASSESSMENT OF LOAN
ANNEXUREII-B
for SSI
a. Estimated Sales for the
Current year
b. Working capital required
(25% of ‘a’)
Eligible Bank Finance (80% of
‘b’)
Bank finance Required (A)
2.Assessment as per
Traditional Method
Estimated Purchases in the
current Year
Estimated Average Raw
Material Holding at any time
(Calculated at cost of
Purchases)
Estimated Average holding of
Stock in process and Finished
(calculated at cost of
Production)
Estimated Average Receivable
outstanding at any one time
Total Requirement
Less estimated average credit
enjoyed on purchases
Less estimated average credit
enjoyed on purchases
Less Other Sources like
unsecured loans, plough back
of profits
Etc
Bank Finance Required (B)
Working Capital
Assessed/recommended
A or B above which ever is
higher i.e
1 Estimated Exports
2 Exports - at cost
(includes order
period /
manufacturing period
etc.)
4 No. Of Cycles in a
year
6 Less:- Margin on
EPC – %
7 Eligible Limit
8 EPC limit
recommended
1 Estimated Exports
2 Exports on
Usance bill basis
3 Usance period
4 Lead Time
Assessment of BG limits:
Outstanding BGs as on
Add: BG’s required during the next 12 months,
as under
1.Earnest Money deposit
2.Security Deposit
3.Advance Payment BG
Land
&Buildings
Plant&
Machinery
WC margin
Contingencies
Total project
cost
Means of
finance
Own funds
Borrowings from
friends and
relatives
Bank finance
Others
Total means of Debt /Equity :
finance
3. Details of capital expenditure i.e land and factory building as well as machinery
proposed to purchase:
Net Profit
Depreciatio
n
Cash
Accruals
Repayment
obligations
(including
Interest)
DSCR
Average
DSCR
Assessment:
Earnings
1 Total No. of Kilometers to be run per day
(estimated)/ No. of
1. Personal details :
Sr.No. Parameters Maximum Marks Criteria Marks
marks Scored
1 Age 5 18 to 24 3
25 to 49 5
50 to 59 1
60 to 65 0
2 No. Of children 2 Upto 3 2
0
>3
3 Owining a house 5 Own 5
0
Not owning
house
4 Academic 4 Professional 4
qualifications 2
Graduate/PG 1
0
Metric
Below Metric
5 Experience in the line 5 > 5 years 5
of trade 3
2 to 5 years 0
< 2 years
6 Spouse details 1 Employed 1
0
Homemaker
7 Assessed for income 2 Assessed 2
tax
Not assessed 0
review)
9 Have life insurance 1 Yes 1
policy No 0
MARKS SCORED 30
Rented
5. Know-how 2 Specialised 2
0
Common
sales
> 2 months of
sales
10. Repayment period 5 Upto 3 years 5
(not applicable 3
> 3 to 5 years 0
for only working
capital loans) > 5 years
11. Gross DSCR (not 5 >2 5
applicable for 2
1.5 To 2 0
only working
capital loans < 1.5
MARKS 50
SCORED
Items 10 & 11 are not applicable for working capital loans alone. In that case the
score should be normalized for 50 (marks scored/40)*50
Minimum score should be 25
is appraised by consultants of
repute)
2. Manufacturing/servicing/trading 5 Yes 5
No 0
process is well known to
applicant
to produce/service/trade the
the product
3. Location advantage 2 Yes 2
No 0
4. Availability of utilities including 2 Easy 2
Ok 0
labour
5. Firm’s capacity to sell the product 5 Good 5
Ok 0
at the price and quantity
6. Line of activity 1 Priority 1
0
Sector
Non priority
7. TOL/TNW (quasi equity to be 5 1 and below 5
4
added to TNW and reduced from > 1 upto 2 3
TOL) Competition > 2 upto 3 0
>3
8a. Quality of receivables as per 5 Upto 3 5
Projections months of
sales 1
sales
> 4 months
of
Sales
8b. Quality of finished goods 5 Upto 1 5
month
inventory as per projections
of sales 1
> 1 but upto
2
months of 0
sales
> 2 months
of
9. Repayment period (not applicable 5 Upto 3 years 5
3
for only working capital loans) > 3 to 5
years 0
> 5 years
sales
10. Gross DSCR (not applicable for 5 >2 5
2
only working capital loans 1.5 to 2 0
< 1.5
MARKS SCORED 50 / 40
MARKS SCORED 20
Minimum Marks are 10 (except in cases where Collateral should not be asked as per Bank’s
norms, where the minimum marks will be NIL)
Appraised by Approved by
Name
Date
Proprietor/partners/
/directors
4. Business Address
Phone/Cell No.
5.Nature of activity
6. a).Date of Last
Sanction/review
b) Sanction is Valid up to
7. IRAC Position as on
8.Present Position of Facility Limit DP O/S Irregul
Accounts as on date CC
(Rs. In lakhs) TL
LC/BG
Net sales
PBT
Cash
Accrual
TNW
TOL/TNW
CR
estimates, if any)
(Interest/Exchange/commission Booked)
promoters/employees :
10. Whether earlier sanction
rectified.?
accounts, Competition,
14. Recommendations
The Conduct of WC loan and Term loan has been reviewed and found satisfactory. The
Credit Score for renewal of limits is as per annexure –I, is satisfactory.
2. Recommended for release of additional working capital limit of Rs. as per the original
sanction on (give date) for the projected year-----
On the above terms and conditions as already set out in the original sanction dated—
Appraised by Approved by
Signature
Name
Designation
Date
Below 50% 2
Flat 5
Decreasing 1
3. Change in TOL/TNW 5 Decreasing and upto 3 5
the unit OK 0
5. Credit summations in the 10 90% & above 10
Name