Bank of Baroda

REPORT ON SMEs-GROWTH ENGINES FOR
INDIAN ECONOMY
PREPARED FOR
BANK OF BARODA
(BANK OF BARODA TOWER,AHMEDABAD)
Guided By
Mr. P.K.SHARMA
Chief Manager (Risk Management)
Prepared By
Parmar Dinesh G.
Shri Chimanbhai Patel Institute of Management &
Research.
MBA (SEM-II)
Ahmedabad.
Date: - 15th July 2008
1
ACKNOWLEDGEMENT
I am very glad to have the vocational training in Bank of Baroda. I am

very thankful to Mr.K.N.Suvarna (General manager EM & HRM),
Mr.J.J.Joshi (General Manager, Gujarat operations) & Mr.V.D. Vashi
(Chief Manager,HRM) who have granted me the permission for
doing summer training in The Bank of Baroda.
I am also very grateful to Mr. P.K.Sharma who is a chief manager of

risk management department who has guided me through out my
training period. With all the necessities being fulfilled by the
department and I am again thankful to all the employees of finance
and HR department who had given me support for the work to be
done during training.
Last but not least I am also grateful to my Institute Shri Chimanbhai

Patel Institute of Management and Research and Director sir Mr.
Vidyut Joshi and also all the faculty members who had inspired me
for doing the summer training.
Thanking You,
Yours faithfully,
(Parmar Dinesh G.)
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TABLE OF CONTENTS
Sr.No. Topic Pg. No.

01. Executive Summary. 04
02. Introduction to the Topic. 05
03. Introduction of the Organization. 06
I. History 07
II. Nature of the company 08
III. Mission of the company 09
IV. Management Profile. 10
V. Organizational Structure 11
VI. Product Profile 12
VII. Bank of Baroda & its Subsidiaries 24
04. Industry Analysis 25
05. Company Analysis
I. Financial position of Bank of Baroda 38
II. Profit & Loss Account of Bank of Baroda 39
III. Balance sheet of Bank of Baroda 40
IV. Statement of Cash Flow of Bank of Baroda 41
06. Ratio Analysis 43
I. Importance of Ratio Analysis. 46
07. Introduction to the small-scale enterprises 49
08. Significance of SMEs in Indian Economy 51
09. Reasons for Smes Promotions 52
10. Smes parameters regarding the performance 54
11. The Growth Story Of Indian SMEs 55
12. the growth of small-scale industries since 1975-76 58
13. Drawbacks and barriers 59
14. Assistances and promotions to SMEs by Government 61
15. Frame-work for Cluster Development 64
16. About MSMED Act 2006 68
17. Conclusions 70
13. Bibliography 71
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EXECUTIVE SUMMARY
Bank of Baroda’s principal activities are to provide banking and

related services through 2,853 branches in India and 40 overseas
branches. The services include accepting deposits, commercial and
institutional credit, project finance, treasury, forex, investment and
risk management and other related financial services. As a part of my
M.B.A curriculum I have taken my summer training in Bank Of Baroda
(Bank of Baroda tower, Ahmedabad). As per the topic SMEs-Growth
engines for Indian economy, I have analyzed SSI Sector of India with
the help of various web sites related to this sector and other related
sources like journals, magazines etc.
Here, the overall project is based on analysis of Small Scale sector

and it’s contribution and impacts on Indian economy. On the
investment front, Indian small businesses are acting on their positive
economic outlook with increased capital investment in the first half of
2008. A majority of the SMEs in the country are planning to hire more
workers while none intended to cut jobs.
The insight of the project report shows the capital structure of the
organization, financial position of the organization, cash flow, and
ratio analysis. The overview of the report reveals that the SME
segment is the growth engine of India economy. IT is a key strategic
tool, which can help India SMEs get a competitive advantage in the
global market place. However, there is a limited understanding of this
segment in the industry SMEs throughout India are expanding rapidly
– both in terms of hiring and additional branch offices. “No. 1
challenge for SMEs is increasing competition followed by pricing-
pressure in the market and managing customer expectations”
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INTRODUCTION TO THE TOPIC
The topic is all about the Small scale enterprises as a growth engines
for Indian economy. Small scale sector has remained high on agenda
of all political parties, intelligentsia and policy makers since
independence as a legacy of Gandhian philosophy. The special thrust
to this sector has been with the multiple objectives of employment
generation, regional dispersal of industries and as a seedbed for
entrepreneurship. The contribution of small scale industries (SSIs)
has been remarkable in the industrial development for the country.
1
Small scale enterprises are getting more importance than other

sectors. Government of India has opened a special financial bodies
like Small Industries Development Bank Of India (SIDBI),State
Financial Corporation (SFCs) & other training institutes like Centre
for Entrepreneurship Development (CEDs), Institute Of
Entrepreneurship Development (IEDs),Technical Consultancy
Organizations (TCOs) for the purpose of providing assistance to this
sector.
Small industry sector is a major employment provider after

agriculture. Overall, the small industry sector has done quite well and
has enabled the country to achieve considerable industrial growth
and diversification.Being generally low capital intensive, SSIs suit the
Indian economic environment with scarce financial resources and
large population base. In addition, it is highly labor intensive and has
a scope for building upon the traditional skills and knowledge.
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INTRODUCTION TO THE ORGANIZATION
Bank Of Baroda, is a Body Corporate (Nationalised Bank) constituted

under The Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970, with its Head Office at Mandvi, Baroda and
Corporate Office at Mumbai.
Bank of Baroda, a leading global Bank of Indian origin has been

expanding its international presence with footprints in 25 countries
and a Pan India network of 2853 branches is a fifth largest bank in
India. Bank of Baroda is one of the oldest banking institutions in India,
having been established in 1908 from a small building in Baroda,
Gujarat State. B.O.B has a core set of values and culture that it
adhere to & at all times seeks to be trustworthy, international,
courageous, determined and responsive. Today the bank employs
39,529 people. It also has four subsidiaries, BOB Housing Finance
Ltd., BOB Asset Management Co. Ltd., BOBCARDS Ltd. and BOB
Capital Markets Ltd.
For financial year ending 31 March 2008, the bank reported a net
profit of Rs.1436 crore. The bank had a total business of Rs.2,59,000
crore, as on March 31, 2008, and is eyeing 22 per cent growth to
Rs.3,10,000 crore by the end of this financial year. It is looking at a
growth of 20 per cent in deposits and 23 per cent in advances. Bank
of Baroda sanctions loans/credit assistance to Small Scale Industries
for acquisition of fixed assets (factory land/buildings & machinery)
and working capital requirements at very competitive interest rates
and against soft margins Rate of interests effective from 01.06.2003
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History
Bank of Baroda was founded on July 20, 1908 with a paid up capital
of Rs.10 lakhs by Maharaja Sayajirao Gaekwad III of Baroda, one
man who made a difference, rooted in Indian values. Yet Global in
vision, rock solid in fundamentals. Nurture a culture where success
does not come in the way of the need to keep learning a fresh, to
keep innovating, to keep experimenting. It has now come a long way
to becoming the strong trustworthy financial institution. It is growing
day by day. The emblem of Bank of Baroda represents wealth,
safety, industrial development and an inclination to better and
promote the company’s agrarian economy. It is a coin with an
unpraised arm indicating wealth that indicated that the depositor’s
money is in the safe hands.
Since then bank has traversed an eventful and successful journey of

almost 100 years. Today, Bank of Baroda has a network of 2853
branches. In mid-eighties, the Bank of Baroda diversified into areas of
merchant banking, housing finance, credit cards and mutual funds. In
1995 the Bank raised Rs.300 crores through a Bond issue. In 1996
the Bank tapped the capital market with an IPO of Rs.850 crores.
Bank of Baroda took the lead in shifting from manual operating

systems to a computerized work environment. Today, the Bank has
1918 computerized branches, covering 70% of its network and
91.64% of its business.
Bank of Baroda gives high priority to quality service. In its quest for
quality, the Bank has secured the ISO 9001:2000 certifications for 15
branches by end of the 2005-06.
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Nature
The nature of the business that decide the company belongs to which
industry and it helps the many stakeholders and parties like
government, NGO, etc, to decide the parameter and other concerned
issue binding to the organization, for e.g. environmental protection,
tax rate, incentives, and rules and regulations.
The Bank of baroda belongs to the service sector, which provides

various types of financial solution related to banking industry.
As Indian economy is emerging as a major services provider in the

world, which can be seen by it’s contribution in GDP of India which is
closed to 55%.
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Mission
“To be a top ranking National Bank of International Standards

committed to augmenting stake holders' value through concern,
care and competence”
About logo
“Bank’s new logo is a unique representation of a universal

symbol. It comprises dual ‘B’ letterforms that hold the rays of
the rising sun. Bank of baroda calls this the Baroda Sun”
The sun is an excellent representation of what bank stands for. It is

the single most powerful source of light and energy – its far reaching
rays dispel darkness to illuminate everything they touch. At Bank of
Baroda, it seeks to be the source that will help all its stakeholders
realise their goals. To bank’s customers, it seeks to be a one-stop,
reliable partner who will help them address different financial needs.
To its employees, it offers rewarding careers and to its investors and
business partners, maximum return on their investment.
The single-colour, compelling vermillion palette has been carefully

chosen, for its distinctivenes as it stands for hope and energy.
It also recognize that bank is characterised by diversity. Its network

of branches spans geographical and cultural boundaries and rural-
urban divides. Its customers come from a wide spectrum of industries
and backgrounds. The Baroda Sun is a fitting face for its brand
because it is a universal symbol of dynamism and optimism – it is
meaningful for its many audiences and easily decoded by all.
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Management Profile
Name Designation
Shri M.D.Mallya Chairman & M.D
Shri V.Santhanaraman Executive Director
Shri Satish.C.Gupta Executive Director
Shri C.G.Chaturvedi (I.A.S, Additional Secretary, Govt.

of India, Ministry of Wealth &
Family Walfare)
Shri A.Somasundaram Nominee of R.B.I
Shri Milind N.Nadkarni Director
Shri Ranjit kumar Chetterjee Director
Shri Amarjit Chopra Director
Smt Masarrat Shahid Director
Shri Maulin A.Vaisnav Director
Dr. Atul Agarwal Director
Dr. Dharmendra Bhandari Director
Shri Mahesh Prabhulal Mehta Director
Dr.Deepak Bhaskar phatak Director
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Organizational Structure
Organizational structure is one of the most important decision mode

by top management before starting the business, as it generally
depend on the nature and size of the company, it has lot to do with
the job description and job specification. The organizational structure
is nothing but hierarchical and departmental process.
Every organization differ in structure. There is a well defined system

in the Bank regarding decision making process. Lending and
administrative decisions are taken at various levels from JMGS I to
Top Executive grade Scale VII and also by Executive Director and
Chairman & Managing Director depending upon their positions as per
the discretionary lending powers delegated to them by the Board.
Branches receive applications for credit facilities and recommend to
the appropriate sanctioning authority. In the case of major retail loan
products applications are processed at branches and Centralised
Credit Processing Cells at select centers.
There is a well defined organizational structure and clear system of

accountability based on RBI / CVC guidelines. All credit decisions
approved by any sanctioning authority are reported to the next higher
authority for control purpose. The system of exercising proper
delegation of power and submission of control reports is in place and
they are monitored by control officers and through internal inspection.
By observing the following is a common structure as per company
guidance.
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Product Profile
Followings are the main products of The Bank of baroda.
• Deposits
• Gen-next
• Loans
• Credit Cards
• Debit Cards
• Services
• Lockers
(1)Deposits:
Bank of Baroda offers various deposit plans that you
can choose from depending on the term period, nature of deposit and
its unique saving and withdrawal features.
Apart from competitive interest rates and convenient withdrawal

options, our deposit plans offer other features such as overdraft
facility, outstation cheque collections, safe deposit lockers, ATM's etc.
Fixed deposits are categorised into deposits with a term period of

less than 12 months, more than 12 months and recurring deposits.
These deposit plans offer convenient solutions to both working
individuals as well as senior citizens.
Current and saving deposits are ideal for individuals who wish to take
advantage of multiple benefits within the same plan and even be
eligible to opt for overdrafts.
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(2)Gen-next:
2.1: Gen-Next Junior (Saving Account)
Product Nature:
This is a Special kind of Savings Bank Deposit product for children to

be made available in Gen-Next Pune branch.
Target Group:
Children upto 18 years of age.
Minimum Amount & Balance:
• QAB: Rs 500/-
• Charges for non-maintenance of QAB is Rs 50/ per quarter
only.
Maximum Amount:
• In case of joint accounts with parent and minors (with sole

account) above 14 years, there is no ceiling on the maximum
amount.
• An account in the sole name of minor above 10 years and
below 14 years, maximum limit is Rs 1 lakh.
Single / Joint Accounts:
• In case of minor below 10 years the account shall be opened

jointly with parents / guardian.
• Minors above 10 years (below 18 years) can open the account
in their sole name subject to :
• Minor is able to read and write any of the recognized
languages, and
• Capable in the opinion of the Bank officials of understanding
the what he / she is doing and SB account rules and regulations
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2.2: Gen-Next Lifestyle
Type Of Facility:
Term Loan (Combo Pack)
Purpose :
• Purchase of Home Furnishings / Consumer Durable goods

(includes color T.V., video camera / refrigerator / washing
machine / music system / air-conditioners / cooking system etc).
• Purchase of vehicle i.e. two-wheeler / four-wheeler.
• Purchase of Laptop / PC.
• Purchase of any new electronic gadgets like Mobile, i-Pod,
Handycam etc.
Target Group :
Working executives / professionals.
Eligibility:
• Should be an Indian National

• Permanent Employees of State / Central Government, Public
Sector Undertakings, Semi government Organization, State /
Central Govt. Corporations, Urban Development Authorities,
Educational Institutions, Universities. Regular Employees of
MNCs, Public Ltd Companies with minimum two years
experience out of which minimum one year service with the
present organization.
• Employees of Private Limited Companies, Regional head will
permit on case-to-case basis.
Present gross annual emoluments / income of the applicant should

not be less than Rs. 2.50 lacs.
Age:
• Minimum – 21 years
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• Maximum – 45 years
Maximum Loan Amount:
Subject to maximum of:
• Furniture & Fixture / New Consumer Durables : Rs. 2 lacs

• New Vehicle (Four Wheeler) : Rs. 6 lacs (Two Wheeler) : Rs. 1
lac
• Old Four Wheeler (Not more than 3 years old) : Rs. 4 lacs
• New modern gadget/s : Rs. 1 lac
Aggregate loan amount should not be more than Rs. 8.00 lacs.
Subject to:
• 24 times gross Monthly income.

• Total deductions including EMI of proposed loan should not
exceed 60% of the gross income.
Margin:
• Furniture & Fixture / New Consumer Durables : 20%

• New Vehicle (Two wheeler / Four wheeler) : 15%
• Old Vehicle (Four wheeler only) : 40%
• New Modern Gadgets (Including Laptop / PC) : 20%
2.3 Gen-Next Power (OD Facility):
Product Nature :
This is a special Savings Deposit product having an in built feature of

overdraft facility to be available at Gen-Next Pune branch.
Target Group
The product is targeted to working executives and other working

professionals.
Our Bank’s Staff members are not eligible to avail the product.
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Minimum Amount & Balance
There is no minimum balance requirement in the account and as

such no service charges shall be levied towards this.
Maximum Amount
There shall be no ceiling on the amount to be deposited and credit

balance in the account.
Eligibility Criteria:
• Permanent Employees of State / Central Government, Public

Sector Undertakings, Semi government Organization, State /
Central Govt. Corporations, Urban Development Authorities,
Educational Institutions, Universities. Regular Employees of
MNCs, Public Ltd Companies with minimum two years
experience out of which minimum one year service with the
present organization.
• Employees of Private Limited Companies, Regional head will
permit on case-to-case basis.
• Minimum age of 21 years.
• Minimum take home Salary should not be less than Rs.
10,000/-.
• Maintaining satisfactorily conducted salary account with the
Bank at least for three months.
Special Feature:
The branch SHALL offer Overdraft facility (Clean/unsecured) to

employees who fulfill the eligibility criteria mentioned above to meet
out their regular short-term personal / family needs.
Overdraft Facility:
Maximum Age: 45 years. (This product is meant for youth)
Amount: 5 times of net take home monthly salary subject to:
Min Rs. 50,000/-

Max Rs. 2.00 lacs, subject to condition:
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Risk Rating Category “A” & “B” Rs. 2.00 lac
Category “C” Rs. 1.00 lac
Category “D” NIL.
For credit rating purpose, model meant for personal loan will be taken
into consideration.
PROCESSING & DOCUMENTATION CHARGES:

0.50% of limit sanctioned / reviewed subject to minimum of Rs. 250/-
+ service tax as applicable.
Security Documents:
• D.P. Note.
• Letter of continuing security.
• A stamped undertaking from the employee authorizing the
employer to remit the salary every month to the bank for credit
of specified SB / Current Account during the currency of the OD
facility and also to deduct from the retirement / terminal
benefits, the outstanding overdraft amount with the interest in
case of retirement / resignation / cessation of employment for
any reason. A copy of the undertaking duly acknowledged by
the employer has to be kept on branch.
• Third party guarantee having adequate net worth. Cross
guarantee may be accepted.
Rate of Interest:
1.5% above BPLR i.e. 14% p.a. with monthly rests. A Minimum
interest of Rs. 10/- shall be charged during a month if OD is availed.
Period: 12 months, subject to annual review.
Other Conditions:
The account is to be brought into credit once in a year.
Interest Rate On Credit Balance In The A/C:
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Interest shall be payable on credit balance in the account as per
savings bank account rules viz. relating to periodicity, rate and
system of application of interest, computation of eligible balances etc.
2.4: Gen Next Suvidha:
Product Nature:
This is a Recurring Deposit product enabling the customer to make

regular savings on monthly basis and earn higher interest.
Customer Segment:
• Individuals in their single / joint names.

• Minors of age 10 years and above jointly with their parents /
natural guardians.
• Minors below 10 years age through their parents.
Minimum / Maximum Amount:
There is no minimum balance requirement in the account and as

such no service charges shall be levied towards this.
Maximum Amount:
• “Gen-next Suvidha” Account can be opened with monthly

installments of Rs.100/- or above & in multiples thereof with a
maximum of Rs.10, 000/- per month.
• The number of installments can range from 12 to 36 months (In
multiples of 3 months).
• The depositor shall, at the time of opening the account,
stipulate the amount of core monthly installment and the
number of installments payable by him which shall not
subsequently alter.
• The depositor is given an option to deposit higher monthly
installment in the account as and when available and the
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maximum amount should not exceed Rs. 10,000/- per month.
However, monthly installments paid during the time gap of less
than 24/12 months (depending upon the period chosen) at the
ending stage of the account’s tenure, shall not exceed in any
month three times the core monthly installment or Rs. 10,000/-
whichever is less.
Rate Of Interest:
As decided by bank from time to time for Term Deposits of same

tenure.
Loan Against Deposit:
• Loan can be considered against the deposit in the account in

accordance to normal guidelines for advances against
Recurring Deposit.
• Interest shall be charged on such loan at the rates advised from
time to time on Loan against Bank’s Own Deposits.
(3)Loans:
3.1: Retail Loans:

Bank of Baroda offers a wide range of retail
loans to meet your diverse needs. Whether the need is for a new
house, child's education, purchase of a new car or home
appliances, our unique and need specific loans will enable you
to convert your dreams to realities.
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KEY PRODUCTS
Housing Loan Personal Loan

Vaibhav Lakshmi Loan (For
Housing Loans to NRIs / PIOs Working Women)
Home Improvement Loan Desh Videsh Yatra Loan

Loan Against Future Rent
Receivables Marriage Loan
Advance Against Property Advance Against Securities
Advance Against Property to NRI Loan to Pensioners

Loan to Defence
Education Loan Pensioners
Car Loan Professional Loan
Two Wheeler Loan Loan to Doctors
Consumer Durables Loan Traders Loan

Loan for financing
Baroda Loan for Laptop & Personal Individuals for subscription
Computer to Public Issues /IPO
Baroda Ashray (Reverse Mortgage Baroda Career
Loan) Development Loan
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(4)Credit Cards:
Bank of Baroda offers following range of credit
Cards.
SI LV ER EX CL US IV E GEN ER AL
GOL D EX CL US IV E
V IS A /M AS TE R WOM AN /Y OU TH
N EX TG EN GOLD C ORP ORA TE GLOB AL
(5)Debit Cards:
The Bank of Baroda International Debit Card is accepted at over

10000 Visa Electron ATMs in India and 850000 ATMs worldwide. The
card is also accepted at any 100000 merchant outlets in India and
around 13 millions globally. The card enables you to enjoy the
convenience of cash-less purchasing power without the fear of
overdrawing your account.
Key Benefits:
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• Take advantage of the most widely accepted card and be able
to withdraw from any ATM displaying the VISA logo, in India
and abroad.
• At VISA Electron merchant shops, it can also serve as your
electronic purse, and money gets debited instantly from your
account, as you pay.
• The Card allows you to get mini-statements from Bank of
Baroda ATMs, or to check the balance in your account,
avoiding visits to even our nearest branches.
(6)Services:
Apart from the Loans, Deposits, Credit and Debit Cards, Bank of
Baroda offers other services to make financial dealings easy and
convenient.
Key Services:
• Demat
• BarodaHealth
• Remittances (Baroda Money Express)
• Collection Services
• ECS (Electronic Clearing Services)
• Government Business (PPF, DSRGE, Tax Collections and
Savings Bonds)
(7)Lockers:
Storing too much jewellery and valuables in the house at times

becomes a security issue and an impediment in case of natural
calamities.
Bank of Baroda offers you, a safe, trustworthy space to store your

valuables, jewellery, documents and other things dear to you.
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Key Benefits:
• State-of-the-art Lockers, the safe deposit vaults with fully

equipped, latest burglar alarm systems.
• For additional safety, the Locker holder assigns a code word
which further increases security.
• Available in different sizes as per your requirement.
• These Lockers and their contents can be nominated to people
near and dear to you
Terms & Conditions:
• For obtaining a Locker at the Bank of Baroda, you must be an

account holder with our Bank.
• Lockers can be allotted both individually as well as jointly.
• NRIs do not require any prior permission from the RBI to hire a
Locker with the Bank of Baroda.
• A minimum-security deposit of Rs. 5000/- is required when the
annual rent is Rs. 1000; this deposit is raised to Rs. 10000 if
the Locker rent is above Rs. 1000/-.
• Security deposit will be accepted under a fixed deposit of 3
years under the banker's lien.
• An acknowledgement will be issued by the bank for fixed
deposit to be kept as security deposit.
• The Locker holder is permitted to add or delete names from the
list of persons who can operate the Locker and can have
access to it.
:Bank of Baroda & its Subsidiaries:
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Domestic Overseas
Subsidiary Subsidiary
BOB Asset Management Co. Ltd. BANK OF BARODA (Botswana)

Ltd.
BOBCARDS Ltd. BANK OF BARODA (Kenya) Ltd.
BOB Capital Markets Ltd. BANK OF BARODA (Uganda) Ltd.
BANK OF BARODA (Guyana) Ltd.
BANK OF BARODA (UK) Ltd.
BANK OF BARODA (Tanzania) Ltd
BANK OF BARODA (Trinidad &

Tobago) Ltd.
BANK OF BARODA (Ghana) Ltd.
Representative Offices
BANK OF BARODA (Thailand)
BANK OF BARODA (China)
BANK OF BARODA (Australia)
BANK OF BARODA (Malaysia)
Associate Bank Joint Venture

Nainital Bank Ltd. Indo-Zambia Bank Ltd. (Lusaka)
:Banking Industry Analysis:
24
The analysis consists of 82 scheduled commercial banks, comprising
of 28 Public Sector Banks, 25 Private Sector Banks and 29 Foreign
Banks, as defined by the RBI. The group of Public Sector Banks
(PSBs) includes nationalised banks, SBI & its Associates and IDBI
Ltd .*
With the purpose of gaining a deeper understanding of the Indian

banking industry, an overall profiling of the industry has been
attempted in this section. This study considers only the 82 banks
profiled in this analysis. The data for the study was collated from
sources in the public domain like annual reports, the RBI documents
and the bank websites. Various parameters like efficiency, growth,
productivity, etc., have been examined for gaining insights.
Total Assets
Total assets for the 82 scheduled commercial banks combined stood

at Rs 27,785,739 mn in FY06, of which Public Sector Banks had the
largest share of 72.5%, followed by Private Sector Banks of 20.2%
and Foreign Banks at 7.3%.
* During the year FY06, two domestic banks were amalgamated -

Ganesh Bank of Kurundwad with Federal Bank Ltd and Bank of
Punjab Ltd with Centurion Bank Ltd to become Centurion Bank of
Punjab Ltd, while one foreign bank, UFJ Bank Ltd merged with Bank
of Tokyo-Mitsubishi Ltd. ING Bank NV closed its business in India. In
25
Sept, 06, The United Western Bank Ltd was placed under
moratorium, leading to its amalgamation with Industrial Development
Bank of India Ltd. in Oct, 2006, Sangli Bank, another Private Sector
Bank was merged with ICICI Bank. Ganesh Bank of Kurundwad,
Sangli Bank and The United Western Bank have therefore been
excluded of the publication.
The assets for all the profiled banks have grown at a rate of 22.6%
over the previous year. It was observed that the asset base of Private
Sector Banks was growing more rapidly compared to the other bank
groups. Total assets of private banks grew by 16% in FY05 and 33%
in FY06, over the previous year. The asset base of Foreign Banks
grew by 13% in FY05 and by 30% in FY06 mainly driven by the
growth in advances of four banks in this group. The Public Sector
Banks maintained a decent year-on-year growth of 15% and 19% in
the respective years. However, it should be noted that the growth of
Public Sector Banks is on a very high base.
Total Income
The total income for the 82 banks stood at Rs 2,215,280 mn in FY06,

of which the Public Sector Banks held the highest share of 72.7%,
Private Sector Banks at 19.5% followed by 7.8% for the Foreign
Banks.
26
The top ten banks classified on the basis of their respective total
income accounted for nearly 56% of the total income of the 82 banks.
Of these top ten banks, 8 banks were Public Sector Banks while the
remaining two were Private Sector Banks.
Non-Interest Income/Total Income
The non-interest income for all the 82 banks profiled in this

publication on an average stood at 22.1% of the total income. Among
the bank groups, non-interest income was the highest for Foreign
Banks at 31%, followed by Private Sector Banks at 19.8%; indicative
of the value-added services these banks offer. For Public Sector
Banks, non-interest income was just 15.3% while interest income was
a high 84.7%. Non-interest income includes fee income components
such as commission, brokerage and exchange transactions, sale of
investments, corporate finance transactions, M&A deals; and any
other income other than the interest income generated by the bank.
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Net Profit
The net profit for the profiled banks together stood at Rs 248,281.5
mn for FY06. The top ten banks, based on the net profit classification,
accounted for nearly 58.5% of the total net profit of all the 82 banks.
These top ten banks included 6 Public Sector Banks, two Private
Sector Banks and two Foreign Banks. Interestingly, of these top 10
banks, four banks that managed to make it to the top ten on the basis
of net profit do not feature among the top ten on the basis of total
income.
Bank group-wise, Public Sector Banks continued to dominate with a

66.6% share in the net profit. The share of Private Sector Banks in
the total net profit stood at 21%, followed by Foreign Banks having a
12.4% share in the total net profit. Within the Public Sector Banks,
There are 5 banks, 4 foreign and one private, out of the profiled 82
banks, which made losses in FY06.
Infrastructure
Banks across all three groups have been rapidly increasing their
infrastructure to tap the under served markets, though Public Sector
Banks are dominant all across in all regions. As of Mar 06, the total
number of branches of the profiled banks operating in the country
was 54,346, of which 88% of the branches belonged to the Public
Sector Banks (PSBs), indicative of the extent of penetration these
banks have in the country. Another 11% of the branches belonged to
Private Sector Banks and the rest were of Foreign Banks.
28
Region-wise, the concentration of branches was highest in the rural
areas, accounting for almost 35% of the total. The rural segment is
entirely dominated by Public Sector Banks with 95% of the total rural
branches belonging to PSBs. 23% of the branches of PSBs are
located in semi urban area, while 19% branches are in the
metropolitan regions. The immense reach of PSBs can be seen by
the fact that almost 62% of total PSB branches are in rural & semi-
urban areas.
Group-wise, the presence of Private Sector Banks was largely in

urban areas with almost 30% of their branches in this region.
As of Mar 06, the total numbers of ATMs installed by profiled banks

were 21,047. Public sector banks once again accounted for the
largest share of installed ATMs with 12,608 machines, followed by
the Private Sector Banks with 7,584 ATM’s. Foreign Banks have
installed 855 ATMs around the country.
29
Growth in Deposits, Advances & Retail Credit
Deposits
The overall deposit growth for the profiled banks was at 18.2% for
FY06. Group-wise, deposits of Private Sector Banks witnessed a
robust growth of 39.2%, closely followed by Foreign Banks at 31.7%.
For Public Sector Banks the deposits grew at about 13% for the same
time period. The share of Private Sector Banks in total deposits has
been rising gradually, while that of Public Sector Banks has been
declining over the years.
Growth in Deposits, Advances & Retail Credit
* The above figures are represented as an average % growth over

FY05
Advances
Advances for all the profiled banks have grown at about 32% YoY
and that made by Private Sector Banks grew at the highest rate of
44% for FY06 followed by a growth of 30.7% for Public Sector Banks
and 30% for Foreign Banks. Among the major components of total
advances, there was no relative change in the percentage share of
30
Bills Purchased and Discounted, over the last three years. Cash
Credits, Overdrafts and Loans have shown a yearly decline of 4% in
FY05 as a part of total advances. Correspondingly, Term Loans have
been growing and constitute a large component of advances. In
FY04, Term Loans constituted 49.4% of Total Advances, which
increased to 54.2% in FY05, and further to 55.7% in FY06.
Group-wise Average Growth in Term Loans
*All figures in %age
In FY06, Term Loans across the profiled banks grew on an average

of 35.9%. Term Loans provided by the public sector banks showed
robust growth of 59.8% in FY05 which almost reduced to half and
stood at 32.2% in FY06. The growth shown by Private Sector Banks
has varied too, with 38.7% growth in FY05 and 48.9% in FY06.
Foreign Banks, however, have shown a lower growth in term loans in
FY06 as compared to FY05, which grew by 30.2% in FY06 as against
a growth of 37.2% in FY05. This growth in all three bank-groups can
largely be attributed to the growth in retail credit and the overall
economy, among other factors.
31
Retail Credit
Retail credit for the Public Sector scheduled commercial banks

increased by 35%, which was significantly higher than the profiled
banks’ overall credit growth of 32%. The retail advances by the
Private Banks grew by 48.3%, which too was well above the overall
growth.
Credit Deposit Ratio
The Credit-Deposit ratio (C-D ratio) is the proportion of loan-assets

created by the bank from the deposits received. Among the 82 banks
profiled, the aggregate C-D ratio stood at 70.1% in FY06 as
compared to 62.7% in FY05. Among the profiled bank-groups, foreign
banks had the highest C-D ratio of 85.8% in FY06, which was slightly
lower than that of FY05. An opposite trend was seen with private
banks, where in their C-D ratio stood at 73.4% in FY06, higher than
70.9% for FY05. Public sector banks too showed a growth in their C-
D ratio at 68.2% as compared to 59.5% in FY05. As seen earlier, the
high rate of bank credit growth during the last two years has resulted
in this unique behaviour of credit-deposit (C-D) ratio.
Priority Sector Advances / Total Advances
As instructed by the RBI, a target of 40% of net bank credit was

stipulated for priority sector lending by domestic scheduled
commercial banks, both in the public and private sectors. Within this,
sub-targets of 18% and 10% of net bank credit had been stipulated
for lending to agriculture and weaker sections, respectively.
In FY06, the average credit to the priority sector by the profiled Public
Sector Banks accounted for 41.6% of their total credit, a little above
the stipulated target level of 40%. In FY05, the profiled private banks
lending to the priority sector constituted 39.6% of their total advances.
32
The Public Sector Banks contributed 15.6% of their total credit to the
agriculture sector and private banks contributed 11.9% for the same,
both falling short of the stipulated sub-targets of 18%.
Operating Efficiency
Net NPAs to Net Advances (Net NPAs/Net Advances)
On an average, the net NPA/Net Advances ratio for the 82 banks was
1.4% in FY06. Of this, the net NPAs to net advances ratio for the
Public Sector Banks was estimated to be 1.4%, closely followed by
Private Sector Banks at 1.8%. For Foreign Banks, the ratio was much
lower at 0.9%.
The graph below depicts that the asset quality of all the banks has
been improving for the past couple of years. It is evident that there
has been a sharp decline in non-performing loans of Public Sector
Banks and Private Sector Banks.
Operating Expenses
The operating expenses are those expenses that cover the day-to-
day functioning of the bank like employee costs and charges for
normal running of business. Among the profiled 82 banks, the ratio of
operating expense to total expense for the Public Sector Banks was
26.5%, Private Sector Banks was 28.4%, while for Foreign Banks the
ratio was nearly one-third of their total expenses and stands a little
higher compared to their peers.
33
Intermediation cost is the ratio of operating expense to total assets,
and when seen in conjunction with non-interest income explains how
much is the non-interest income able to cover up the operating
expenses of the banks. This gap (the excess of operating expenditure
over non-interest income as a percentage to total assets) has been
narrowing considerably over the past few years. Among the profiled
banks, for Public Sector Banks this gap was 0.9%, for private banks
0.4% and for Foreign Banks it stood at 0.2% for the year ending Mar
06.
Capital Adequacy Ratio
The Capital Adequacy Ratio is a measure of the amount of a bank’s

capital expressed as a percentage of its risk weighted credit
exposures. The RBI guidelines require a capital adequacy ratio of
9%. All the banks profiled in this publication have a capital adequacy
ratio of above 9%; with most of the banks placed well above the 9%
mark.
Return on Assets
In the list of 82 banks profiled, the return on assets for Foreign Banks
was highest at 1.5%, followed by Private Sector Banks at 0.9%; and
Public Sector Banks at 0.6%. The graph depicts that the return on
assets bounced back smartly for Foreign Banks after the slight
decline it witnessed in FY05. The return on assets for the Private
Sector Banks has more or less remained the same with just a slight
34
decline in it. While the return on assets for Public Sector Banks
shows a very sharp decline.
Return on Equity
Of the 82 banks profiled in the publication, the Return on Equity for

Public Sector Banks was estimated to be the highest amongst its
peers at 16%, closely followed by Private Sector Banks at 11.1% and
9.2% for Foreign Banks. Bank of Baroda has achieved 15% return
on equity for the financial year 2007-08.
As shown in the graph depicting the trend in Return on Equity over

the last four years, it is observed that the Return on Equity for Private
Sector Banks fell drastically from 21.1% in the year 2003 to 11.1% in
the year 2006. The Return on Equity for Public Sector Banks too
showed a sharp decline from 21.8% in 2003 to 16% in 2006. As for
Foreign Banks, the return on equity showed a marginal decline from
11% in 2003 to 9.2% in 2006.
One of the reasons for the declining RoE could be the large amount
of resources raised from primary capital market to strengthen the
capital base. As per RBI data ,the equity capital for public sector
banks jumped close to five times from Rs 11040 mn in 2003-04 to a
whopping Rs. 54130 mn in the year 2005-06. The private sector
banks which had a low capital base in 2003- 04, also witnessed a
huge jump in equity capital and ended the year with an equity capital
of Rs. 56540 mn in 2005-06.
35
Net Interest Margin
It is defined as the excess of interest income over interest expense,

as an percentage to total bank assets. Broadly speaking, this ratio
reflects the allocative efficiency of financial intermediation, a lower
ratio being indicative of upper efficiency. The net interest margin in
FY06 stood at 3.5% for Foreign Banks its due to the fact that
tradionally, the Foreign Banks can mobilise low-cost deposits. ;
followed by 3.4% for Private Sector Banks and 3.13% for Public
Sector Banks.
Productivity
Business per employee is the total revenue generated on a per

employee basis where as Net Profit per employee gives an indication
of the ability of labour to generate profit. However, both can be used
as tools for measuring the efficiency of an organisation with respect
to its human assets.
In FY06, the Foreign Banks on an average generated business worth

Rs 101.27 mn per employee, which was the highest among the
various bank groups. The business generated per employee by public
sector and private banks stood at Rs 41.64 mn and Rs 49.54 mn
respectively.
Correspondingly, the profitability per employee for Foreign Banks was

highest at Rs 2.20 mn per employee, followed by private banks with
Rs 1.87 mn per employee. Public sector banks showed an aggregate
36
Rs 0.21 mn profitability on per employee basis. This indicates that
profit generation with respect to its human resource is highest in
Foreign Banks followed by private banks, and lowest in Public Sector
Banks.
37
Company Analysis
Followings are included for the purpose of company analysis
Capital structure of the Bank of Baroda:
From (Rs crore) Authorized Issued Paid Up Paid Up Paid Up
Year To Year capital Capital Shares(Nos) Face Value Capital(rs.in crore)
2006 2007 1,500.00 367 364266000 10 364.27
2005 2006 1,500.00 367 364265500 10 364.27
2004 2005 1,500.00 296 293265400 10 293.27
2003 2004 1,500.00 296 293261700 10 293.26
2002 2003 1,500.00 296 296000000 10 296
2001 2002 1,500.00 296 296000000 10 296
2000 2001 1,500.00 296 296000000 10 296
1999 2000 1,500.00 296 296000000 10 296
1998 1999 1,500.00 296 296000000 10 296
1997 1998 1,500.00 296 296000000 10 296
1996 1997 1,500.00 388.46 203537400 10 203.54
1996 1997 1,500.00 388.46 92462600 6 55.48
1995 1996 1,500.00 740.94 740935900 10 740.94
Financial position of Bank of Baroda:
38
Profit & Loss Account for the Year ended 31st March, 2007
Amount in Rupees
(000's Omitted)
As on 31st March, 2007 As on 31st March, 2006
I. Income
Interest Earned 9212,63,72 7049,95,39
Other Income 1173,24,10 1127,39,03
Total 10385,87,82 8177,34,42
II. Expenditure
Interest Expended 5426,55,70 3875,08,73
Operating Expenses 2544,31,34 2384,75,27
Provisions and 1388,54,33 1090,54,45
Contingencies
Total 9359,41,37 7350,38,45
III. Profit
Net. Profit for the year 1026,46,45 826,95,97
Available for
Appropriation 1026,46,45 826,95,97
Appropriation
Transfer to :
a) Statutory Reserve 256,61,61 206,73,99

b) Capital Reserve 14,31,65 7,61
c) Revenue and Other
Reserves
I) Investment
Fluctuation
Reserve - -1042,54,43
II) General Reserve 502,50,35 1448,04,53
II) Statutory Reserve
(Foreign) 57,00 503,07,35 6,96,58 412,46,68
d) Dividend (including
Dividend Tax)
I) Interim Dividend 124,60,65 -
II) Proposed Dividend 127,85,19 252,45,84 207,67,69 207,67,69
TOTAL 1026,46,45 826,95,97
Basic & Diluted
Earnings per Share Rs..28.18 Rs.27.10
Balance Sheet as on 31st March, 2007
Amount in Rupees
39
(000's Omitted)
As on 31.3.2007 As on 31.3.2006
Capital & Liabilities

Capital 365,52,76 365,52,74
Reserves & Surplus 8284,41,00 7478,90,72
Deposits 124915,97,93 93661,99,16
Borrowings 1142,56,16 4802,20,07
Other Liabilities & Provisions 8437,69,61 7083,90,04
143146,17,46 113392,52,73
Total
Assets
Cash and balances with Reserve Bank of India 6413,52,02 3333,43,34
Balances with Banks and Money at Call and Short Notice 11866,84,51 10121,20,60
Investments 34943,62,75 35114,21,87
Advances 83620,86,98 59911,77,84
Fixed Assets 1088,80,75 920,72,69
Other Assets 5212,50,45 3991,16,39
143146,17,46 113392,52,73
Total
Statement of Cash Flow for the year ended 31st March, 2007
(000's omitted)
Year ended Year ended
31.03.2007 31.03.2006
40
A. Cash flow from operating activities:
Net Profit before taxes 16542587 8920074
Adjustments for :
Depreciation on fixed assets 1942849 1111313
Depreciation on investments (including on Matured 5442072 6096190
debentures)
Bad debts written-off/Provision in respect of non-performing 2190869 3200090
assets
Provision for Standard Assets 1760349 47400
Provision for Other items(Net) 299718 1836215
Profit/(loss) on sale of fixed assets(Net) -128475 3020
Payment/provision for interest on subordinated debt(treated 2172062 1969417
separately)
Dividend received from subsidiaries/others (treated -318721 -127566
separately)
Sub total 29903310 23056153
Adjustments for :
(Increase)/Decrease in investments -3927008 13506034
(Increase)/Decrease in advances -239281783 -168314035
(Increase)/Decrease in other assets -17024574 -2649422
Increase/(Decrease)in borrowings -36596391 31613670
Increase/(Decrease) in deposits 312539877 123285273
Increase/(Decrease) in other liabilities and provisions 10320723 3717501
Direct taxes paid(Net of refund) -4833814 -3536105

Increase in Capital Reserve on a/c of merger of BOBHFL 439034 —
Net cash from operating activities (A) 51539374 20679069
B. Cash flow from investing activities :
Purchase of fixed assets -3914373 -2014206
Sale of fixed assets 328321 186730
Changes in Trade related investments (Subsidiaries & others) 190848 3310300
Dividend received from subsidiaries/others 318721 127566
Net cash from investing activities (B) -3076483 1610390
C. Cash flow from financing activities :
Share capital 2 710000
Share premium 12 15351111
Unsecured Subordinated Bonds 4491000 7700000
Dividend paid including dividend tax -2524584 -2076769
Interest paid / payable on unsecured subordinated bonds -2172062 -1969417
Net cash from financing activities (C) -205632 19714925
Net increase in cash & cash equivalents (A)+(B)+(C) 48257259 42004384
Cash and cash equivalents as at the beginning of the year 134546394 92542010
41
Cash and cash equivalents as at end of the year 182803653 134546394
Ratio Analysis
Financial statement analysis may be done for a variety of purposes,

which may range from a simple analysis of the short-term liquidity
position of the firm to a comprehensive assessment of the strengths
42
and weaknesses of the firm in various areas. It is helpful in assessing
corporate excellence, judging creditworthiness, valuing equity shares,
forecasting bond ratings, predicting bankruptcy, and assessing
market risk.
If we want to compare the financial statement of one company with

that of the other company it is difficult, as there would be a problem of
differences in size of these companies. One way to avoid this
problem is to calculate and compare financial ratios of the both the
companies.
A ratio is the arithmetical relationship between two figures. Financial

ratio analysis is a study of ratios between various items or groups of
items in financial statements. Financial ratio has been classified in
several ways. They are as follows,
o Liquidity Ratios.
Liquidity ratios to measures the ability to pay interest regularly ,

finance structure ratios to measure the solvency thus the ability
of the company to return the principal amount on maturity.
Liquidity refers to the ability of a firm to meet its obligations in
the short-run, usually one year. Liquidity ratios are generally
based on the relationship between current assets and current
liabilities. The important liquidity ratios are, Current Ratio, Acid
Test Ratio
o Profitability Ratios.
Liquidity ratios to measures the ability to pay interest regularly ,

finance structure ratios to measure the solvency thus the ability
of the company to return the principal amount on maturity.
Liquidity refers to the ability of a firm to meet its obligations in
43
the short-run, usually one year. Liquidity ratios are generally
based on the relationship between current assets and current
liabilities. The important liquidity ratios are, Current Ratio, Acid
Test Ratio
o Assets Turnover Ratios.
Asset turnover ratios are basically Productivity ratios which measure

the output produced from the given inputs deployed. Assets are the
inputs which are deployed to generate production or sales. The same
set of assets when used intensively produces more output or sales. If
the assets turnover ratio is high, it shows efficient or productive use of
inputs or assets. These ratios are based on the relationship between
the level of activity, represented by sales or cost of goods sold, and
levels of various assets. The important assets turnover ratios are total
assets turnover, net fixed assets turnover, inventory turnover, and
debtor’s turnover.
o Finance Structure Ratios.
Finance structure ratios indicate the relative mix or blending of

owners’ funds and outsiders’ debt funds in the total capital
employed in the business. It should be noted that equity funds
are the prime fund which increase progressively through
reinvestment of profits, while outside debt funds are
supplementary funds and are added at the discretion of the
management. Management prefers to choose debt only when it
helps in enhancing the earnings of equity
o Valuation Ratios.
The valuation ratios are the result of the management of the above
four categories of the functional ratios. Valuation ratios are generally
presented on the per share basis and thus are more useful to the
share holders and the other interested parties may be external.
44
It includes the following ratios
(1) earning per share
(2) dividend per share
(3) book value per share
(4) earning yield
(5) Dividend yield etc.
Valuation ratios indicate how the equity stock of the company is

assessed in the capital market. Since the market value of equity
reflects the combined influence of risk and return, valuation
ratios are the most comprehensive measures of a firm’s
performance. Valuation ratios are the result of the management
of above categories of the functional ratios. Valuation ratios are
generally presented on a per share basis and thus are more
useful to the equity investors.
IMPORTANCE OF RATIO ANALYSIS.
Ratios are the relative information which is amenable for comparison.

Business units are interested in assessing whether they have
progressed or digressed over the period. Ratios transform the
absolute rupee data of the financial statements into the pure relative
45
unit less information. Following type of comparison can be made with
the help of ratios.
1). Intracompany comparison.
Under the intracompany comparison, the relative data of the same

company are made with the preceding period. There are two ways
through which this can be done,
~ Current year with preceding year.

~ Time series and trend series.
2). Intercompany comparison.
Under this type of comparison, the relative data of company is

compared with the other company, industry average, and national
average of international standards.
3). Strategic comparison.
Ratios represent the quotient relationships between two relevant

variables of the financial statements an individual item to individual
item, an individual item to group item or a group item to group item,
which develop the meaningful relationships between these two sets
of variables. It is necessary to dig out the facts behind the figures.
~ To compare the actual ratios with the budged ratios.

~ It helps in planning the future activities.
~ The comparison of company ratios with competitive company
ratios.
~ The comparison with national ratios.
Key Financial Ratios: 2007-08
Return on Average Assets (ROAA)= EBIT___ x 100

Total Assets
=0.89%
46
As per the calculation the return on average assets improved from
0.80% to 0.89% on year-to-year basis which shows 11.25%
increases than previous financial year. It shows efficient utilization
of the total assets of the Bank of Baroda.
Earning per share = Net Profit - Preference Dividend

Total Number of Equity Shares
= Rs.39.41 (Rs.28.18 last year)
It shows significant increase in the earning per share by 39.85%

compare to other banking companies’ the bank of baroda holds a
bulwark over increasing the value of share holders.
Book Value per Share = Equity capital + Reserves – Misc. expenses

No. of equity shares
= Rs 261.54 [Rs 231.59 at end-March, 2007]
Bank of baroda’s book value per share has decreased by more than
11%.
Return on Equity (ROE) = Net Profit x 100

Net Worth
=15.07% [12.17% Last year]
Return on equity has increased by 23.82% as compare to last

year. It shows efficient utilization of available financial resources,
which result in to less operating expenses and higher net profit.
47
Cost-Income Ratio = Total operating expenses
Net Profit
= 49.21% (51.30% last year)
The cost income ratio shows proportion between total expense

incurred and net profit realized. The higher the ratio the less efficient
utilization of resources, but here the ratio has shown the declination
by more than 5% that means it has used its resources effectively and
also shown improvement in cost control.
Introduction to the small-scale enterprises
• Small (Manufacturing) enterprises:

Enterprise engaged in the
manufacture/production or preservation of goods and whose
48
investment in plant and machinery ( Original cost excluding land
and building and the items specified by the Ministry of small scale
Industries vide its notification No.S.O.1722(E) dated
October 5,2006.).does not exceed Rs.5 Crore.
• Small (service) enterprises:

providing/rendering of services and whose investment in
equipment ( Original cost excluding land and building and
furniture, fittings and other not directly related to the service
rendered or as may be under the micro small and medium
enterprises development (MSMED),Act 2006 )
does not exceed Rs.2 crore.
• Micro (Manufacturing) enterprises:

October 5,2006).does not exceed
Rs.25 lakh, irrespective of the location of the unit.
• Micro (service) enterprises:

enterprises development (MSMED),Act 2006 )
does not exceed Rs.10 lakh.
• Medium (Manufacturing) enterprises:
49
October 5,2006.) is more than
Rs.5 crore but does not exceed Rs.10 crore.
• Medium (service) enterprises:

enterprises development (MSMED),Act 2006 ) is more than
Rs.2 core but does not exceed Rs.5 crore.
• Khadi and Village industries Sector (KVI):

All advances
granted to units in KVI sector, irrespective of their size of
operations, location and amount of original investment in plant and
machinery. Such advances will be eligible for consideration under
the sub target (60 per cent) of the small enterprises segment
within the priority sector.
:Significance of SMEs in Indian Economy:
The Indian industrial economy is characterized by a

dynamic and versatile set of enterprise actors, who are small and
medium in terms of scale of operations. This SME category has been
leading a typical competitive advantage to Indian industry in terms of
50
controlling sufficient markets globally. It is because of their ability to
make available low-volume customized products, flexible response
and lower fixed overhead costs. The other typical behavior of these
SME’s is that in most of the cases depending upon their
specialization, they have evolved as clusters.
The small scale sector produces a wide range of products, from

simple consumer goods to highly precision and sophisticated end-
products. As ancillaries, it produces a variety of parts and
components required by the large enterprises. The sector has
emerged as a major supplier of mass consumption goods like leather
articles, plastics and rubber goods, fabrics and ready-made
garments, cosmetics, utensils, sheet metal components, soaps and
detergents, processed food and vegetables, wooden and steel
furniture and so on. More sophisticated items manufactured by the
small scale sector now include television sets, electronic desk
calculators, microwave components,air conditioning equipment,
electric motors, auto-parts, drugs and pharmaceuticals.
The importance of SME’s as compared to Corporate

Enterprises with regard to their contribution towards Indian economy
can be best understood that they have a share of 40% in terms of
volume, 80% in terms of employment, 60% in terms of exports and
92% in terms of number of enterprises. These figures are indicative of
the economic significance of SME’s.
S No. Contribution to Indian Corporate SME’s (%)

Economy Enterprises (%)
1 In terms of volume 60 40
2 In terms of employment 20 80
3 In terms of exports 40 60
4 In terms of no. of 7 to 8 92
enterprises
: The following are the main reasons for the promotion of

small-scale industrial units:
1. It has proved to be a powerful instrument for a rapid and

decentralized growth of a developing economy like India with a
51
large army of unemployed labour and scarcity of capital
resources.
2. The small scale sector is considered as an important means for
checking concentration of economic power in a few hands and
bringing about economic dispersal and more equitable
distribution of national income.
3. This sector is also considered very effective in promoting the
industrial development of backward area.
4. It also helps in checking the unplanned migration from rural and
semi-rural areas to the urban areas.
5. It greatly encourages the development of new entrepreneurial
initiative and thereby injects competitiveness in our industrial
economy.
6. Small scale sector also assumes great significance from India's
stand point since this sector accounts for more than 35 percent
of India's total exports.
:MSMEs and their role in socio economic development:
The importance of Micro, small and medium enterprises (MSME) for

its contribution in the Indian economy growth is a matter of record
and needs no further elaboration. However with the changing focus
from economic growth to inclusive growth, MSMEs sector role in the
socio economic development of India needs to be understood,
explored and facilitated. What is so significant about MSMEs that
makes them special in their relation to socio economic development
of the country? Here are few facts which may give answer to this
question.
(1) Wide spread reach: There are around 12.34 million (1) MSMEs,
including 1.9 million registered one which are spread out across the
length and breadth of India. They may be touching the lives of 123.4
million directly or indirectly which is roughly 10% of India’s population.
(2) Major share in GDP: MSMEs combined output is roughly 7% of

country’s Gross Domestic Production (GDP).
(3) Big employment generator; MSME sector is the second largest
manpower employer in the country next only to agriculture sector. It
provides employment to more than 20 million people which is roughly
52
2 % of country’s population. Looked from social angle, it helps in
solving the unemployment and under-employment problem in the
society.
(4) Facilitates balanced regional development: Dispersion of
MSMEs in all parts of the country helps in removing regional
imbalances by promoting decentralized development of industries.
MSMEs can be found every where, which may be rural, urban,
coastal, desert, mountains, forest, backward/ forward areas. This
decentralized concept also helps in reducing the other problems like
pollution, congestion, housing, sanitations etc.
(5) Helps in equitable distribution of wealth/ income: When the
entrepreneurial talent is allowed to grow in different regions and
areas, the income is also distributed instead of being concentrated in
the hands of few. This help in solving a big social issue of bridging
the gap between rich and poor.
(6) Act as nursery for entrepreneurship: MSMEs provide a natural
habitat for entrepreneurs. Through this platform, the latent/ raw talent
available locally can hone their skills and talents, to experiments, to
innovate and transform their ideas into goods and services needed by
the society.
The table below represents several parameters regarding the

performance of the small scale sector in India from
1973-74 to 2001-02:
53
Comparative performance of SSIs in terms of compound
annual growth rate
Areas of Compound annual growth rates (in %)

performance
From 1973-74 to From 1973-74 to From 1991-92 to

2001-02 1990-91 2001-02
No. of units 7.86 9.51 5.22
Production 17.70 19.80 14.47
Employment 5.80 6.99 4.01
Exports 20.4 20.73 17.77
:The Growth Story Of Indian SMEs:
The economic performance of India has often been equated with the
slow growth rate of around 3.5 % never quite entering into the ‘take
off’ stage of the Rostow's model. Some economists believed, as
though the nation was destined for it. At the time of India's
54
independence in the year 1947, the nation had a plethora of serious
problems to face, viz. shortage of food-grains, poor infrastructure,
lack of financial resources, high rate of illiteracy and poor industrial
base. To build the nation's economy, following the socialist path of
development an overwhelming importance was attached to the public
sector units, which the first Prime Minister of India called them
"Modern Temples of India.
The Industrial Policy Resolution of 1948, which marked the evolution

of Indian Industrial Policy, outlined the broad contours of the policy
and defined the role of the state in industrial development both as an
entrepreneur and a regulatory authority. In order to optimize the
utilization of scarce resources and reduce the threat of re-colonization
by the multinationals, centralized planning was adopted with wide
ranging controls on private trade, investment, land ownership and
foreign exchange.
The foundations of the policy for the small-scale industry were

laid in the Second Five Year Plan.
In 1956, the government announced its second industrial policy which

unambiguously chose equity as the guiding principle for small
industry development. The operative statement says: “small scale
industries provide immediate large scale employment, offer a method
of ensuing a more equitable distribution of national income and
facilitate an effective mobilization of resources of capital and skill
which might otherwise remain unutilised”.
1977 Policy Statement:
A high watermark in the evolution of the policy for small industry was
the ‘Industrial Policy Statement’ of 1977. It was then that the
protection of small industry touched its acme. The important planks of
the 1977 industrial policy statement were:
55
• Whatever can be produced by small, cottage industries must
only be so produced.
• The number of products reserved for SSI was increased from
180 to 504 an further to 836 items in 1996.
• Special attention to be given to the `Tiny Sector’ defined as
enterprises with investment inplant and machinery of upto Rs. 1
lakh and situated in towns and in villages with population less
than 50,000.
• Special Legislation will be introduced to give due recognition
and adequate protection to the self-employed in cottage and
household industries.
• Special arrangements for marketing of the products of Small
Scale Sector will be made by providing services such as
product standardization, quality control, marketing surveys, etc.
1980 Policy Statement:
The recognition of the importance of ancillary industry found

expression in the policy statement of 1980 which laid emphasis on
ancillaries. Moreover, the program for the development of rural and
backward areas was accelerated. The Industrial Policy Statement of
1985 made incremental changes and took into account the impact of
inflation. The investment ceiling for SSI was raised to Rs.35lakh and
for ancillaries to Rs.45lakh.
Leading to a liberal regime :
The Industrial Policy of July 1991 marks a conscious shift from the
regulated and controlled policy to a liberal one. Most of the medium
and large industrial units, with a few exceptions, would no longer
need licenses. Full foreign ownership will henceforth be possible in
export – oriented enterprises. Import of capital goods has been
significantly made free from restrictions. Foreign equity participation
is also encouraged. The openness that has come with the ongoing
economic reform process during the last five years has hastened
several changes and the debate has shifted from the 'whys' to 'hows'
indicating high level of acceptability of the reform process. With the
56
lifting of several trade and investment related restrictions, India is
witnessing a mini-revolution in its economic growth faced with the
challenges of global market and competitiveness.
Impact is felt now :
The impact of these reforms that were started in the year 1991-92, is
now becoming clear as per the Economic Survey for 1995-96. Salient
features of the economic growth in the post-liberalization era are
given as under:
• Growth of GDP at factor cost during 1995-96 is estimated to be

6.2% in 1994-95 that has gone up from a level of 0.8% in the
crisis year of 1991-92.
• After a low employment growth during the crisis year of 1991-
92, annual total employment growth has averaged at 6.3 million
jobs per year over 1992-93 to 1994-95 and has reached 7.2
million during 1994-95. The Gross domestic savings rates
touched a record high of 24.4%. Real gross and capital
formation also reached a record of 22.2% in 1994-95.
• After declining by 6.2% in the crisis year 1991-92, the growth of

real wages of unskilled agricultural labor averaged 5.1% per
annum in the following three years.
• Provisional estimates by the Planning Commission indicate that
in 1993-94, the incidence of poverty had declined to below 19%
of India's population.
• After registering a decline in the dollar value of exports in 1991-
92, the country has witnessed a strong three year boom with
annual export growth averaging 19% during the period 1993 to
1996.
The following table depicts the growth of small-scale industries

since 1975-76. It reveals that the growth of the small-scale
industrial units has out paced the growth of total industrial
sector:
57
Comparative growth of small scale industries and industrial sector
(in percentage)
Year SSI Sector Industrial Sector
1975-76 17.9 6.7
1976-77 10.2 9.5
1977-78 12.7 4.2
1978-79 10.2 7.6
1979-80 14.0 (-1.6)
1980-81 8.8 4.0
1981-82 8.5 9.3
1982-83 8.1 3.2
1983-84 10.3 6.7
1984-85 12.0 8.6
1985-86 12.8 8.7
1986-87 13.2 9.2
1987-88 12.7 7.3
1988-89 13.4 8.6
1989-90 NA NA
1990-91 NA NA
1991-92 3.1 0.6
1992-93 5.6 2.3
1993-94 7.1 6.0
1994-95 10.1 9.4
1995-96 11.4 12.1
1996-97 11.32 5.6
1997-98 8.43 6.7
1998-99 7.70 4.1
1999-2000 8.16 6.5
2000-2001 8.23 5.0
Drawbacks of Indian SMEs
Small and medium scale organisations are considered backbone of

economic growth in all countries. Sinceeconomic reforms in 1991,
58
Indian small and medium enterprises (SME) are facing a very
different scenario compared with the protective environment of the
past. Due to global competition, technological advances and
changing needs of consumers, competitive paradigms are
continuously changing. These changes are driving firms to compete,
simultaneously along several different dimensions such as design
and development of product, manufacturing, distribution,
communication and marketing.
:Barriers for Indian SMEs:
:Managerial barriers:
As the man behind the machine is the most important, I will take up
the managerial barriers to innovation in the context of Indian SMEs,
first. India, as you know, was a protected market economy before
liberalization.The Indian industrial environment was traditionally
identified by its regulative and protective characteristics. Till, 1990,
the Indian economy was inward looking and protected from internal
and external competition. In the absence of competition, firms did not
develop the technological capability needed for penetrating the global
market. This decades long protective environment also reduced the
risk taking capacity of the SME manager and made him complacent
and averse to risk. He chose to avoid risky situations.
Earlier, Indian firms had quite often followed an opportunistic
approach to growth, as opposed to capability driven approach that
seeks to strengthen key aspects of manufacturing. Consequently,
firms have paid very little strategic attention to their shop floors in the
last few decades. Today Indian industry is facing tough competition
from imports in the domestic markets also. This competition is in
terms of new designs, new usages, reduced cost, improved quality,
products with higher performance and variety, better services, all
delivered simultaneously to enhance values to the customers.
:Financial barriers:
The non-availability of institutional finance on affordable and easy

terms is hindering access to new technologies. In India the situation
59
is further complicated by the fact that the preferred mode of finance is
either self or other sources
:Technological barriers:
Technology is the key to enhancing a company's competitive

advantage in today's dynamic information age. SMEs need to
develop and implement a technology strategy in addition to financial,
marketing and operational strategies, and adopt the one that helps
integrate their operations with their environment, customers and
suppliers
:Assistances and promotions to SMEs by Government:
60
Institutional Support Structure for SMEs in India
(1)At Federal Level:
• Ministry of SSI
• Ministry of ARI
• Small Industries Development Organisation (SIDO)
• National Small Industries Corporation(NSIC)
• Khadi & Village Industries Commission(KVIC)
• Coir Board
• Entrepreneurship Development Institutions (EDIs)
(2) At State Level
• Directorate of Industries
• District Industries Centres
• State Finance Corporation
• State Industrial Development Corporation
• Technical Consultancy Organisations
• Entrepreneurship Development Institutions (EDIs)
(3) Others
• Industry Associations
• NGOs
• Banks/Financial Institutions
ABOUT NATIONAL SMALL INDUSTRIES CORPORATION
61
The Government of India through its Ministry of Commerce & Industry
in Collaboration & deliberation with the National Planning
Commission and International planning team (Ford Foundation)
decided to set up NSIC in 1955 with mandate:
“To aid, counsel , assist, finance, protect and promote the interest of
Small Industries in India”
VISION:
To be a premier organisation in the country fostering the
growth of small enterprises including Tiny and Service Enterprises
MISSION:
To enhance the competitiveness of Small Enterprises by
providing integrated support services under Marketing, Technology
and Finance.
• The Corporation is a fully owned entity of the Government of

India.
:INTEGRATED SUPPORT PROVIDES BY NSIC:
Marketing Support:
• Single Point Registration Scheme under Govt. Stores Purchase

• Programme.
• Consortia & Tender Marketing
• Raw material Distribution
• Exhibitions & Buyer Seller Meets
• Export Facilitation
Technology Support:
• Advise on application of new techniques

• Material testing facilities through accredited laboratories
• Product design including CAD
• Common facility support in machining, EDM, CNC, DNC etc.
62
• Energy and environment services at selected centres
• Classroom and practical training for skill upgradation
Credit Support:
• Finance for procurement of Raw Materials

• Finance for Marketing
• Credit facilitation through linkage with banks
• Limited Financing for Equipments
SUPPORT SERVICES:
• Performance and Credit Rating Scheme

• Information Support
• Mentoring and Advisory Services
• Software Technology Park
• Technology Business Incubator
• International Consultancies & International Cooperation
• Display Centre & Exhibition Complex
• Marketing Development cum Business Park(Proposed)
Enables small enterprises to ascertain their strengths and
weaknesses of their existing operations and take corrective
measures to enhance their organizational strength.
• An independent, trusted third party opinion on capabilities and
credit worthiness of SSI units is taken.
• Good rating enhances the acceptability of the SSI units with
Banks, FIs, SSI’s customers and buyers.
• Facilitate prompter credit decisions from Banks on proposals of
SSI units.
• Empanelled agencies: ICRA, ONICRA, Dun & Bradstreet,
CRISIL, FITCH and CARE, SMERA
• Performance and Credit Rating Scheme
:Conceptual Frame-work for Development of a Cluster:
63
Definition of a cluster :
A cluster may be defined as a local agglomeration of enterprises

(mainly SMEs, but often also including some large enterprises), which
are producing and selling a range of related and complementary
products and services. An example can be a localized leather
industry which includes leather tanning units, leather finishing units,
leather goods producers, leather garment manufacturers, designers,
sub-contractors, merchant buyers and exporters etc. It must be,
however, highlighted that a cluster is not merely a
hardware, consisting of a group of industries located in a particular
area .Its success and dynamism are highly dependent on the
software i.e. the linkages and relationships that get established or are
consciously established over a period of time. The precise definition
of a cluster based on quantitative parameters may vary from country
to country.
Typology reflects only a static view :
Clusters can be categorized in different ways. But before developing

the typology, it is important to realize that such classifications may
help to provide useful first static insight into the structure of a cluster,
but need not present a dynamic picture of that. Therefore typology
should not be used to generalize any policy prescriptions. Secondly,
the categorization of a cluster into a specific type during the course of
its evolution or later due to changes in the international scenario may
change.This typology presented as under is therefore a first cut at
taking stock and organizing the information on clusters in India and
any further understanding of how the specific clusters function would
require detailed analysis of each cluster.A total of 138 clusters have
been chosen as a sample to understand the current scenario of
clusters in India. These clusters have been chosen and categorized
based upon the judgment of informed persons, available write-ups
and studies, each one cross checked & reconfirmed from several
possible sources to improve the reliability of information. Due to the
scarcity of research studies available for most of these clusters, this
improvised method of data collection is entirely the responsibility of
the researcher with a few possible limitations or differences in view
point. Typology based on stage of development : An important way of
categorization has been developed by the researchers of this study
64
which is based upon the stage of development of a cluster at a static
period of time. Development of a cluster could conceptually be
divided into four distinct phases : namely the 'Initial phase', 'Growth
phase', 'Maturity phase' and 'Extinction phase'.
Initial Phase :
In this stage of cluster formation, only a handful of units establish

themselves and based on their success, several other units come up
in the subsequent stages. The formation of cluster may be natural,
based upon high demand potential and private initiative or may be
induced due to policy incentives, infrastructure availability or a large
buying public sector unit. The reason may also be the availability of
critical raw material or specific skills, as in case of most traditional
clusters. The example of natural cluster based on raw material
resources would be 'marble cutting' cluster at Kishangarh in
Rajasthan while a demand based cluster would be 'ready-made
garments' at Indore and Mumbai. The examples of induced clusters
would be automobile component industry at Gurgaon due to the
setting up of the public sector car manufacturing unit of 'Maruti Udyog
limited' and another example may be cited as of petro-chemical
based industry at Vadodra due to setting up of 'Indian Petrochemical
Industries Ltd', another public sector undertaking.
The firms, in the initial stage, develop the man power and help setting
up of ancillary or subcontracting firms. They also contribute to the
development of support institutions and other enterprises with the rise
of demand for them. The initial phase is likely to be characterized by
slow growth and high costs. There are a few competitors in the
cluster at this stage, so it is possible to pass on the cost to the
consumer by charging higher than that in the later stages of
development. An example of a cluster in the initial stage is floriculture
industry at Bangalore, Pune and Gurgaon.
Growth Phase :
65
The second phase characterizes rapid development of the industry,
intervention by support institutions including government institutions
and consolidation of other raw material and service providers. New
firms enter the market and thus the competition increases. This
increased competition encourages technology development and
expansion into new markets. The growth is usually fueled by the
widening of national or international markets that the cluster caters to.
Both in the spheres of marketing and management, innovative means
are likely to be developed thus reducing the overall decline in the
prices. Since the industries go through their cycles of recession
and growth, a cluster that is not currently in the growth stage may
reach that stage later. An example of the industry currently in the
growth stage is “automotive components industry” that was pushed
back from maturity stage because of the industry for new cars and
other automotive vehicles had been allowed to be set up first during
the early 1980s in India and subsequently with the onset of
liberalization several MNCs set up their base in India. From the
sample of 138 clusters under study it was observed that 38 of them
are in the Growth Phase.
Maturity Phase :
The third phase is characterized by the growth of the cluster slowing

down due to over capacity generally created in the cluster and
resultant very high competition amongst the units. The data seems to
suggest that in the Indian context so far, the stage of maturity lasts
longer than the previous two stages. During the maturity phase strong
input of research & development may be needed to reduce costs,
increase productivity and add new product features to stay ahead of
the competition. As a natural outcome, weak units begin to wither
away creating space for the healthier units to continue to survive.
Several studies have shown how 'mature' clusters that were
overwhelmed by technological change at one point of time,
regenerated themselves back into the growth stage as a
result of choices made by local actors and groups. This represents
the transformation and re-invention. The examples of the matured
clusters would be “ the electric fans cluster ” in Calcutta, “sewing
66
machines cluster “ in Ludhiana and 'stationery diesel engines cluster '
in Rajkot. Out of the 138 clusters, 100 of them seem to be in the
category of mature clusters which represent 72.5 % of the clusters,
reflecting the prevalence of a lengthy duration of this phase among
the clusters.
.
Extinction Phase :
If due to wide ranging technological changes that the cluster is unable

to cope with or due to change in the life styles, a product is no longer
in demand, the cluster may go to face extinction. Another reason may
be the erosion of competitiveness because of increase in the labor
costs in the cluster. However the same industry may find itself viable
in a different location where favorable conditions exist for the survival
and growth of the cluster. One example of such a cluster is related to
shoddy yarn made from recycled wool which shifted itself from Prato
in Italy to Panipat in India where not only the skills existed due to the
presence of textile industry and the cheap labor but also the
favorable market for the shoddy yarn existed. During the last decade,
Panipat has grown to be a cluster of 700 carding machines each on
an investment of Rs. 7 million (USD 200,000). Now there is hardly
any such unit in Prato in Italy. In the Indian case , tile industry cluster
based in Mangalore with a history of 175 years has now gone into
oblivion due to the stated reasons of scarcity of raw material and fire
wood and accentuated with increased competition from China in the
export market.
Exceptions may occur :
There may be exceptions to the above stages of development in

some of the clusters. The growth and maturity phases may in certain
cases be inseparable thus making it difficult to assign one of the two
stages to such specific clusters. Secondly, the transition from one
stage to another may not be smooth as reflected in the ‘S’ curve but
could be quite jerky due to certain internal or external changes that
may crop up.
Micro, Small & Medium Enterprises Development (MSMED) Act 2006
67
Central Govt. decided to bring into India, the concept of Small and
Medium Enterprises in the place of small-scale sector, as per the
suggestions by the western giants through WTO. The MNCs who had
invested in India also favoured such a move, since the small scale of
the foreign land would not fit into the small-scale definition in India
and that they can not come into India and claim concessions from
Govt.
This pressure from outside made Govt, of India propose SME Bill in
2003. When the draft bill came into the knowledge of the small scale
NGOs, there was wide-spread denouncement of the same from the
Associations all over India. The Govt. then constituted a
Parliamentary Committee to travel through India and meet SSI
stalwarts to know their views and to submit a report with remedial
suggestions.
The MPs were all unanimous in accepting the objection of the SSI
sector on the total neglect of the welfare of the Tiny sector in the
proposed Bill, in which the sector was treated at par with Medium
Scale Units with investment of Rs. 10 Crores. All clamoured that the
Tiny sector should find a separate place in the Act with special
benefits.
Based on the recommendations of the Parliamentary Committee, the
old SME bill had been rechristened as MSMED Act. The first letter
“M” here stands for “Micro”, which is same as the old “Tiny”.
The MSMED Act was passed in the Parliament in May 2006 and
gazetted in July. The date of effectuation is yet to be notified
:The important clauses of the Act are renderd hereunder:
 The maximum credit period permissible under agreement

between the supplier and the buyer is 45 days (Sec 15)
 For default beyond the permissible credit period or in the
absence of any credit agreement, from the date of delivery of
goods, a penal interest at 3 times the bank rate notified by RBI,
shall be payable at compound rate calculated on monthly rests.
(Sec 16)
68
 One or more Micro and Small Enterprises Facilitation Councils
will be constituted by the State Govts., comprising of minimum
3 members and maximum 5 members consisting of Director of
Industries, MSE Associations, Banks and Persons with special
knowledge in Industry, Finance etc. (Sec 20 & 21)
 The Council will first conciliate for amicable settlement. On
failure, it shall arbitrate and give Award. [Sec 18 (2) & (3)]
 The Council will have jurisdiction to act in a dispute between
the supplier within its jurisdiction and a buyer located anywhere
in India. [Sec 18(4)]
 The petition filed shall be decided within 90 days by the
Council. [Sec18(5)]
 For appeal against the Award of the Council, appeal will lie
before appropriate judicial Courts. It is mandatory to deposit
75% of the Award amount in the Court for preferring the appeal.
Pending disposal of the appeal, the Court has discretion to
release suitable part of the deposit to the supplier, depending
on the dire financial need of the supplier. (Sec 19)
 In the audited accounts of the buyer, details of defaulted
amounts, penal interest paid or payable etc have to be
furnished. Further under IT Act, the default-interest amounts
shall not be allowed as deduction. (Sec 22)
 The delayed payment provisions in the Act shall apply
notwithstanding any contrary provisions existing under any
other Law. (Sec 24)
:Conclusions:
69
Today organizations are knowledge based and their success and
survival depend on creativity, innovation, discovery and
inventiveness. An effective reaction to these demands lead to
innovative change in the organization, to ensure their existence. The
rate of changes is accelerating rapidly, as new knowledge idea
generation and global diffusion are increasing. Creativity and
innovation have a bigger role in this change process for survival.
SMEs have to learn and imbibe the process of innovation, in their day
to day working, to remain competitive. Instead of looking for support
from other agencies, they have to find their own ways of overcoming
barriers. Despite all the barriers and gaps which I have stated before,
Indian SMEs have continued on their path of progress. In fact,
their rate of growth is higher than the rate of growth of the
industry sector as a whole, their contribution to our GDP is
almost 7%. In the past also, our SMEs have shown enough
strength, vigour and resilience and in current situation they will
not only survive but win also. By contributing higher than
industrial sector for our economy , Smes have proved that they
are growth engines for Indian economy.
BIBLIOGRAPHY
70
Sr. No. Details
Magazines & Reports
01. Business World
02. The Economic Times
Books Author
01. Accounting for Management D.R. Patel
02. Financial Management Prasanna Chandra
Web-sites
01. www.bankofbaroda.co.in
02. www.chickmagalur.nic.in
03. www.thehindubusinessline.com
04. www.annualmeeting2005.insme.org
05. www.mcciapune.com
06. www.indcom.tn.gov.in
07. www.unido.org
08. www.wardha.nic.in
09. www.maharastra.gov.in
10. www.domainb.com
11. www.ficci.com
12. www.banknetindia.com
13. www.smera.com
14. www.expresstextile.com
15. www.iiaonline.in
16. www.partnershipsummit.com
17. www.businessworldindia.com
18. www.laghu-udhyog.com
19. www.coirboard.nic.in
20. www.sidbi.com
71
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REPORT ON SMEs-GROWTH ENGINES FOR

Date: - 15th July 2008

I am very glad to have the vocational training in Bank of Baroda. I am

I am also very grateful to Mr. P.K.Sharma who is a chief manager of

Last but not least I am also grateful to my Institute Shri Chimanbhai

(Parmar Dinesh G.)

Sr.No. Topic Pg. No.

Bank of Baroda’s principal activities are to provide banking and

Here, the overall project is based on analysis of Small Scale sector

Small scale enterprises are getting more importance than other

Small industry sector is a major employment provider after

Bank Of Baroda, is a Body Corporate (Nationalised Bank) constituted

Bank of Baroda, a leading global Bank of Indian origin has been

Since then bank has traversed an eventful and successful journey of

Bank of Baroda took the lead in shifting from manual operating

The Bank of baroda belongs to the service sector, which provides

As Indian economy is emerging as a major services provider in the

“To be a top ranking National Bank of International Standards

“Bank’s new logo is a unique representation of a universal

The sun is an excellent representation of what bank stands for. It is

The single-colour, compelling vermillion palette has been carefully

It also recognize that bank is characterised by diversity. Its network

Shri M.D.Mallya Chairman & M.D

Shri V.Santhanaraman Executive Director

Shri Satish.C.Gupta Executive Director

Shri C.G.Chaturvedi (I.A.S, Additional Secretary, Govt.

Shri A.Somasundaram Nominee of R.B.I

Shri Milind N.Nadkarni Director

Shri Ranjit kumar Chetterjee Director

Shri Amarjit Chopra Director

Smt Masarrat Shahid Director

Shri Maulin A.Vaisnav Director

Dr. Atul Agarwal Director

Dr. Dharmendra Bhandari Director

Shri Mahesh Prabhulal Mehta Director

Dr.Deepak Bhaskar phatak Director

Organizational structure is one of the most important decision mode

Every organization differ in structure. There is a well defined system

There is a well defined organizational structure and clear system of

Apart from competitive interest rates and convenient withdrawal

Fixed deposits are categorised into deposits with a term period of

2.1: Gen-Next Junior (Saving Account)

This is a Special kind of Savings Bank Deposit product for children to

Children upto 18 years of age.

Minimum Amount & Balance:

• In case of joint accounts with parent and minors (with sole

Single / Joint Accounts:

• In case of minor below 10 years the account shall be opened

Term Loan (Combo Pack)

• Purchase of Home Furnishings / Consumer Durable goods

Working executives / professionals.

• Should be an Indian National

Present gross annual emoluments / income of the applicant should

Maximum Loan Amount:

Subject to maximum of: