PROJECT REPORT

ENTITLED
“FINANCING OF SMALL SCALE INDUSTRIES BY J&K
BANK”

Submitted To Punjabi University Patiala in The Partial Fulfillment Of The Requirement For
The Award Of Degree Of

INTEGRATED MASTER OF BUSINESS ADMINISTRATION

(2013-2018)

SUBMITTED TO SUBMITTED BY:

Ms. Kiranjit Kaur Tafazul Nazir
Assistant professor Exam Roll no.
CIBM 3794
Class: IMBA 6th sem
Area of Research:
Finance

CORDIA INSTITUTE OF BUSINESS MANAGEMENT

(AFFILIATED TO PUNJABI UNIVERSITY, PATIALA)

1
 VALIDITY CERTIFICATE
This is to certify that student Mr TAFAZUL NAZIR of CORDIA
INSTITUTE OF BUSINESS MANAGEMENT, SANGHOL has worked on
project “FINANCING OF SMALL SCALE INDUSTRIES BY J&K
BANK”. She has successfully completed her project training report in partial
fulfilment of INTEGRATED COURSE OF MASTER OF BUSINESS
ADIMISTRATION (IMBA) through PUNJABI UNIVERSITY, PATIALA.

This project training report is the record of the student’s own effort under
supervision and guidance of Mrs. Rifat Andrabi.

Project Coordinator

..........................................

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 DECLARATION

I hereby declare that the project entitled “FINANCING OF SMALL SCALE

INDUSTRIES BY J&K BANK” written and submitted by me to the
PUNJABI UNIVERSITY, PATIALA, in partial fulfilment of the requirement
for the award of Integrated Masters of Business Administration (IMBA), under
the guidance of my mentor Mrs. Rifat Andrabi, is my original work and the
conclusion drawn there in, are based on the material collected by myself.

I, hereby declare also this study has not been permitted by me to publish
anywhere.

Dated -------------------

Tafazul Nazir

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 ACKNOWLEDGEMENT

I wish to acknowledge a deep sense of gratitude to all those who are connected
with the preparation and preservation of this project report and who have made
a major contribution in its development.

On the very outset of this report I would like to express my gratitude to

Almighty Allah who bestowed his blessings on me and gave me the courage
and right type of environment for completion of my project. I owe a deep sense
of indebtedness and heartfelt obligation to my family who has always been a
perennial source of inspiration for me.

I am grateful and gratified to the respected Director Dr. Kulveer Singh Rai for
grooming me into a true line of work and for providing me with this opportunity
to have my project work with J&K Bank Ltd.

I am deeply indebted to my supervisor/project guide Mrs. Rifat Andrabi

(Associate Executive –Credit) J&K Bank Zonal office Kashmir (central)
having permitted me to carry out this project work. I wish to express my deep
sense of gratitude for her guidance and useful suggestions, which helped me all
the time in completing the project work in time.

I am also thankful to all the respondents who helped the accomplishment of this
project by their valuable responses and suggestions.

Thanking you
Tafazul Nazir

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 INDEX
CONTENTS PAGE NO.

1. INTRODUCTION TO BANKING 8-12

INDUSTRY

2. COMPANY FROFILE 13-22

3. INTRODUCTION TO TOPIC 23-35

4. ROLE OF BANKS AND OTHER

FINANCIAL INSTITUTIONS IN 36-44
THE DEVELOPMENT OF SSIs

5. FINANCING BY J&K BANK TO

SMALL SCALE INDUSTRIES 45-58

6. RESEARCH METHODOLOGY 59-63

7. DATA ANALYSIS AND 64-75

INTERPRETATION

8. FINDINGS
76-78

9. SUGGESTIONS 79-81

10. CONCLUSION 82-83

11. BIBLIOGRAPHY 84-86

12. ANNEXURE
87-92

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

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

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

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

regarding the financial help provided by the bank.

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

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

Commerce J&K for SS’s in the Valley.
The industrial sector plays an important role in the economic growth of both developed and
developing countries. The Small Scale Industrial (SSI) sector is very important for any
country irrespective of the level of development because, SSI contributes maximum socio
economic benefits with low level of investment and results in employment creation, income
generation, poverty alleviation and restricts migration of unemployed and underemployed
workers into cities. It is also one that maximizes the utilization of local resources and results
in innovations, new technology and is a pathway to emerging entrepreneurs. It is a starting

6
point for industrial growth. The main aim behind making this project report is to know how J
& K Bank is operating its business and how the corporate play their role to its operations.
This study has become necessary due to the following reasons:

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

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 CHAPTER - 1
INTRODUCTION
TO BANKING
INDUSTRY

8
 BANKING INDUSTRY IN INDIA
Banking in India originated in the last decades of the 18th century. The oldest bank in
existence in India is State Bank of India, a government-owned bank that traces its origins
back in 1886 and is the largest commercial bank in the country. Central banking is the
responsibility of the Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India, regulating it to commercial banking
functions. The Reserve Bank of India acts as a centralized body monitoring any discrepancies
and shortcoming in the system.

 With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector, the demand for banking services, especially in retail
banking and mortgages are expected to be strong. The Reserve Bank of India is the
foremost monitoring body in the Indian financial sector.
 The liberalize policy of Government of India permitted entry to private sector in the
banking, the industry has witnessed the entry of nine new generation private banks.
The major differentiating parameter that distinguishes these banks from all the other
banks in the Indian banking is the level of service that is offered to the customer.
 With years, Private Banks are also adding services to their customers. The Indian
banking industry is passing through a phase of customers market. The customers have
more choice in choosing their banks. A competition has been established within the
banks operating in India. With stiff competition and advancement of technology, the
service provided by bank has become easy and convenient.
 The popularity of these banks can be gauged by the fact that in a short span of time,
these banks have gained considerable customer confidence and consequently have
shown impressive growth rates. Today, the private banks corner almost four per cent
share of the total share of deposits. Most of the banks in this category are concentrated
in the high-growth urban areas in metros (that account for approximately 70% of the
total banking business). With efficiency being the major focus, these banks have
leveraged on their strengths and competencies viz. Management, operational
efficiency and flexibility, superior product positioning and higher employee
productivity skills.
The private banks with their focused business and service portfolio have a reputation
of being niche players in the industry. India has 88 scheduled commercial banks

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 (SCBs) - 28 public sector banks (that is with the Government of India holding a
stake), 29 private banks (these do not have government stake; they may be publicly
listed and traded on stock exchanges) and 31 foreign banks. They have a combined
network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA
Limited, a rating agency, the public sector banks hold over 75 percent of total assets
of the banking industry, with the private and foreign banks holding 18.2% and 6.5%
respectively Financial System is the most important institutional and functional
vehicle for economic transformation of any country. Banking sector is reckoned as a
hub and barometer of the financial system. As a pillar of the economy, this sector
plays a predominant role in the economic development of the country.
In a country like India where reach is the biggest issue, banking technology plays a
major role. “In the past 10-15 years, technology has made a significant difference to
the way banking functions. Technology is purely used to offer our customer the
choice and a positive experience. It has been seen that Indian banks aren’t lacking
behind when it comes to technology. Technology has become a great level and now it
has become productive, and one can get access to technology which results in cost
efficiency.

CHALLENGES FACED BY INDIAN

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

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

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

Financial Inclusion
Financial inclusion has become a necessity in today’s business environment. Whatever is
produced by business houses, that has to be under the check from various perspectives like
environmental concerns, corporate governance, social and ethical issues. Apart from it to
bridge the gap between rich and poor, the poor people of the country should be given proper
attention to improve their economic condition. Dev (2006) stated that financial inclusion is
significant from the point of view of living conditions of poor people, farmers, rural non-farm
enterprises and other vulnerable groups. Financial inclusion in terms of access to credit from
formal institutions to various social groups Apart from formal banking institutions, which
should look at inclusion both as a business opportunity and social responsibility, the author
conclude that role of the self-help group movement and microfinance institutions is important
to improve financial inclusion. The study suggested that this requires new regulatory
procedures and de-politicisation of the financial system.

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 Interest rate risk:
Interest rate risk can be defined as exposure of bank's net interest income to adverse
movements in interest rates. A bank's balance sheet consists mainly of rupee assets and
liabilities. Any movement in domestic interest rate is the main source of interest rate risk.
Banking in the recent years had been reduced to a trading operation in government securities.
Recent months have shown a rise in the bond yields has led to the profit from treasury
operations falling. The latest quarterly reports of banks clearly show several banks making
losses on their treasury operations. If the rise in yields continues the banks might end up
posting huge losses on their trading books. Given these facts, banks will have to look at
alternative sources of investment.

Competition in retail banking:

The entry of new generation private sector banks has changed the entire scenario.
Earlier the household savings went into banks and the banks then lent out money to
corporate. Now they need to sell banking. The retail segment, which was earlier
ignored, is now the most important of the lot, with the banks jumping over one
another to give out loans. The consumer has never been so lucky with so many banks
offering so many products to choose from. With supply far exceeding demand it has
been a race to the bottom, with the banks undercutting one another. A lot of foreign
banks have already burnt their fingers in the retail game and have now decided to get
out of a few retail segments completely. The nimble footed new generation private
sector banks have taken a lead on this front and the public sector banks are trying to
play catch up. The PSBs have been losing business to the private sector banks in this
segment.

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CHAPTER - 2
COMPANY
PROFILE

13
CORPORATE HEADQUARTER

14
 HISTORY
The Jammu & Kashmir bank incorporated on October 1st 1938 commenced business
on 4th July 1939. The Jammu & Kashmir bank is today one of the fastest growing banks in
India with a network of around 800 branches/ offices spread across the country, offering
class banking products/ services to its customers. Today, the bank has a value driven
organization and is always working towards building trust for shareholders, employees,
customers, borrowers, regulators and stakeholders. J&K bank considers good corporate
governance as its prime motive and has adopted a policy based on all four pillars of good
governance i.e. Transparency, disclosers, accountability and value. The excellence achieved
by bank in its operations stemming from the roots of good governance has not gone
unrecognized and bank has recently bagged three very prestigious awards for following fair
business practices and commitment to social obligations.

The Jammu & Kashmir bank has been one of the few banks in the country which showed
exemplary performance in adjusting to the rigorous prudential norms that came into force
during 1992-93 and has been able to achieve capital adequacy ratio of 15.15% at the end of
march 2007 which is far ahead of RBI stipulation of 9% and one of the highest in the
industry today.

Traditional moneylenders till 1920-30 performed entire banking in the state of Jammu &
Kashmir at exorbitant interest rates. At the same time some banks functioned but at a very
limited scale, such as Punjab National Bank, Grind lays Bank and Imperial Bank of India.
The role of these banks was reduced to the acceptance of deposits, as they could not grant
loans and advances to the people of the state owing to the statutory limitations. To
overcome this critical situation the then Maharaja of the State conceived an idea of setting
up of a state bank in the state. The deliberations of the assignment for establishment of “The
Jammu & Kashmir Bank Limited” were given to the late Sir Sorabji N Pochkhanwala, the
then Managing Director of the Central Bank of India.

Mr. Pochkhanwala formulated a scheme on 24.09.1930, suggesting establishment of a Semi

State Bank with participation in capital by State and the public under the control of State
Government. The bank was formally incorporated on 1st of October 1938 and commenced

15
business from 4th of July 1939 at its Registered Office, Residency Road, Srinagar, and
Kashmir.

PROFILE
 Incorporated in 1938.

 Governed by the companies act and the banking regulation act

 Regulated by the Reserve bank of India and SEBI ( stock exchange board of India)

 Listed on the national stock exchange (NSE)and Bombay stock exchange (BSE)

 53% owned by the Jammu and Kashmir government.

 Four decades of uninterrupted profitability and dividends.

UNIQUE CHARACTERISTICS
 Private sector bank despite government holding more than 50% of the equity.

 Sole banker and lender of the last resort to the government of Jammu and Kashmir

 Plan and non-plan funds, taxes and non-taxes revenue routed through the bank

 Salaries of the government office distributed through the bank.

 Only private sector bank designed as an agent of the RBI.

 Collect tax pertaining to the central board of the direct taxes in J&K.

 Strong capitalisation with good resource profit.

 J&K bank functions as a universal bank in Jammu and Kashmir and the specialized
bank in the rest of the country.

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 AWARDS

In recognition of its excellent customer service, fair business practices, overall

operational efficiency, overall performance, etc. the bank has been felicitated by the
following awards during the last few years:

 Asian Banking Awards – 2004

 No. 1 Bank in India – ET – CMTE Survey 98-99
 India’s Fastest Growing Bank – Business Standard
 The Best Bank – Rediff.com & PWC Survey
 Excellence Award – Institute of Economic Studies
 Ranked as No. 1 on Safety Parameters – Business Standard Survey
 Best Private Sector Bank Award – Financial Express. Presented by Dr. Bimal Man,
Governor Reserve Bank Of India on 4th April 2003.
 Best Universal Bank Award – Financial Express, Presented by Dr.Bimal Man,
Governor, Reserve Bank of India on 4th April 2003
 Asian Banking Award 2004 for the Customer Convenience program.
 Asian Banking award – 2005 for its “ Development Project Financing Program’,
contributing significantly development of tourism industry of the Jammu &
Kashmir
 In 2005-06 -Bank launches its first multi-colour logo.
 In 2008 -09 – Business crosses Rs.50000cr.
 In 2010-12- Instant ATM card introduced on 30th November.
 In 2012-13- Mobile banking introduced.
 Aggregate business of the bank crosses milestone of Rs.one lakh crore to settle at
Rs.103421.03 cr as on March 31, 2013.
 Special Platinum Jubilee Dividend of 500 percent paid to shareholders in 2012 – 13.
 2013-14 Bank receives “Best Enterprise Award” from Europe Business Assembly.

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 Brand identity

The new identity of the Jammu and Kashmir is visual representation of the banks philosophy
and business strategy. Three colour squares represents the region of Jammu, Kashmir, and
Ladakah. The counter-forms created by interaction of the squares are a falcon without
stretched wings a symbol of power and empowerment the synergy between the three region
people the bank toward new horizons. Green significance growth and renewable blue
conveys stability and unity, and red represents energy and power. All these attributes are
integrated and assembled in the white counter form.

Vision
The banking vision is to capitalize economic transformation and catalyse on growth.
The bank aspires to make Jammu and Kashmir the most precious in the country, by help
creates a new financial architecture for the Jammu and Kashmir economy, at the centre of
which will be the J&K bank.

The bank is committed to achieve the healthy growth in profitability and

simultaneously to remain constant with the banks risk appetite and at the same time ensuring
the highest levels of ethical standards, professional integrity and regulatory compliance.

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 Mission of the bank
The company’s mission is two- fold. To provide the people of Jammu and Kashmir
international quality financial services and solutions and to be a super specialist bank in the
rest of the country. The two together will make it the most profitable bank in the country.

Financials of the J&K bank

The 75th Annual Report of J&K Bank, together with the audited Balance Sheet, Profit and
Loss Account and the report on business and operations for the year ended2015-16

The Bank has delivered a strong performance in FY The Bank’s strategy of consolidation, re-
engineering, re-pricing and re-organisation has resulted in productive and efficient growth,
robust balance sheet, reality asset book and substantial provisions. Financial highlights for the
year under review are presented below:

Performance at a Glance
JK bank has recorded highest ever business turnover of Rs115890 crore at the end of the
financial year 2015-16. It’s an appreciation of over Rs12000 crore when compared with
Rs103421 crore of the financial year 2015-16

At the end of March 2016, the deposits of the bank were recorded at Rs69,392 crore and
advances at Rs46498 crore. At the end of March 2013, the total deposits and advances of the
bank stood at Rs64,221 crore and Rs39,200 crore respectively.

Against the regulatory norm of 70% the NPA coverage ratio of the bank is at 94.01% for the
year ended March 2014, which is one the best in the industry.

During the year 2015-2016 the bank opened 70 new Business units thereby increasing its
network more than 750 while 105 ATMs were commissioned during this period taking their
number more than 800 excluding 2 mobile ATMs.

Credit Suisse Group, a leading global financial services company, recently cherry-picked
J&K bank among top five organizations in Asia as an interesting investment opportunity. The

19
selection was made on the basis of business outlook, financial strength, valuation, market
expand trading liquidity. The equity research report has backed the target of Rs1700 crore for
J&K state’s business outlook.

Product Range of The Company/Industry

Services Offered By Banks

Although the basic type of services offered by a bank depends upon the type of bank and the
country, services provided usually include:

 Taking deposits from their customers and issuing current (UK) or checking (US)
accounts and savings accounts to individuals and businesses
 Extending loans to individuals and businesses
 Cashing cheques
 Facilitating money transactions such as wire transfers and cashiers checks
 Issuing credit cards, ATM cards, and debit cards
 Storing valuables, particularly in a safe deposit box
 Cashing and distributing bank rolls
 Consumer & commercial financial advisory services
 Pension & retirement planning
 Childcare deposit scheme
 Grameen current account

Financial transactions can be performed through many different channels:

 A branch, banking center or financial center is a retail location where a bank or

financial institution offers a wide array of face to face service to its customers
 ATM is a computerized telecommunications device that provides a financial
institution's customers a method of financial transactions in a public space without the
need for a human clerk or bank teller

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 Mail is part of the postal system which itself is a system wherein written documents
typically enclosed in envelopes, and also small packages containing other matter, are
delivered to destinations around the world
 Online banking is a term used for performing transactions, payments etc. over the
Internet through a bank, credit union or building society's secure website.

Services Provided By The Jammu And

Kashmir Bank :
 The J&K Bank Savings Accounts
 The J&K Bank Current Accounts
 The J&K Bank Fixed Deposits
 The J&K Bank’s various Loans Schemes
 The J&K Bank various Depository Scheme

Other Facilities At The J&K Bank Ltd:

 Automatic Teller Machines.

 Locker Facility.
 Mobile ATM Service.
 The J&K Bank Credit Cards.
 The J&K Bank Global Access Debit Cards.
 SMS Banking
 Anywhere banking facility
 The J&K bank is the only bank in India which provides Amaranth YatraTickets to
pilgrims.

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 Future Prospects/Plans
Maintaining a progressive outlook, the J&K Bank is keeping pace with the changing
technology. The bank continues to leverage information technology as strategic tool for its
business operators.

The IT strategy emphasizes enhanced level of customer service through 24x7 hours
availability, multi-channel banking and cost efficient through optimal use of electronic
channels, wider market reach and opportunities for cross selling.

The bank has launched the three variant types of credit cards with different limits with an
interest free credit facility for 20 to 50 days at accept at 125000 mercantile establishments
across the globe. The customers have the access to their money for all the 365 days of a year
and 24 hours per day. The credit and debit cards of the bank are accept of cash with draws at
7000 ATMs in India and 1 million ATMs across the globe. To maximize value to its
customers, the innovation in products and improving the quality and speed of the services in
the Hall Mark of banks business strategy. The bank has launched several unique financial and
deposit products like education loans, car loans, consumer loans, flexi deposit recurring plus
and Mehandi deposits schemes to meet the needs of customers. the bank has recently won the
prestigious Asian banking awards 2004 for customer convenience programs. The awards are
given each to recognize and honour the bank in Asia pacific region for outstanding
innovating and world-class products services, projects and programmers.

J&K Bank has embarked on brand strategy exercise and engaged removed consultants to
work on business development possibility and engaged over all processes that could be
improved in the future to enhance the overall profitability of the bank.

This would increase branding of the banks products in order to increase the value for its
customers. And now with the right kind of leadership efforts of dedicated employees and
State of art technology, the J&K Bank is on the path of growth and success building trust
profit, peace and property.

22
 CHAPTER-3
INTRODUCTION
TO TOPIC

23
 INTRODUCTION TO SMALL SCALE
INDUSTRIES
Industrialization remains a fundamental objective of economic development in the majority
of less developed countries. In these countries industrial development is considered necessary
for achieving high rate of economic growth, to provide for basic needs of population, to
create more employment opportunities, to lead an increasingly diversified economy and to
give rise to desirable social, psychological and institutional changes. Historically, the level of
per capita income has been found to be correlated with the degree of industrialization.
Broadly speaking, industrialization is a “process in which changes in a series of strategical
production are taking place. It involves those basic changes that accompany the
mechanization of an enterprise, the building of a new industry, the opening of a new market
and the explanation of a new territory. This is in a way, a process of „deepening and
widening‟ of capital”. Thus in a large and more fundamental sense it involves the basic
transformation of society.

In India there is a strong case for the industrialization with vast manpower, large and varied
resources and continental dimensions. India’s industrial structure encompasses organized
large and medium scale, modern small scale and unorganized traditional industries. The last
two are known as the village and small industries (VSI) constitute an important segment of
the economy. The VSI sector is divided into eight sub-sectors a) Khadi b) village industries c)
handlooms d) sericulture e) handicrafts f) coir g) small-scale industries and h) power-looms.
While the last two represent the modern small scale industries, the other sub-sectors
constitute traditional industries. The promotion of industries in this dispersed sector primarily
falls within the jurisdiction of the state Government, the Centre, however, supplement their
efforts. The modern small scale industries include „Tiny‟ units and power looms, use power-
driven machines and possess some technological sophistication. The market for these
industries is relatively wide and quite often includes export market.

Small Scale Industries (SSIs)

The range of industries in India extends from the large- scale, medium- scale, small- scale
and traditional village and cottage industries. The basis of distinction between these
industries is generally the size, capital resources and labour force of the individual unit.
However, the basis for distinction between small -scale and cottage industries was laid down
by the Fiscal Commission in 1950 when it stated that, “A cottage industry is thus one which
is carried on wholly or primarily with the help of members of the family either as a whole or
a part- time occupation. A small- scale industry, on the other hand, is one which is operated
mainly with hired labour, usually 10-50 hands”. Probably it was this definition that prompted
the Industries Development and Regulation Act 1951 to exempt units employing less than 50
workers with power, and less than 100 workers without power, from registration. This
exempted sector came to be known as the small- scale sector.

24
 New Nomenclature & Classification of Small Industries under the
MSMED Act, 2006

ENTERPRISE MANUFACTURING SERVICE

ENTERPRISES ENTERPRISES
MICRO Rs.25 Lakhs Rs.10 Lakhs
SMALL Rs.5 Crores Rs.2 Crores
MEDIUM Rs.10 Crores Rs.5 Crores

Abid Hussain Committee Report on small scale industries, 1997, defined small scale
industries “as those units which have investment in plant and machinery up to Rs 3 crores”.
As per the new initiatives taken in 1999-2000 the investment limit for small scale units has
been reduced from Rs. 3 crores to Rs. 1 crore. According to the Act of 2006, MSMEs are
classified into (a) enterprises engaged in the manufacture or production of goods pertaining to
any industry specified in the first schedule to the Industries (Development and Regulation)
Act, 1951 and (b) enterprises engaged in providing or rendering services.

The Small Scale Industries sector, over the years, has grown steadily and occupied an
important place in the economy. Contribution of the sector in terms of generation of
employment, output and exports is quite significant. The number of registered units in the SSI
sector has increased from 67.87 lakhs as in 1990-91 to 298.08 lakhs in 2009-10. These
numbers are exclusive of the units in the unregistered sector. The importance of the Small
Scale Industries sector is well-recognized from its significant contribution to the socio-
economic objectives of growth in generation of employment, output, exports and fostering
entrepreneurship. Currently, the sector accounts for around 95 per cent of the industrial units
in the country contributing 40 per cent of the manufacturing sector output and approximately
one-third of the nation’s exports. In 2009-10, there were 298.08 lakhs modern SSI units
providing direct employment to around 695.38 lakhs persons. The production of SSIs has
increased from ` 63518 crore to ` 982919 crore during 1990-91 to 2009-10, the investment
has increased from ` 93555 crore to ` 693835 crore and exports has increased from ` 9664
crore to ` 202017 crore during the period of 1990-91 to 2009-10.

The present economic scenario in India has created an excellent climate for the development
of SMEs. Although the Indian Economy traditionally has been agro- based, with a sizeable
part of its gross domestic product (GDP) being contributed by agriculture, a notable
contributor to nations gross domestic product is the small scale industrial sector. The SSI
sector was dominated in the earlier years by village and cottage industries, and small
industrial units with very low capital base, with the increasing pressure of population, which
has grown from 350 million in 1947 at the time of the independence to over 985 million as
of now, there has been a perceptible shift towards industrial economy which provides gainful
employment. Large industrial undertakings came up in core sectors such as steel, cement and
petro- chemicals. During the paradigm shift in economy, the small scale sector has remained
a very active participant in India’s growth.

25
To illustrate:
 Over 95 percent of total industrial units are in the SSI sector numbering 298.08 lakhs.
 SSI has 695.38 lakhs workforce, representing 80 percent of the total industrial
workforce.
 Over 40 percent of turnover of the manufacturing sector comes from the SSI sector,
i.e., 3,40,650 million out of 21,19,680 million.
 Over 40 percent of industrial exports are contributed by the SSI sector.

In process of liberalization of the industrial sector, the Government of India announced New
industrial policy (NIP) in 1991 which reiterate the importance of small units and announced
different measures for the promotion of small tiny and village industries. Definition of SSI
was also revised. To encourage modernization and upgrading technology, equity participation
by other industrial undertakings including foreign collaborators was permitted up to 24
percent.

Presently, the Government is implementing various promotional schemes to encourage

the small enterprises. Important schemes are:

a. Excise concession available for both registered and unregistered units on a graded scale
depending on turnover up to 300 lakh.

b. Integrated Infrastructure Development Scheme to strengthen infrastructural facilities in the

rural and backward areas.

c. Quality Certification Scheme to improve SSI product quality and financial support to
acquire ISO 9000.

d. Seven Point Action Plan to improve credit flow to SSI sector.

e. To support expansion, modernization and technology upgradation, the scope of National

Equity Fund Scheme is enlarged to cover the entire country except metropolitan areas.

f. Technology Development and Modernization Fund Scheme for the modernization and
adoption of improved and upgraded technology.

g. A scheme for creation of Technology Development Fund in the states with the
involvement of State Governments and Industry Associations.

h. Priority Sector Leading.

i. 40 percent of advances to SSI sector reserved for tiny sector and village and cottage
industries.

j. Refinance facilities and special schemes of Small Industries Development Bank of India
(SIDBI).

26
k. Concessional/fixed rate for loans upto `.2 lakhs in two slabs.

l. Single window scheme of SIDBI for project outlay upto `.50 lakhs.

m. Prime Ministers Rozgar Yojana (PMRY) for loans to micro-enterprises.

n. Infrastructural support to Entrepreneurship Development Institutes to augment their

training capacities.

o. Joint programme with the State Bank of India and SIDBI for modernization and
technology upgradation of industry customs.

p. Assistance to industrial associations and voluntary agencies to set up Quality Testing

Centres.

q. Special programme on render development, quality awareness and pollution control.

r. Reservation of products for exclusive manufacture by the SSI.

s. Government priority for purchase and price preference for items from the SSI sector.

Under the integrated production programme of the small and large scale industries, the
number of products reserved for the SSI have increased from initial 47 in the First Five Year
Plan to 836 (as on march 1996). About 409 items have been reserved for the exclusive
purchase by the Government from the SSI sector. Thus the Government of India has been
adopting various protective and promotional policies for the development of SSI in the
country.

Small Scale Enterprises (SSEs) play an important role in the recovery and are increasingly
recognized as having a permanent role as a seedbed for future growth. Their activities span a
wide range in both the formal and informal sectors and they provide a good source of non-
public sector employment. Even for some in public sector employment, SSEs provide a
substantial supplement to their incomes as second job. An important feature of the SSE,
whether urban or rural, is the belief that they make better use of scarce factors of production
than large scale enterprises. The SSE is usually labour intensive and the amount of capital
invested is small.

A number of problems have been identified with the SSEs in India. These include shortages
of capital, raw materials, spare parts and machinery, competition from large industries and
complicated procedures which must follow in order to start or expand a small business
shortage of imported raw materials. Spares and machinery has been an added problem mainly
due to the difficulty of import licenses for these imputes. This has been a function of the
preventing shortage or foreign exchange.

The structure of Indian economics is currently undergoing a period of transformation under

the aegis of structural adjustment policy packages negotiated with the IMF and the World

27
Bank, Government in all corners to the continent are effecting programmes after radically the
nature and orientation of their national economics. In most cases there involves a substantial
degree of economic liberalization with the role of the Government in the management and
regulation of economic activity having much reduced. Since the inception of the New
Economic Policy (NEP) in 1990, within the broad set of structural adjustment programmes,
certain policies have affected the activities of SSEs.

J&K Scenario
The Industrial growth in Jammu and Kashmir has remained subdued in the past. There is no
major or medium industry in the state. The contribution of this sector both manufacturing
registered and unregistered to the Gross Domestic Product is around 6%. Among other
factors geographical and topographical conditions hampered the industrial growth as heavy
and large scale industries sector could not be tapped due to heavy financial involvement.
Except three districts viz. Jammu, Samba and Kathua, the whole state posses difficult terrain
and landscape. Besides, the atmosphere was not more conducive to cottage and small scale
industries. As a result, the state on industrial front was lagging far behind than the other
industrially developed States of India. This could be well judged by the fact that Index of
industrial production (IIP) for the State is worked out to be below 110 by the Directorate of
Economics & Statistics, J&K, and while as many other States in the country have crossed
even 200 marks. The State is struggling hard to be on the path of industrialization. The
industry sector has been declared as the main vehicle for accelerating economic activity
besides providing employment opportunities to the educated unemployed youth. The state has
got the industrial potential in Bat making, tyre & tube making and newly emerging agro food
processing.

The Department of Industries, J&K Govt. with a special Statistical section was established in
1923 which has successfully organized several important industries and will likely be able to
assist in the establishment of some other SSI units under new government. The J & K State
Marketing Board was established in 1935 with objects similar to those of marketing
organizations in British India. The Board has carried on marketing surveys in respect of a
number of Kashmiri products, while useful information on the marketing was collected. The
industrial sector has been declared as the main vehicle for accelerating economic activities
besides providing employment opportunities to the educated youth of the state. The
Department of Industries and Commerce has been making untiring efforts to establish
backward and forward linkages to provide institutional support to the local industries.h

The industrial sector plays a significant role in economic development and employment
generation in the Country. It is a major contributor to the Gross National Product (GNP) after
services sector. The remarkable achievement made in the growth rate in the couple of years in
India is mainly due to services and industrial sector. During severe economic meltdown in
America and Western Europe, resulting in withering away of the gigantic financial
institutions based in the USA and other

28
 European countries made the world to realize the economic and industrial prowess of India
and its future role in ameliorating the economic depression.

Present Position:
J&K is still far behind in Industrialization and has not kept pace in tandem with the high
speed industrialization taking place in the country. The State of J&K is less attractive for
investment due to political instability and geographical disadvantage. Despite difficulties,
there is a hope that the State will come out from the quagmire of industrial backwardness and
the day is not far when the State will find place in the industrial map of India. Despite host of
difficulties and serious infrastructural problems, it is encouraging to note that in Micro Small
and medium Sector (MSME), the units have come up mostly in FMCG (Fast Moving
Consumer Goods) and food processing sector. An extra effort is needed in making a perfect
resource mapping and evolves a package that addresses sector specific problems. The
committees constituted for evolving a sub package policy for backward areas is examining
the issue of incentives for backward areas other than what is available in the industrial policy.
There is a need to make a shift and focus on sectors which have optimum and sustained raw
material base in the State such as construction industry (marble), gem and jewellery, textiles
(woollen and silk), carpet, sports (cricket bat) having complete value addition available in the
State, wood based industry and finally food processing (export of walnut), pharmaceutical
etc. As per the fourth census of MSMEs total number of SSI units surveyed in J&K is 20,359,
out of them 14534 are working, 2313 are closed and 3812 are Non-traceable. The total
enterprises run by males are 11467 and total enterprises run by females are 3067.The
employment generated by these enterprises are 415771 (0.70% share of employment of units
during 2001-02 to 2010-11, the investment has increased from ` 198.54 crores to ` 3015.71
crores 2001-02 to 2010-11.

29
 DISTRICT-WISE NUMBER OF SSIs IN J&K
SERIAL No. NAME OF DISTRICT NO. OF SSI UNITS
1 Anantnag 4312
2 Kulgam 149
3 Pulwama 2816
4 Shopian 115
5 Srinagar 10021
6 Ganderbal 137
7 Budgam 3798
8 Baramullah 4184
9 Bandipora 117
10 Kupwara 1815
11 Leh 953
12 Kargil 661
13 Leh 953
14 Jammu 10015
15 Sambha 127
16 Udhampur 3859
17 Reasi N.A
18 Doda 1702
19 Kishtawar N.A
20 Ramban N.A
21 Khatua 4824
22 Poonch 1627
23 Rajouri 1360
Source: Directorate of Economic and Statistical Planning, Jammu and Kashmir

30
 Role of Promotional Agencies

 Jammu and Kashmir State Industrial Development Corporation

Limited (SIDCO)
Jammu and Kashmir State Industrial Development Corporation Limited (SIDCO) is the nodal
agency for promotion and development of medium and large- scale industries in the state.
The corporation has been entrusted with various assignments for the development of
industries in the state. It is responsible for the development of infrastructural facilities of
small, medium and large scale industrial projects, identification of technically feasible and
financially viable projects for the state, conducting seminars/ workshops/ industrial
exhibitions within and outside the state for the promotion of industries, and assisting quick
clearance of the envisaged projects by various regulatory authorities. SIDCO has also been
acting as a nodal agency for the Ministry of Food Processing Industries, Government of India
and operating as the virtual office of Agricultural and Processed Food Products Export
Development Authority (APEDA), Ministry of Commerce, in the state. It has also been
assigned the responsibility of providing grant of financial assistance to industrial projects
having investment up to 450 lakh and participation in the equity of selected joint or assisted
projects. SIDCO has developed a number of industrial estates in Jammu and Kashmir.

 J&K Small Scale Industries Development Corporation Limited (SICOP)

SICOP was established in 1975 as a wholly owned company of the Government of J&K. It
has been entrusted with a variety of roles for the development of small-scale industries (SSI)
in the state. The corporation, along with SIDCO and Directorate of Industries and Commerce
(DIC), has been responsible for developing industrial infrastructure in the state. The
corporation has established a network of raw-material depots in all districts of the state for
the procurement and distribution of raw materials to small industrial units. It also functions as
the consignment agent of Indian Petrochemicals Ltd. (IPCL) at Jammu, Srinagar and Leh and
handling agent of Steel Authority of India Ltd. (SAIL) at Pampore (Kashmir) and the
consignment as well as its handling agents at Leh. Besides, it also provides marketing support
by selling the end products of the industries to the government. The state government, to this
effect, had reserved fifteen items for exclusive purchase by the government departments from
SSI through SICOP in 1997. Small Industries Service Institute (SISI)

Small Industries Service Institute (SISI) was set up to provide technical support services to
small scale industries in the country. Along with various developmental efforts, SISI has been
conducting entrepreneurial development programmes as well as promotional programmes to
promote SSIs in the country. SISI and its branches have common facility workshops in
various trades attached to it. SISI, Jammu has been providing techno-managerial, economic
and marketing services to prospective and existing entrepreneurs in the state. The

31
entrepreneurs are guided in product identification and diversification, selection of machinery
and their procurement. It has also undertaken the preparation of project reports like: Industrial
Profile of J&K state, State Profile on Agro-based industries, Technical Reports on the
prospect of glass and ceramic industry in J&K, etc. Besides, SISI provides consultancy
services to prospective entrepreneurs and conducts training courses/seminars.

 Directorate of Industries and Commerce (DIC)

The Directorate of Industries and Commerce performs various functions to promote
industrialization in the state. The directorate is the implementing agency for various policies
and programmes meant for the development of industries. It provides incentives (under the
package of incentives announced by the government both state and central) and marketing
assistance to existing as well as new industrial units in the state, organises and participates in
exhibition and fairs, seminars, workshops and awareness campaigns to promote industrial
development in the state. DIC facilitates interface between industrial associations and
agencies engaged in industrial development and financial institutions and banks. The
directorate has also developed industrial estates with facilities to set up industrial units. Along
with promotional functions, DIC maintains statistical information regarding industrial
development in the state.

 J&K Khadi and Village Industries Board

To provide gainful employment to rural artisans of the state, the J&K Khadi and Village
Industries Board was established in 1962. The Board provides financial and technical
assistance for setting up of small-scale industries under various schemes to achieve this
objective. Financial assistance is provided as per the approved pattern of the All-India Khadi
and Village Industries Commission to individual units as well as to cooperative societies.

Industrial promotion agencies such as SIDCO, SICOP, Small Industries Service Institute
(SISI) and Directorate of Industries and Commerce perform various functions to promote
industrialization in the state. Both central and state governments announced a package of
incentives to attract industrial investments in J & K. Still, industrial scenario of the State has
been very dismal and an action plan would therefore consist of the following:

a. Sector-specific strategies should be adopted to promote industries in Jammu and Kashmir

keeping in mind the climate, accessibility, raw material availability, human resources and
consumption pattern.

b. To encourage investments in the state, Government should play a lead role to build up the
confidence of the private investors.

32
c. A comprehensive and analytical review of existing industrial estates in the state is required
so that reasons for the failure or non-performance of units located in the industrial estates can
be ascertained and corrective action taken.

d. Common Facilities Centre should be provided to the industrial units set up in the estates.

e. Better infrastructure including uninterrupted power supply and connectivity should be

provided to the units.

33
  INDUSTRIAL POLICY OF
STATE J&K-2016
Jammu and Kashmir govt. on March 15 brought into effect its industrial policy, which will
remain in force for next 10 years up to 2026. The ‘Industrial policy-2026’ has focused on
easing doing of business by simplifying procedures, bringing registration and other
formalities online, puts a time frame and brings most of the procedural requirements under
the authority of a single nodal officer, General Manager, District Industrial Center. The
policy adds up a number of incentives and subsidies. To already existing ones for progress of
industrial development and promoting manufacturing with an aim to create the jobs and boost
the economy in the state. Here are important points of this new policy for the startups to
notice.

1. Provisional registration of a unit to be issued within 7 days from the day of

online submission of ‘form and required documents’.
2. Online process of land allotment, PCB’s ‘consent to establish’ and PDD’s ‘power
availability certificate’.
3. Land of for the desired unit would be identified by SIDCO/SICOP within 7 days
of receiving the form from general manager, District Industries Center.
4. PCB and PDD to provide certificates of consent and availability within one
month and 7 day of receipt of email. No communication from PCB or PDD will
be considered as ‘no objection’ for the go ahead of the unit.
5. Allotment of the land to unit holder to be issued online within 3 days receiving
PDD and PCB certificate.
6. An entrepreneur is required to pay premium for land within one month of issue
of land, otherwise to face cancellation of the allotment.
7. Entrepreneurs shall setup and make functional their projects within 2 years of
the allotment of land otherwise the registration shall be considered cancellation
and land would be retrieved.
8. No requirement of a project report (DPR) on a micro industry unit, i.e., a unit
with investment up to 25 lakh on plant and machinery in manufacturing sector
and up to investment of Rs 10 lakh on equipment in services sector.
9. Registration with Ministry of MSME, Government of India with self-certified
detail for issue of udhayog Adhar Number is mandatory for receiving benefits
for micro, small and medium enterprises provided by the said ministry.
10. Cent percent subsidy up to Rs 2 lakh on the cost incurred on project report /
feasibility reports (DPR).
11. Exemption of stamp duty on mortgage deeds required for loan and other
purpose by the financial institution.
12. Exemption of court fee on registration of documents required for lease of land.

34
13. Airfreight subsidy of 50 percent up to Rs5 lakh per annum on export of finished
goods and import of raw materials within India.
14. For handloom and handicrafts, airfreights subsidy of 50 percent up to Rs15 lakh
per annum on the parcels of 5000 kg within India and 1000 kg abroad.
15. State government will provide capital investment subsidy of 30 percent to micro,
small industries with upper sealing of Rs60 lakh and Rs75 lakh respectively in
Zone-A (industrially progressive districts) and Zone-B (far flung and
industrially backward districts) in manufacturing sector, and up to sealing of
Rs30 Lakh and Rs37.5 lakh in respective zones in services sector.
16. For Micro and small industries additional capital investment subsidy of 10
percent up to maximum Rs 20 lakh will be provided in Zone-B districts for
promotion of industries in industrially backward districts.
17. Interest subsidy in Zone-B has been enhanced to 5 percent for existing 3 percent
to attract more investment in these industrially backward districts.
18. State govt. will provide 60 subsidy up to Rs50 lakh for installation of pollution
control devices in the factories.
19. Subsidy of 50 percent on expenditure taken for green and environmental
protection initiatives like waste management, rain water harvesting, recycling
etc.
20. For installation of diesel generator sets of 10 KW to 200 KW, 100 percent
subsidy up to Rs40 lakh in Zone-A and Rs45 lakh in Zone-B will be provided.
The 100 percent subsidy will also be provided for installing renewable energy
sources like wind and solar plants for required energy consumption in industrial
units.

35
 CHAPTER-4
ROLE OF BANKS
AND OTHER
FINANCIAL
INSTITUTIONS IN
THE
DEVELOPMENT
OF SSIs

36
 INTRODUCTION
The Development of small scale and cottage industries has remained as an integral part of
India’s strategy for industrialization. A network of institutional agencies was set up during
and after the first plan to accelerate their development. Yet State Financial Corporation’s
(SFCs) were setup principally to cater the financial needs to this sector. The RBI played a key
role in establishing or supporting institutions, intended to enlarge the flow of credit to small
scale industries and in encouraging existing institutions, notably the State Bank of India had
launched more liberal schemes to finance the small scale industries in collaboration with the
state level institutions. With these initiatives not yielding results the RBI speeded up its
engagement to cater the needs of this sector from 1950. It took the lead to put in place and
administrated a scheme to guarantee institutional loans to the small scale industries and began
refinancing commercial bank’s lending to this sector at concessional rates of interest. The
labour intensive handloom industry was also accorded a special treatment.

The Small scale and cottage industries were accorded with an important place in successive
five year plans. The first plan provided 27 crores for the sector, which the plan document
regarded as being an integral part to the wider industrial development of the country. A
network of institutions were established to promote handlooms, other handicrafts, khadi and
village-level manufacturing, sericulture and coir-based activities, the Government also set up
a National Small Industrial Corporation (NSIC), the Small-Scale Industries Development
Board (SIDB), and Regional Small Industries services Institutes to provide technical
assistance and advice to small industries. The second plan assigned key roles to the RBI and
to newly formed State Bank of India in evolving an integral scheme for financing the needs
of the small-scale industries. The planning commission set up village and small industries
(second five year plan) committee under D.G. Karve to advise the RBI on how best to utilize
the plan resources earmarked for the sector. The committee stressed the need for coordination
between the RBI, the State Bank of India, State Financial Corporations and Central
Cooperative Banks in evolving a coherent financial policy for small industries. A working
group set up by the Ministry of Commerce and Industry to evaluate small industries
development programmes and make suggestions for the third plan deplored the inadequate
performance of State Financial Corporation and banks meant for lending to medium-sized-
units. Making the bigger provision for the State Aid to industries Act, the plan once again
stressed the need for enhancing up financial assistance to the sector.

Efforts are being made for extending credit facilities for the small scale and the cottage
industries. Large credit is extended to the small scale industries on liberal terms by several
agencies with the State Financial Corporation, Commercial Banks, Cooperative Banks,
Regional Rural Banks and the overall guidance of the Reserve Bank of India and the
Industrial Development Bank of India. Credit is offered both for a short-term and a long-term
purpose. The small scale industries are also included in the priority sector for commercial
banks lending. Finance is provided for various activities such as buying of inputs,
equipments, marketing etc. In providing credit facilities efforts are also made to reduce the
dependence of these small scale industries on non-institutional sources.

37
Credit is required for a long term as well as for a short term. The long term credit is required
for creation of fixed assets like land, buildings, plant and machinery. The short term credit is
required for running the industry for its day to day requirements such as purchase of raw
materials, payment of water, power, etc. The amount required for short term is also called
working capital.

The Government of India has been introducing different institutions to meet the credit
requirement of different sectors of the economy and the small scale industries in particular.
Prior to the establishment of IDBI and SIDB, Banks availed of refinance from the RBI
against eligible loans made by them to SSIs. SIDBI is the main financial institution for
finance, promotion and development of the SSI sector in India. The following are the major
institutions for credit dispensation to SSI sector at national and state level:

SOURCES OF FINANCE TO SSIs

SOURCES of
FINANCE TO
SSIs

NATIONAL
STATE LEVEL OTHERS
LEVEL

At National Level

1. Small Industrial Development Bank of India (SIDBI):
Industrial Development bank of India was set up in 1990 as a principal financial institution.
SIDIBI acts as an apex bank for priority re-financing of small loans to meet the credit
requirement through various schemes. Small Industries Development Bank of India has
diversified and increased its operation and has come up with new schemes for factoring

38
services, venture fund and schemes for modernization and technology up-gradation. Today,
small entrepreneurs can avail credit facility not only for initial investment and working
capital, but also for modernization expansion of their enterprises.

The SIDBI had set up a Technology Development and Modernization Fund (TDMF) Scheme
in April 1995 with a corpus of ` 200 crore for direct assistance of small scale industries to
encourage existing industrial units in the sector, to modernize their production facilities and
adopt improved and updated technology so as to strength their export capabilities. Assistance
under the scheme is available for meeting the expenditure on purchase of capital equipment,
acquisition of technical know-how, up-gradation of process technology and products with
thrust on quality improvement

in packaging and cost of TQM and acquisition of ISO-9000 series certification. The operation
of this scheme has been extended by another three years through the announcement under
Union Budget 2000-2001 made by the Minister.

2. Banks:
a. Commercial Banks: Indian commercial banks are playing an important role in mobilizing
adequate volume of resources from different parts of the country. Commercial banks are
rendering valuable services in moblising untapped small savings and other financial resources
from different areas and especially from rural areas of the country through its branch
expansion programme. Before nationalization, commercial banks did not show much interest
in the development of the small scale industries of the country, till March 1969, the
commercial banks of the country jointly extended loan to the tune of only ` 90 crore to the
small scale industries of the country. But after nationalization of 14 commercial banks in July
1969, these banks have taken some steps to extend credit to the small scale industries to some
extent. At the end of June 1980, all the commercial banks advanced loan to the extent of
`3250 crore. In recent years, the amount of loan extended by the commercial banks to the
small scale industries of the country has increased in considerable proportion. After
nationalization, the public sector banks started to extend liberal credit facilities to the priority
sectors which include agriculture, small scale industry and exports. Total amount of credit
advanced to the priority sector has increased from `440 crore in June 1969 to ` 73654 crore in
December 1996. The share of priority sectors in total bank credit has increased from 12
percent in June 1969 to 41.1 percent in December 1996. Total credit provided during 2010-11
are ` 4,84,473 crores.

b. Regional Rural Banks: The regional rural banks are multi-agency approach to rural
credit, were established since 1975 under the RBI Act of 1976. RRBs were introduced and
promoted by the Government of India with the noble objective of promoting saving habits
and providing credit delivery mechanism to the rural India. The target groups were small and
marginal farmers, agricultural labours, artisans and small entrepreneurs for the development

39
of agriculture, trade, industry and other commercial activities in rural India. There were 196
Regional Rural Banks with a network of 14,485 branches in India. Ninety percent of these
have been opened in the rural areas and unbanked centres. The credit requirement to village
and cottage industries are fulfilled by the Regional Rural Banks.

c. Cooperative Banks: Cooperative banks consist of state cooperative banks, central

cooperative banks and primary non-agricultural credit societies. The cooperative banks were
established under the Cooperative Societies Acts of different states; it came into force in
March 1, 1966. The cooperative banks mobilize the savings of the members and non-
members by inculcating habit and self-help, and funds so raised to those who can profit by
them. The functions of the cooperative banks are as follow:

i. Agriculture, allied and marketing activities,

ii. Marketing of crops,

iii. Pisciculture,

iv. Industrial cooperative societies (other than weavers),

v. Labour contract and forest labour cooperative societies including collection of minor forest
produce,

vi. Rural artisans including weaver members of functional societies, viz., PACS/LAMPS/SS,

vii. Procurement of agricultural inputs (fertilisers, seeds, etc.).

 At State Level
1. State Financial Corporation (SFC): State financial corporation came into
existence under the provision of the State Financial Corporation Act and one viz. Tamil Nadu
Industrial and Investment Corporation Ltd. under the Companies Act. The main objectives of
the SFCs are to finance and promote Industrial enterprises in their respective states for
achieving a balanced regional growth to catalyse investment, generate employment and
widen the ownership base of industry. Financial assistance to an industrial unit is provided by
the way of term loans, direct subscription to equality/debentures, guarantees, discounting of
bill of exchange and seed capital assistance. They also provide financial assistance for small
road transport operations, hotels, tourism-related activities, hospitals, nursing homes etc.
With the increasing diversification/expansions in the Indian industry, the corporation has
started providing assistance to the newer types of business including tissue culture, poultry,
farming, commercial complexes and services related to engineering, marketing etc. With a
view to enable corporations to finance/undertake the new industrial/business activities, the
definition of industrial concern under the SFC Act has been modified. In view of the

40
changing business environment, the SFCs are focusing more attention on investment
activities and the capital market related operations. With the ongoing liberalization in the
country, the SFCs have to play a more challenging role than before but it also exposes its
structural and financial constraints to support industrial development under the current
competitive environment.

2. State Industrial Development corporations: Incorporated under the companies

Act 1956 SIDC‟s were set up in different states as wholly owned companies for promoting
industrial development in the irrespective states. The main functions of SIDC‟s are as
follows:

a) Providing term finance to all small, medium and large industrial enterprises set up in state.

b) Underwriting and directly subscribing to shares, and debentures of industrial enterprises

being set up in the state.

c) Preparing feasibility studies, conducting market surveys and motivating private

entrepreneurs to set up their industrial ventures in the state.

d) Collaborating with private entrepreneurs to set up industrial ventures in joint and assisted
sector.

e) Implementing scheme of „Industrial Development Bank of India‟ of seed capital in the

state.

3. State Small Industrial Development Corporations (SSIDCs): State small industrial

development corporations were established in various states under the Companies Act, 1956
as state Government undertakings for the development of Small, tiny and village industries in
the respective States/Unions Territories. Being operationally flexible, it undertakes a variety
of activities for the benefit of the SSI sector such as:

i. Procurement and distribution of scarce raw materials.

ii. Supply of machinery to SSI units on a hire-purchase basis.

iii. Providing assistance for the marketing of products.

iv. Construction of Industrial estates, provision of allied infrastructure facilities and their
maintenance.

v. Extending seed capital assistance on behalf of the State Govt.

vi. Providing management assistance to production units.

vii. Management of emporia for providing sale window for handlooms, handicrafts and SSI
items.

With the emergence of WTO, SSIDCs have initiated various measures to expand the scope of
their activities. Distribution of raw materials to Small Scale units is the most important

41
activity of SSIDCs. With a view to reduce the exploitation faced by Small Scale
entrepreneurs in a competitive market, the corporation is supplying adequate and quality raw
materials at right time. SSIDCs also assist the Small Scale Industries by marketing their
products in domestic and international markets. They also run production-cum-training
centres, provide guidance/consultancy to entrepreneurs and organize buyer-seller meets.
Some SSIDCs are setting up centres for display of/and information dissemination on export
marketing in addition to development of web pages for them and acting as Common Export
Manager.

Other Agencies:
1. National Bank for Agricultural and Rural Development (NABARD): It is
a central or apex institution for financing agricultural and rural sectors. If a person is engaged
in agriculture or other activities like handloom weaving, fishing, etc. NABARD can provide
credit, both short-term and long-term, through regional rural banks. It provides financial
assistance, especially, to co-operative credit, in the field of agriculture, small-scale industries,
cottage and village industries handicrafts and allied economic activities in rural areas.

i. Financing industrial societies:- Refinance is provided to Cooperative Banks for financing

production and marketing activities of industrial cooperative societies engaged in one or more
of the 22 approved broad groups of the cottage and Small Scale Industries (SSIs).

ii. Weavers’ Finance:-Given the importance of handloom sector in the rural employment
generation, refinance is extended to meet the working capital requirements of primary
weavers‟ societies, procurement, stocking, distribution and marketing activities of Apex
Weavers‟ societies and State Handloom Development Corporations (SHDCs).

iii. Financing handicrafts sector: - Rural craftsmen are provided support by financing State
Handicraft Development Corporation (SHDCs) through SCBs and Commercial Banks (CBs)
for production, procurement and marketing of handicraft goods.

iv. Rural Entrepreneurship Development Programme:- Rural Entrepreneurship

Development Programme (REDP), introduced on an experimental basis in the early nineties,
as a means to support capacity building of the rural unemployed persons to enable them to set
up their own enterprises, is firmly entrenched as a successful model for employment
generation in the rural areas. During 2010 year, 871 REDPs were supported covering 26,130
persons and involving grant assistance of `454.39 lakh. So far, grant assistance of `3185.64
lakh has been extended for conducting 7159 REDPs covering 2.15 lakh persons. The
programme has been institutionalised since 2004-05 by associating Rural Development and
Self-Employment Training Institutes (RUDSETI) and banks in conduct of training
programmes.

v. District Rural Industries Project (DRIP):- The project was launched by NABARD in
1993-94 in 5 selected districts with the objective of generating sustainable employment

42
opportunities through enhanced credit flow to Rural Non Farm Sector together with the
promotional measures in a coordinated manner. Under the project, a common action plan is
prepared and implemented in coordination with all the Government and non-governmental
agencies involved in the promotion of rural industrialization in a district. Considering the
success of the programme, it was decided to extend the project to 100 more districts in 5
years commencing from the year 2001-02. As at the end of 31 March 2006, a cumulative
number of districts covered were 106 facilitating a setup of more than 10.79 lakh units and
generating employment opportunities for over 22.93 lakh persons.

2. Khadi and Village industries Commission: The khadi and village industries
commission is a statutory organization established in 1957 under an Act of the parliament.
KVIC assists in the promotion and development of khadi and village industries. KVIC
operates through 30 state-level Khadi Boards, 4,969 registered institutions and 30,129
cooperative societies, 188 departmental units and 15,441 sales outlets. The main objectives of
the KVIC are: rural industrialization, promotion of self-reliance among the people and the
building up of a strong rural community base; and skill development, creation of employment
opportunities in the rural areas and transfer of technology. For the development of khadi and
village industries, KVIC plans, promotes, organizes and implements programmes and
provides financial assistance to the eligible agencies. The Commission arranges training for
persons employed in the KV Sector or desirous of seeking employment in the khadi and
village industries, besides supervisors and other functionaries, the KVIC also builds reserves
for raw materials and supplies them at such rates as may be decided from time to time. It
undertakes R&D activities in the khadi and village industries products and encourages the
promotion of cooperative efforts among the persons engaged in the khadi and village
industries.

3. National Small Industries Corporation: The National Small industry

Corporation, the government of India undertaking, was setup in February 1995 with a view to
promote aid and foster the growth of the Small scale Industries. The authorized share capital
of the corporation is ` 40 crores and the paid up capital was ` 25 crores. The corporation was
setup for providing specific assistance to the Small Scale Industries through:

i. Supply of machinery on hire purchase basis,

ii. Ensuring a greater share for the Small Scale units in the government purchase programme,

iii. Distribution of raw material, scarce components and parts,

iv. General marketing assistance, particularly in the export market,

43
v. Providing training and common facilities in the networking of Prototype Development and
Training Centre (PDTC) at specific places, and

vi. On behalf of the Government to undertake institutional assistance programme in other

developing countries.

The NSIC continues to remain at the forefront of the industrial development throughout the
country with its various programmes and projects to assist the Small Scale Sector in the
country. The recent transition of industrial climate, liberalization of the total economic
environment within the country and an international area has witnessed tremendous changes
in the domestic as well as in the international markets. The sudden changes have thrown up
as many opportunities as the challenges to Small Scale entrepreneurs in the country. The
NSIC is directing operating different programmes by professionals through 8 regional offices,
5 Technical services centres, 2 foreign offices, 2 software technology parks, 17 branches of
offices located in all the states and 3 technical services extension centres.

4. North Eastern Development Finance Corporation Limited: NEDFi was set

up in 1995 with an initial paid up capital of 100 crores to cater the financial needs of the
industrial entrepreneurs in the north eastern region of the country. The services include term
loans, working capital, discounting/rediscounting of bills, guarantees, subscriptions to and/or
underwriting of shares and securities, consultancy and research facilities in the north eastern
region. It also offers Techno-Economical Feasibility Studies for the national and the
international funding. It also introduced a scheme called the North East Equity Fund Scheme
in 1998 to help the tiny units in the region. It also launched a new scheme called NEDFi’s
Micro Finance Scheme to meet the financial needs of the smallest of the small entrepreneurs.

44
 CHAPTER-5
FINANCING BY
J&K BANK TO
SMALL SCALE
INDUSTRIES

45
 PREAMBLE:
Small Scale Industries (SSIs) are considered as the growth engines of the Indian economy
due to their spread and depth. They create vast employment opportunities and contribute
significantly to our GDP. Their share in the exports is also significant. The scope of lending
to Small Scale Industries is expanding due to various policy measures of banks, RBI and
Government of India. A comprehensive and liberal lending policy is required to enable the
SSI sector to play it’s pre-eminent role in the Indian economy without any hurdles.
Accordingly, this policy is fine tuned in line with objectives of the bank to meet the genuine
requirements and aspirations of the SSI sector.

 GUIDELINES ON SSI UNITS FINANCE:

Advances to SSI sector will be assessed like any other advance (except for the specific
relaxations and concessions given in this policy) and credit decisions will be taken based on
viability, merits and commercial judgment in each case as per general norms of lending. The
credit appraisal will be made in a transparent and non-discriminatory manner. All genuine
and just requirements of the SSI units will be considered and adequate amount of credit will
be sanctioned to ensure that the unit does not suffer for want of funds at a later stage.

Necessary credit support will be extended to SSI units for business restructuring,
modernization, expansion, diversification and technological up gradation as may be required
from time to time.

The following type of credit facilities will be extended to SSI units.

A. Term Loans for creation of fixed assets

B. Project Finance i.e. Term Loans for creation of fixed assets/project assets

C. Working Capital Finances by way of CC Limit, WCDL, WCTL, Bills Limits,

Purchase, Discounting & Negotiation of Bills, Pre shipment/Post shipment finance.

D. Non fund based facilities such as LC, BG and Buyer’s Credit (BC).

E. Credit facilities under Bank’s special credit schemes e.g. Term Loan against
Mortgage of Immovable Property, Loans to Trade & Services against Mortgage of
Immovable property, J&K Bank Contractors Finance scheme, Saral Finance for
Small Business, Loans under Govt sponsored schemes, other specific products and
any other type of credit depending on specific need.

46
ASSESSMENT OF CREDIT FOR SSI
UNITS:

1. Simplified procedures will be adopted for sanction of working capital limits upto
Rs.5.00 crores as per Nayak Committee. Turnover Method i.e. 20% of the projected
and accepted annual turnover will be extended as working capital limit to SSI units
requiring aggregate fund based working capital limits up to Rs.5.00 crores. For
business enterprises whose sales are more than Rs.40.00 lacs audited financials shall
be obtained. A reasonable growth in sales by amount ranging between 15% & 25%
over the actual sales of last financial year may be normally accepted. However, sales
growth of more than 25% but up to 35% maximum can be accepted provided
the entrepreneur provides sufficient justification for such increase in sales. Sales
growth of more than 35% can also be accepted and such cases shall fall within
the powers of Zonal Head upto loan limits falling normally under the powers of
Branch Head, Cluster Head & Zonal Head. Cases where sales growth of more
than 35% shall be accepted and falls in the powers of A&AP shall be sanctioned
as per existing powers without considering it as deviation. In case working capital
margin is available for amount less than the required margin contribution, limit shall
be sanctioned with suitable condition that the borrower shall induct deficit/shortfall
amount and after being satisfied that the borrower has sufficient resources/capacity to
generate adequate cash flows to meet the deficit/shortfall in working capital margin.
2. For SSI units requiring working capital limits above Rs.5.00 crores, WC Limits shall
be strictly allowed as per 2nd Method of Lending based on Credit Monitoring
Arrangement (CMA) data.
3. For seasonal industries such as tea, coffee, sugar, IT Services etc Cash Budget method
shall be followed.
4. A combined working capital limit will be allowed against the stock and receivables
without any sub limit for receivables. However, a separate Bills Discounting/Purchase
limit can be sanctioned wherever required depending upon the nature of activity.
Margins may be different for stocks and receivables on case to case basis.
5. If the bank sanctions term loan solely or jointly with one or more Banks, working
capital limit will also be sanctioned simultaneously solely or jointly to avoid delay in
commencement of commercial production. It will also be ensured that there are no
cases where term loan has been sanctioned but sanction of working capital facilities is
awaited.
6. The interest payable up to six months after commercial production will be included as
part of the project cost for assessment of credit requirements. Adequate
moratorium/gestation period say, up to six months, after commencement of
commercial production, will be allowed for repayment of principal amount wherever
required, to enable the unit to establish itself in the market.

47
 7. Rejection of SSI credit application will be conveyed to the applicant only after
obtaining approval from the next higher authority.

MARGIN NORMS:
1.Term Loans:
a. No margin is required for loans upto Rs.50000/.

b. 10% for limits above Rs.50000.00 and upto Rs.2.00 lacs.

c. For loans above Rs.2.00 lacs 25%, can be relaxed upto 20% in case of well established
SSIs on merits.

2. Working Capital Finance for calculation of drawing power:

a. For working capital up to Rs.5.00 crores: Minimum margin of 20% of Stocks & 20% of
Book Debts shall be prescribed in case facility will be secured against hypothecation of raw
materials, work in process, finished goods etc. & assignment of book debts. However, higher
margins may be stipulated depending upon the nature of activity wherever justified.

b. For working capital above Rs.5.00 crores: As per 2nd method of lending i.e. 25% of
Stocks & Book

c. For Post Shipment Loan: Nil

d. For PCL: Minimum20%.

3. Minimum cash margin of 10% will be prescribed in respect of non fund based limits
such as Bank Guarantee, Letter of Credit & Buyers Credit on merits.

4. For loans under Government sponsored schemes and Bank’s special credit schemes,
margin will be obtained as stipulated in the scheme even if it is different from the levels
indicated above.

5. In exceptional cases, margins lesser than indicated above can be accepted subject to
prior approval of the competent authority as per powers vested with them.

6. In case of restructured/rehabilitated account minimum margin norms may not apply.

48
 SECURITY NORMS:
1. Primary Security: All the assets both fixed and current financed by the bank shall be
obtained as primary security by the bank by way of hypothecation/assignment/mortgage
(registered as well as equitable). Normally an Asset Coverage Ratio of 1.25:1 shall be
maintained.

2. Collateral: Collateral in the form of tangible security will supplement coverage for
exposure. Personal/Corporate guarantee, negative lien of fixed assets will not be considered
as collateral for this purpose.

3. In respect of following categories collateral security and/or 3rd party

guarantee(s) shall not be obtained:
a. Loans & Advances to SSIs for credit limits up to Rs.10.00 lacs. CGTMSE cover in all such
cases i.e. loans up to Rs.10.00 lacs will be obtained by bank at its own cost.

b. Loans & Advances to SSIs for credit limits above Rs.10.00 lacs upto the credit limits as
specified by the bank from time to time, provided credit guarantee cover under Credit
Guarantee Trust for Micro & Small Enterprises (CGTMSE) is available and obtained. Cost of
CGTMSE Fee shall be paid by the borrower for loans above Rs.10.00 lacs.

Note: Presently Bank is freely taking guarantee cover for credit facilities upto Rs 25 lacs.
However, depending on the merits of each case, the bank may also consider acceptance of
CGTMSE Guarantee cover on selective basis for credit facilities above Rs 25 lacs & up to
Rs.1.00 crores.

c. Loans & Advances under Govt sponsored schemes sponsored by State/Central

Governments, unless specified in the scheme.

49
 Key Ratios:
For entertaining new credit proposals, following level of key ratios are required for
loan limits above Rs.2.00 lacs :

KEY RATIO MINIMUM REMARKS

Current Ratio 1.25:1 for limits upto May be relaxed Up to 1.10:1
Rs.5.00 crores. in case of export credit
1.33:1 for limits above
Rs.5.00 crores
Debt Equity ratio 3:1 May be relaxed up to 4: 1 in
( Long term debt including (For loans above Rs.2.00 case of well established SSIs
DPG / Equity) lacs) on merits
DSCR ( Debt service 1.:15 (Minimum) and The acceptable levels in
coverage Ratio) 1.30:1 (Average) base case scenario are
prescribed as 1.15:1
(Minimum) and
1.30:1(Average). However,
the levels can be relaxed
upto 1.10:1 (minimum) &
1.25 :1 (average), provided
the borrower has good track
of repayments and has
satisfactory dealings with
the bank.
Interest coverage ratio 1.25:1 The ratio is an indicator of
ability of the unit to repay /
service the interest and is
arrived at by dividing PBIT
by interest and has to be
analyzed in combination
with other financial
indicators.

50
 Disposal of Loan Applications:
The operative levels while acknowledging receipt of loan applications shall indicate to the
applicant borrower the time period for disposal of the application. The following time frame
is prescribed for disposal of loan applications after their receipt along with relevant details
/information supported by requisite financial and operating statements. If additional details/
documents are required, the borrower should be immediately informed in writing.

Category of loan application Total time period for disposal

after receipt of the loan
application along with
relevant information/
documents at the Business
units.
All categories of loan applications (fresh, 15 days
renewal or enhancement) falling within
the powers delegated to Business unit
Heads
All categories of loan applications (fresh, 3 weeks from the date of receipt of the
renewal or enhancement) for limits proposal at the B/U.
falling within the powers delegated to
Zonal Heads and Cluster Heads.
All categories of loan applications (fresh, 4 weeks from the date of receipt of the
renewal or enhancement) falling within proposal at the B/U.
the powers of CHQ (other than proposals
to be sanctioned by BOD/MCB)
All categories of loan applications (fresh, 6 weeks from the date of receipt of the
renewal or enhancement) falling within proposal at the B/U.
the Powers of BOD/MC
Proposals seeking in principle sanction One week from the date of receipt of the
proposal

51
 CREDIT GUARANTEE TRUST FOR
MICRO AND SMALL ENTERPRISES
(CGTMSE):
Bank will encourage financing viable micro and small enterprises for fund based and non
fund based limits without collateral security and/or third party guarantee by taking advantage
of the Credit Guarantee Scheme of CGTMSE. In order to promote flow of credit to Micro &
Small Enterprises, the Bank is freely taking guarantee cover for credit facilities upto Rs 25
lacs. However, depending on the merits of each case, the bank may also consider acceptance
of CGTMSE Guarantee cover on selective basis for credit facilities above Rs 25 lacs & up to
Rs.1.00 crores. For loans up to Rs.10.00 lacs guarantee fee shall be paid by the bank and for
loans above Rs.10.00 lacs fee shall be paid by the borrower.

STRATEGIES:
To improve the flow of credit to SSI sector and to achieve the various targets and
commitment for the SSI sector, the bank will adopt the following strategies:

1. Branch Managers and other officials handling SSI credit will be imparted training to
enable them to properly understand the nuances of SSI finance and opportunities in the
sector. Efforts will be made to sensitize the operative levels and inculcate positive mindset
towards financing SSI units.

2. SSI credit processing centers will be set up at key locations to ensure prompt and efficient
processing for all SSI credit applications.

3. Simplified loan application forms will be made available for loans to SSIs.

4. Zone Wise and Branch Wise annual targets will be fixed for lending to SSI and quarterly
review notes on Zone Wise performance will be placed before Top Management.

5. A separate target will be fixed to branches for sanction of loans under CGTMSE cover in
order to increase the coverage under Credit Guarantee Scheme of CGTMSE.

6. Cluster based financing will also be undertaken wherever possible.

7. Specialized SSI branches will be opened at potential centers, identified clusters and
industrial estates to enhance the flow of credit to SSI sector.

8. Latest technology will be adopted for on line submission of SSI credit applications,
tracking of applications and for MIS requirements.

52
9. New credit products will be developed for SSI sector to meet the emerging requirements of
the sector from time to time.

10. Bank will implement all Government of India/State Government sponsored schemes for
SSI sector and disburse credit under such schemes within the stipulated parameters.

11. Bank will avail refinance from SIDBI to augment the resources for lending to SSI sector,
considered necessary.

12. To ensure that loans to SSI sector up to loan limit of Rs.10.00 lacs are extended
collateral free, sanctioning powers of all sanctioning authorities against collateral
security/3rd party guarantee up to Rs.10.00 lacs will be withdrawn.

13. No cross selling of financial products as a pre condition of financing SSI units.

14. Down selling of Bad/Unviable accounts to Asset Reconstruction Company.

15. Bank will create a separate portal for SSI on banks website and will place all the
information & data related with SSI as suggested by RBI.

SSI CARE CENTERS:

SSI Grievances redressal cum Care centers shall be established at all Zonal Offices to handle
the grievances of Small Scale Industries and also to guide the SSI Entrepreneurs.

53
 FOLLOW UP OF SSI CREDIT:
SSI loan portfolio will be monitored at branch and controlling office levels on regular basis.
Early warning signals with regard to irregularities in the accounts will be picked up promptly
and probed into. Following mechanism to be adopted by operative levels for catching early
warning signals in loan limits of Rs.2.00 lacs & above:

Early Warning Signal Benchmark

No. of times DP/limit overdrawn More than 10 days per month
Cumulative no: of days DP/ Limit More than 60 days in a year
exceeded
No: of days interest overdue More than one month
No: of cheques / bills payable by the More than 5 per month.
borrower returned
No: of LC/ BG issued in favour of More than 5 in a year
borrower devolved/ invoked
No: of days delay in submission of renewal More than 60 days a time
proposal
No of days delay in submission of More than 30 days a time
Periodical statements such as stock
statement, book debt statement & creditors
statement.
Variance in projected sales Vs actual sales More than 30%
Delay in rectification of inspection More than 60 days
irregularities (Borrower side)
Default in days in compliance with More than 60 days
sanction conditions (borrower side)
Credit summation (in case of sole banking) Less than 60% of sales
Delay in submission of financial More than one quarter
statements.

Corrective measures will be initiated without loss of time to avoid the accounts slipping
into sub standard category. Borrowal accounts will be restructured, wherever necessary,
under the provisions of debt restructuring mechanism for SSI units. If any accounts
become sick, in spite of close monitoring and follow up action, such accounts will be
dealt with sympathetically and shall be rehabilitated under bank’s policy on nursing and
rehabilitation of sick SSI units, if they are potentially viable.

54
 REHABILITATION OF SICK SSI UNITS:
With a view to provide timely and adequate assistance to SSIs, bank will begin
rehabilitation effort on proactive bases after detecting the early sickness signs and shall
declare account to have reached “Handholding Stage” if any of the following events
have triggered:

a. There is delay in commencement of commercial production by more than six months for
reasons beyond the control of the promoters;

b. The company incurs losses for two years or cash loss for one year, beyond the accepted
timeframe;

c. The capacity utilization is less than 50% of the projected level in terms of quantity or the
sales are less than 50% of the projected level in terms of value during a year.

Bank will provide handholding support to each unit which is in handholding stage within a
maximum period of two months of identification of such units. These units will be provided
guidance, counseling, timely financial help as per established need and will also be extended
help in sorting out any difficulties which are non-financial in nature or requiring assistance
from other agencies.

Definition of Sickness:
A SSI may be said to have become Sick, if:

a. Any of the borrowal account of the unit remains NPA for three months or more

OR

b. There is erosion in the net worth due to accumulated losses to the extent of 50% of
its net worth during the previous accounting year.

The units who will not get revived at handholding stage will be classified as sick subject to
complying with any one of the two conditions as laid above. A rehabilitation package based
on a viability study than will be sanctioned to viable/potentially viable units. The
rehabilitation package will be implemented speedily in a time bound manner within six
months from the date the unit is declared as 'potentially viable' / 'viable'. While identifying
and implementing the rehabilitation package ‘holding operation' will be allowed to units for a
period of six months. The units will be allowed to draw funds from the cash credit account at
least to the extent of their deposit of sale proceeds during the period of such ‘holding
operation'.

55
Units becoming sick on account of willful mismanagement, willful default, unauthorized
diversion of funds, disputes among partners / promoters, etc. will not be classified as sick
units and accordingly are not be eligible for any relief and concessions.

Viability of Sick SSI Units:

A unit may be regarded as potentially viable/viable if it would be in a position, after
implementing a relief package spread over a period not exceeding 10 years from the
commencement of the package, to continue to service its repayment obligations as agreed
upon including those forming part of the package, without the help of the concessions after
the aforesaid period. The repayment period for restructured (past) debts should not exceed 10
years from the date of implementation of the package. The decision on viability of the unit
will be taken at the earliest but not later than 3 months of unit becoming sick under any
circumstances. The following procedure will be adopted by the bank before declaring any
unit as unviable:

1. All the rehabilitation proposals will be sanctioned / recommended by a committee

comprising of senior officials from Local Head Offices.

2. A unit should be declared unviable only if the viability status is evidenced by a viability
study.

3. For SSI units , having investment in plant and machinery up to Rs.5 lakh and micro
(service) enterprises having investment in equipment up to Rs. 2 lakh, Branch Managers will
take a decision on viability and record the same, along with the justification.

4. The declaration of the unit as unviable, as evidenced by the viability study, will be
approved by a committee.

5. In case a unit is declared unviable, an opportunity will be given to the unit to present the
case before the next higher authority.

6. The next higher authority will take any decision only after giving an opportunity to the
promoters of the unit to present their case.

7. Decision of the above higher authority will be informed to the promoters in writing.

8. The above process should be completed in a time bound manner not later than 3 months.

Units not Eligible for rehabilitation:

Units becoming sick on account of willful mismanagement, willful default, unauthorized
diversion of funds, disputes among partners / promoters, etc. should not be considered for
rehabilitation and steps should be taken for recovery of bank’s dues. The definition of willful
default, as given by RBI vide its Circular DBOD No. BC.DL (W)12/20.016.002(1)98-99
dated 20 February 1999, will broadly cover the following:

56
1. Deliberate non-payment of the dues despite adequate cash flow and good net worth.

2. Siphoning off of funds to the detriment of the defaulting unit.

3. Assets financed have either not been purchased or have been sold and proceeds have been
misutilised.

4. Misrepresentation/falsification of records.

5. Disposal/removal of securities without bank's knowledge.

6. Fraudulent transactions by the borrower.

The views of the bank with regard to willful mismanagement of funds/defaults will be treated
as final.

Reliefs and Concessions for Rehabilitation

of potentially viable units:
The viability and the rehabilitation of a sick SSI units would depend primarily on the unit’s
ability to continue to service its repayment obligations including the past restructured debts. It
is, therefore, essential to ensure that ordinarily there is no write off or scaling down of debt
such as by reduction in rate of interest with retrospective effect. Reliefs and concessions for
sick units shall be calculated as under:

1. Interest Dues on Cash Credit and Term Loan: Penal interest or damages, if any,
charged to the account, such charges shall be waived from the accounting year of the unit in
which it started incurring cash losses continuously. After this, the unpaid interest on term
loans and cash credit during this period should be segregated from the total liability. The
amount shall be funded. No interest may be charged, if justified, on funded interest and
repayment of such funded interest should be made within a period not exceeding seven years
from the date of commencement of implementation of the rehabilitation programme.

2. Unadjusted Interest Dues: Unadjusted interest dues such as interest charged between the
date up to which rehabilitation package was prepared and the date from which actually
implemented, shall also be funded on the same terms as at above.

3. Term Loans: The rate of interest on term loans be reduced, where considered necessary
and repayment period be extended subject to the conditions that total repayment period
including moratorium shall not exceed 10 years from the date of implementation of package.

57
4. Cash Losses: Cash losses are likely to be incurred in the initial stages of the rehabilitation
programme till the unit reaches the break-even level. Such cash losses including interest, as
may be incurred during the nursing programme, may also be financed in the shape of term
loan. Cash losses in this context will refer to losses from the time of implementation of the
package up to the point of cash break-even as projected.

5. Working Capital: Additional working capital limits may be extended. Turnover method
or 1st method of lending shall be applied while calculating MPBF.

6. Contingency Loan Assistance: For meeting escalations in capital expenditure to be

incurred under the rehabilitation programme, bank may provide, where considered necessary,
appropriate additional financial assistance maximum upto 15 per cent of the estimated cost of
rehabilitation by way of contingency loan assistance

58
 CHAPTER-6
RESEARCH
METHODOLOGY

59
 TITLE:
Financing of Small Scale Industries by J&K Bank Ltd in
Kashmir Division

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

SCOPE OF THE STUDY

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

60
 OBJECTIVES OF THE STUDY
Objectives of a project tell us why project has been taken under study. It helps us to know
more about the topic that is being undertaken and helps us to explore future prospects of the
topic. It essentially tells what all has been studied while drafting the project.

The various objectives of the study are:

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

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

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

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

Commerce J&K for SSI, s in the Valley.
 To study the business environment in the valley and also the feasibility and
viability of starting new business in valley.
 To Study the level of satisfaction of SSI’s holders with J&K bank
regarding the financial help provided by the bank.

61
 RESEARCH METHODOLOGY OF THE
STUDY
Survey method and personal interview is used to collect data from the randomly selected five
small scale industries by using the close‐ended structured questionnaire. This study is
empirical and mostly depends on primary data. Study is based on the various data provided
by bank officials and data from research literature is thoroughly studied and interpretations
made thereof. Primary data has also been collected from anonymous bank staff. The
responses of all the questions in the questionnaire were tested by using the five points Likert
scale.

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

RESEARCH DESIGN
As far as my working on the project report is concern I have collected data through
exploratory research methodology. I administered questionnaires in proportion to the selected
sample size and my sample size for the said project report stands at 60. Several respondents
were reluctant to respond freely and frankly. But I collected enough data for the
accomplishment of my project report.

62
 SOURCES OF DATA
COLLECTION
Data collection method is highly influenced by the methodology chosen.
Following are the methods of collecting data:

 PRIMARY DATA:

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

 SECONDARY DATA:

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

SAMPLE SIZE
In the study the sample size was 30, the respondents were selected from different regions
across the valley. For the study I have targeted respondents from major areas.
These areas were selected for the data collection due to certain reasons. Here I have easy
access to the targeted people, easily targeted different income group respondent. The target
respondents were Entrepreneurs, Managers and employees of SSI’s. I have targeted
respondent from different Managerial levels and occupations. The technique of sampling
used is Simple Random Sampling

63
 DATA COLLECTION
Respondent were given a questionnaire and the interviewer noted down the responses after
giving the information about the purpose of the study and instruction about the questions.

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

 Pie Chart

 Bar Chart

 LIMITATIONS OF THE STUDY

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

64
 CHAPTER-7

DATA ANALYSIS
AND
INTERPRETATION

65
1: Since how long the industry is functioning?

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

7 3 15 4 1

Age of the Industries

60%

50%

40%

30%
Age of the Industries
20%

10%

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

Interpretation

The above data reveals that J&K has various number of industries. It has been observed from
the above data that the growth of industries is increasing. The industries which have gone
above 40 years of development are 1, 30-40 years are 4 , 20-30 years are 15, 10-20 years are
3 and 0-10 years are 7.

66
2: What is your contribution in this business?

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

lacs Lacs lacs Lacs lacs
7 12 5 3 2 1

Investment
100

80

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

Interpretation

It is clear from the above data that different industries have made different investment in their
industry out of which those industries which have investment between75 lacs to 1 crore is 1,
60-75 lacs is 2, 45-60 lacs is 3, 30-45 lacs is 5, 15-30 lacs is 12 and 0-15 lacs is 7.

67
3: Dealings of Small scale industries with different banks operating in the state?

JK BANK HDFC PNB SBI None

25 2 1 1 1

Banking Relations

JK bank
HDFC
PNB
SBI
None

Interpretation :

Above data clears that most of the SSIs have banking relationship with JK bank.

68
4: Amount of loan taken from the JK bank:

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

Lacs lacs lacs lacs lacs Lacs lacs 35 lacs
For Term loan 5 8 10 4 2 1 0 0
For Working 11 10 3 4 2 1 0 0
Capital loan

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

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

Interpretation:

It has been observed from the above data that JK bank has given different amount of loans to
SSIs for term loans and for working capital loans.

69
5: Contentment level of SSI units with the JK bank?

Fully Somewhat Neutral Somewhat Fully

satisfied Satisfied unsatisfied unsatisfied
3 9 10 6 2

Contentment level
8.33%
5%

%
21.66%
age
of 31.66%
SSI"s

33.33%

Interpretation

The above data reveals the information about the satisfaction level of SSIs with the J&K
bank. It has been cleared that most number of industries are satisfied with the JK bank.

70
6: Awareness about the RBI guidelines?

Fully Somewhat Neutral Somewhat Fully

Aware aware unaware unaware
3 6 8 10 3

Awareness
100
80
%
age 60
of 40 35% 31.66%
SSI's 16.66%
20 10% 6.66%
0
Fully aware Somewhat aware Neutral Somewhat fully unaware
unaware
7:

Interpretation:

The above data revels the information about the awareness of SSIs about the RBI guidelines.
It has been cleared that most no. of industries are neutral about the knowing of RBI guideline.

71
7: Are you satisfied with the security demanded by the JK Bank for loans?

Fully Somewhat Neutral Somewhat Fully

satisfied Satisfied unsatisfied unsatisfied
0 1 4 6 19

Somewhat stisfied Satisfication

6.66%
Fully satisfied
0% Neutral
13.33%
Fully satisfied
Somewhat satisfied
Fully Somewhat Neutral
unsatisfied unsatisfied
63.33% Somewhat unsatisfied
20%
Fully unsatisfied

Interpretation

The above data clears the satisfaction level of SSIs with the security demanded by JK bank
for loan. As the data reveal’s that most number of the SSIs are unsatisfied with the security
demanded by JK bank.

72
8: Does the JK bank keeps privacy & confidentiality of your business & personal
information?

Strongly Disagreed Neutral Agreed Strongly

disagreed agreed
7 14 5 3 1

60 D.A
48.33%
.
50
40
S.D.A
30 23.33% N
18.33%A S.A
20
1.66%
8.33%
10
0 .

Interpretation

The above data clears, the most number of customers feel that JK bank does not keep their
privacy and personal information confidential.

73
9: Which initiatives will be more effective to improve SSI’s?

Implementation Decreasing Introduction Advertiseme Decreasing

of schemes Interest new nt Demand for securities
rate schemes
4 14 2 4 6

Effectiveness
13.33%
21.66%
% age of SSI's

Implementation of schemes
Decreasing int.rate
10%
Itroduction of new schemes
8.33% 43.33%
Advertisement
Decreasing Demand for security

Interpretation

As per my view increasing the introduction of new schemes will improve the SSIs in the
state. Most of the industries wants that govt. should introduce new schemes.

74
10: Is JK bank transparent to you?

Strongly Disagreed Neutral Agreed Strongly

disagreed agreed
2 6 8 14 1

Transparency
50

40

30

20 .
10

0
Strongly Disagreed(D.A) Neutral(N) Agreed(A) Strongly
disagreed(S.D.A) agreed(S.A)

Interpretation:

As per the analysis its revealed J&K bank gives complete and full transparent detail
with regard to charges for availing loan while other banks does not show such transparency
of charges for availing loan.

75
11: Does the bank advertising their schemes regarding financing of SSI’s to make you
aware about these schemes?

Yes No
23 7

Advertising

Yes
No

Interpretation
From the above figure we have studied that J&K bank is good in advertising their schemes
regarding the financing of SSI as the above figure shows the difference itself.

76
CHAPER-8
FINDINGS

77
FINDINGS
 The study reveals that about 92% of Small Scale Industries in Kashmir have
maintained their relationship with JK Bank and only 10% of SME’s have maintained
their relationship with other (i.e. SBI ,PNB etc) banks.
 The study also reveals that the SSI units holders are least satisfied with the
transparency of the J&K Bank.
 The study reveals that most of the SSI’s are not fully aware from the guidelines given
by RBI to the banks for financing SSI’s.
 The study reveals that 70-75% Management of SSI’s in Kashmir are not satisfied with
the Privacy & confidentiality of their information(both of business & personal) kept
by the bank.
 About 85% of SSI’s are saying that they are making a reasonable increase (from 5-
15%) in the profit by getting loan from the bank.
 Most of the SSI’s are more interested in getting working capital loan rather than Term
loans.
 The study reveals that most of the SSI’s have investment not greater than 20 lacks i.e.
these industries are at the bottom of given value of investment given by RBI for an
industry for being an SSI (i.e. 1 corer).
 The study reveals that most of the SSI’s are satisfied with the overall contribution of
JK bank towards SSI’S.
 Most of the SSI’s want decrease in the Interest rate, also are unsatisfied with
commitments of the bank to implement new schemes & also are unsatisfied with the
Advertisement strategy of the bank for the new schemes.
 Most of the SSI’s are more interested in the Cash credit type of working capital loan.
 About all SSI’s are complaining about the low consideration by the government.
 By the study, it came to light that the various subsidies promised by the government
for the entrepreneurs under the industry policy cost them dearly due to the corrupt
system of directorate of industries and commerce.
 Bank is continuously taking steps to improve SME’s.
 This time bank is continuously organizing meetings with the entrepreneurs of SSI’s in
order to discuss the new steps that should be taken to improve SSI’s.

78
 The managers of SSI’s are also complaining about the non-implementation of the
scheme i.e. lower down rate and also rescheduling the instalment schedule.

 The managers of SSI’s are also complaining about the winding up of Business
Development Promotion Cell (BDPC) and are not satisfied with Cluster making
strategy by the bank.
 The study also reveals and bring into light that there are no business awareness
campaigns in the valley.
 Most of the Sick industries are winded up in the valley because of 30% margin kept
by bank to sick industries.
 The study also reveals that 40% of the budding entrepreneurs are not availing the loan
from the banks due to the threat perception in the mind regarding the political
instability that hinder the entrepreneurs from repayment of loan along with interest.
 The study also disclosed that the relaxation in the period of repayment of loan to the
banks be extended so that the business unit holders could easily pay it off at regular
easy instalments.

79
 CHAPTER-9
SUGGESTIONS

80
 Suggestions and Recommendations
 RBI should make new strategies to make Industries and SSI’s particularly aware about their
guidelines to the banks for financing Industries and SSI’s in the Valley.
 The formalities for SSI’s for getting loan should be reduced.
 The Securities especially Collateral securities demanded for getting loans, which are about
twice the actual amount of loan, should be decreased.
 J&K Bank should keep Privacy & confidentiality of information (both of business &
personal) of SSI’s.
 Bank should not do any kind of editing in SME’s Project plan for which they have applied
for loan because it can make failure of that plan.
 All loan applications received under SSI Sector should be disposed of by the branches
within in minimum period of time
 The bank should follow sharply all the RBI guidelines in financing SSI’s .
 The bank should make available, free of cost, simple standardized, easy to understand, and
application form for loans.
 The bank should focus more on improvement of SSI’s and should achieve targets in Priority
Sector Lending.
 The bank should restore Business Development Promotion Cell (BDPC).If BDPC is
restored their focal point should be industries.
 The bank should locate branches in every industrial area for the convenience of SSI’s.
 Every SSI Entrepreneur should be given rights to present their grievances and suggestions
to the bank.
 Government should help SSI’s through providing Subsidy, good Infrastructure and also
should help them in the marketing of their products.
 The new schemes/policies should be implemented which needs sharp supervision on middle
and lower management.
 Bank should do proper recruitment, and train the staff about the proper and quick
service.
 Bank should make regular advertisement of their new schemes for SSI’s in order to make
them familiar with the new schemes introduced by the bank.
 There should be more than 20 lacks sanctioning competence to the branch placed in the
industrial area.

81
 The bank should introduce new schemes for SSI’s in order to improve them.
 Government intervention is very must for the Small Scale industries in the valley.
 Sound government policy is required for the promotion of this industrial sector.
 Financial institutions need to be strengthened.
 Entrepreneurs of SSI’s need to come forward with their innovative projects.

82
CHAPTER-10
CONCLUSION

83
CONCLUSION
The industrial sector plays an important role in the economic growth of both developed and
developing countries. The Small Scale Industrial (SSI) sector is very important for any
country irrespective of the level of development because, SSI contributes maximum socio
economic benefits with low level of investment and results in employment creation, income
2wsgeneration, and poverty alleviation and restricts migration of unemployed workers into
cities. SSI’s is also one that maximizes the utilization of local resources and results in
innovations, new technology and is a pathway to emerging entrepreneurs. SSI’s are the
starting point for industrial growth. Small and medium scale industries (SSIs) have been
considered essential for economic development not only in less developed countries (LDCs)
but also in more developed regions of the world. Since they are seen being more dynamic,
innovative and have higher labour absorptive capacities than their corporate counterparts, the
SSI sector has been the backbone of industrial development in many developed countries.
SSIs have played a significant role in Valley’s economic development. In Kashmir, SSI’s
have been estimated as providing 21% of total employment and have fulfilled important
functions such as being the foundation for local entrepreneurship and innovation, as critical
supporting industry. Problems faced by the SMI sector in the Valley can be divided into those
from the demand and supply side. Constraints of the demand side cover competition from
domestic and foreign sources, non-availability of market information and inadequate market
access. While the supply side constraints include low technology, shortage of finance, access
to raw materials, inadequate Infrastructure, lack of managerial skills, shortage of skilled
labour and low productivity. The working in DIC is slow which should be streamlined for
disposal of cases of SSI’s. The unit holder requires hassle free services from DIC for
clearness and registration of cases. J&K Bank should categorize its credit policy towards the
SSI sector; this sector has high potential in the Valley. The overall performance of the J&K
Bank was rated as excellent. This shows that the persons are very much satisfied with the
overall performance of the bank, although it needs to improve in some fields. There is an
opportunity for the bank to diversify its business. This is because the most of the
respondentsdesire that the bank itself should market their products. The respondents have
given surety that they will totally cooperate. Quick sanctioning of the loans has been
preferred by the most of the respondents. After quick sanctioning, low interest rates are
highly considered by respondents by applying for such loans. Monitoring of the functioning
of these units, reasonable mortgage are considered secondarily.

84
 CHAPTER-11
BIBLIOGRAPHY

85
 BIBLIOGRAPHY / REFERENCES
Websites

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

Research Papers
 Daniel L. Bond, Daniel Platz and Magnus Magnusson, “Financing small-scale
infrastructure investments in developing countries”, may 2012.
 Alan Dale C. Gonzales, “Financing Issues and Options for Small-Scale Industrial
CDM Projects in Asia”.
 Jesmin, Rubayat, “financing the small scale industries in Bangladesh: the much-
talked about, but less implemented issue”, vol 16, no1.
 Purusottam Nayak, “Role of Financial Institutions in Promoting Entrepreneurship
In Small Scale Sector in Assam.”
 Hemanta Saikia, “Total Factor Growth in Small Scale Industries Some Evidences
from India, the Romanian Economic Journal, sep2012.
 Damayanthi Menike MGP, “Role of bank in financing SSI’s in srilanka.”
 Annual Report 2011-2012, “MSME-DI Jammu Kashmir.”

Magazines/Journals
 Prof. Jayshri J Kadam,Prof. Dr. V.N. Laturkar, Lecturer, IBMRD, A.Nagar, India
Reader, SRTMU, Nanded, India,(aug 2011), International Journal of Exclusive
Management Research”, A study of Financial Management in Small Scale Industries
in India vol 1, issue 3,pp.1 -8.
 Dr. K.A. Goyal & Vijay Joshi,(2012) Indian Banking Industry Challenges And
Opportunities .International Journal of Business Research and Management
(IJBRM), Vol 3, no 1, pp.30 -48
 Dr k Ramakrishnan,(2013)The Indian Banker. The Monthly Journal Published by the
Indian Bank’s Association, vol 8, no 7, pp. 44-48

86
Newspapers
 https://www.greaterkashmir.com

87
CHAPTER-12
ANNEXURE

88
 QUESTIONNAIRE

Dear Respondent,

I am currently working on a project titled “Financing of Small Scale Industries in Kashmir

by J&K Bank”. Your cooperation in this project will help me to fulfil my academic
requirement and will also provide you a chance to register your valuable thoughts.

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

1. Kindly complete the questionnaire fully in one session.

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

answer by placing a tick in the relevant box.

89
Name of the Industry ___________________________________________

Location of the Industry ___________________________________________

Job Profile ___________________________________________

1) Since how long the industry is functioning?

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

2) What is your contribution in the business?

□ 0-15 lac
□ 15-30 lac
□ 30-45 lac
□ 45-60 lac
□ Above 60 lac

3) Dealings of Small scale industries with different banks operating in the state ?

□ JK bank
□ HDFC
□ PNB
□ SBI
□ Others

3) Amount of loan taken from J&K bank?

□ 0-10 lac
□ 10-15 lac
□ 20-25 lac
□ Above 25 lac

90
 5) Are you satisfied with the securities demanded by the bank for the loans?

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

6) Contentment level of SSI units with the J&K bank?

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

7) Are you aware of all the RBI guidelines to banks for financing SSI’s?

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

8) Does the J&K bank maintains your privacy and confidentiality regarding your business?

□ Fully Satisfied
□ Somewhat satisfied
□ Neutral
□ Somewhat unsatisfied
□ Fully unsatisfied

91
9) Which initiatives will be more effective to empower and develop the SSI units?

□ Implementation of schemes
□ Decrease interest rate
□ Introduction of new schemes

□ Advertisement
□ Decreasing demand for securities

10) Is J&K bank transparent to you?

□ Fully Agreed
□ Somewhat Agreed
□ Neutral
□ Somewhat Disagreed
□ Fully Disagreed

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

□ Yes
□ No

12) Any other suggestions

___________________________________________________________________________
___________________________________________________________________________
________________________________________________ *************** Thank you
for your participation. ***************

92