SME Study MaterialSTUDY MATERIAL FOR CERTIFICATION IN SME FINANCE FOR BANKERS RAMYA EDUCATION ENTERPRISE Towards Professional Excellence… http:\\ramyaeducationenterprise.blogspot.in [email protected] SME Study material Page 1 [email protected] SME Study Material SME Study material Page 2 [email protected] 10. 14. PPP is a Response-Demand-led approach. 19. 20. e. 2. Investment in capital/Fixed assets. General trading company act. In case of public ltd company minimum no. b. 3. 13. 6. 28. Charge to be created within 30 days of execution of documents and second search after 30 days. 27. 18. 165 returns & 60 inspectors encompass the functioning of SMEs. g. 31. a. 30. Public sector banks to attain 20% growth in lending to SMEs. In EU SMEs contribute 40% of employment. 72 Product Control orders. Dual vocational training system –Germany is an example of PPP. Small and medium industries fundamentals act-Republic of Korea. SME basic law c. National Commission on un organized sector ( Chairman-Dr. V Krishnamurthy) 5. It cannot issue debentures/IPO. c.com . 15. 12.SME Study Material KEY STUDY POINTS 1. In case of new industries registration to ESIs to be completed prior to commencement of production. If an enterprise is considered as woman oriented if it is owned by woman entrepreneur with 51% equity share and atleast 50% of woman employed. National manufacturing competition council (Chairman-Dr. Business Enterprise c. Food products (21. d. Magna carta of Small enterprises. Woman generally suffers from two discriminations. Retail trade b. premarket discrimination like education. In India 56 Laws. US small business act. 32. Following laws relating to SMEs persistent in US. SIDBI with CIBIL set up SME rating agency (SMERA). No of people employed B. Transfer of shares limited. 24. A. 11.0%). MSME development act-2006. 25. In India definition based on investment in plant and machinery which is 10 million. Japan-a. In private ltd company minimum number of share holders is 2 and maximum 50. experience B. Doubling credit to SME sector by 2009-10. SME Study material Page 3 ksp20001@gmail. 23. Company’s act 2006 replaces company’s act 1956 with amendments. In case of transport operators if business is considered as small scale if it is association of 6 or less person and number of vehicles owned not exceed 10. Regulation flexibility act. 17. In India 2 commissions influencing policies of government both at central as well as state level. b.4%) and leather products (15%). In case of giving loans to companies search should be made within 30 days by banks. Corporate debt restructuring for SMEs. 26. The MSME act proposed following. f. Arjun Sen Gupta) b. Transport operators. 4. a. Law of prevention of payment delay to sub contractor’s b. Small business comprises of a. training. A. Commercial bank branches to finance atleast 5 new units per annum in Urban & Semi urban. Largest share o SSI s in exports in the areas of Hosiery 7 garments (29. d.Philippines. c. SME s classified generally in the basis of 2 ways. 7. 29. Export oriented unit is one which exports at least 30% of annual production at the end of third year. 16. Small business regulatory enforcement fairness act. a. Minimum no. If a company is considered as controlled by other if equity holder of the other in it exceeds 24% and when same person is MD of both the countries. differential wages. In Germany 50% of GNP from SMEs. Industries development and regulation act-1951 provided basis frame work for post independence industrialization strategy. 8. is 7 and no maximum number of share holders. 9. 22. In India development of SSI’s is a state subject but overall policy guidelines provided by Union Government. 21. SME s to be credit rated. Minor can become partner but cannot sign partnership deed. Equal access to justice act. Italy follows cluster approach. Professional and self employed person d. Law on business activity & Law on acceptability and monitoring of public assistance to entrepreneurs persist in Poland. OTS in NPAs. of partners is 2 and maximum is 20. 76. 62.5 Million. 36. 58. National board for MSME head office-Delhi. Micro Small Medium Manufacturing 0 lakhs-25 lakhs 25 lakhs-5 Crores 5 crores-10 Crore Service 0 lakh-10 lakhs 10 lakhs-2 Crores 2 crores-5 crore 51. 34. 70. (1 Crore). 57. 49.5 Million (50 lakhs). Second act as development Bank. Expand the following a. EAP-Entrepreneurship Awareness Programme. NISIET (National Institute of Small Industries Extension & training) –Located at Hyderabad. SSI industries board-1954. There are 18 State Financial Corporations in India. (25 Lakhs) 40. HUDCO(Housing & Urban Development Corporation)-1988. b. Composite Loan limit can be sanctioned without security to SSI is 2. 45. Small Industries Service Institute acts as interface between Center & State govt. 47. 50. 67. implementation Stage & Operational stage. 55. 74.com . Institute for Design of Electrical Measuring Instruments-1969. CHENNAI. 42. SME Study material Page 4 ksp20001@gmail. NIESBUD-National Institute for Entrepreneurship & Small Business Development apex body oversees activities of various agencies involved in entrepreneurship development. Karve committee report (1955) recommended protective environment for the growth of small industries in India. 75. c.SME Study Material 33. Minimum no of partners for LLP is 2 and no maximum limit. 43. MSMED act 2006. DICs-District industries Centers started in 1980. Ministry of SSI designs policies for SSIs. b. They are formed according ato State Financial Corporation Act-1951. One time capital grant of 50 % for testing labs of international standard. 71. 56. Small Scale industries Development Corporation (SSIDC) established under 1956 companies act. For ISO certification 75000 grant from SIDO. Limited liability concept originated in US. Investment limit in SSI sector in India is Rs. SMART-Small firms Merit Award for Research and Technology. Investment limit for medium enterprise -100 million (10 crores) 38. 35. MUMBAI & CULCUTTA. 69. 52. 39. Central Level-Depot of Small industries. Exemption in excise duty up to 10 Million. Coverage under credit guarantee scheme. SSBE s upto investment of 1 Million (10 lakh) qualify for priority sector lending. SFC’s are refinanced by SIDBI. 65. Entrepreneur Development Institute of India located at Ahmadabad. (SSI means-Micro & Small Enterprise) 37. National equity fund scheme project costs limit 5 Million (50 lakhs). 44. Agriculture & rural industries. 66. All policies implemented through SIDO & National Small Industries Corporation (NSIC). 2 institutions promote SSIs a. IN India it is implemented based on Naresh Chawla & Expert committee report. MPI-Manufacturing Planning Implementation. 72. 54. Executive agency at state level. PPP-Public Private Participation. Integrated infrastructure development scheme cover all areas of country with 50% reservation for rural areas. 46. NSIC-national Small Industries corporation-1955. For investment in technological sector capital subsidy-12%. State level-Directorate of Industries. Khadi & Village Industries Commission-1957-an autonomous body set up for promotion of Khadi industry in India. 59. 63. Policy guidelines in India regulate SMEs at the Entry stage. 73. 68. State Level-Commissioner/Directorate of industries. 64. State Industrial Development Corporation & State Industrial Investment Corporation set up in 1956. 50 Million. d. MSME classification based on size. Market development assistance (MDA) programme provided by SIDO. 53. New business plan proposed to SMEs is LLP. In LLP members should subscribe incorporation document. 61. Technical Consultancy organization setup by IDBI & SIDBI. 41. project implementation stage & operational stage. Policy package for SSI in India announced in 2000.Staeted with assistance of UNDP & UNIDO. 48. Central footwear testing institute has branches in AGRA. 60. Regulation required for SME at Entry stage. Rural Entrepreneurship Development Programme conducted by NABARD. 87. Factoring. 84.5% of ANBC then it is not included in 18% achievement. It follows fund of fund approach. Two major objectives of SIDBI are Enterprise Creation & Strengthening of existing MSMEs. EXIM bank setup by the act of Parliament.com . TANSTIA-FNF Center- Chennai. National Venture Fund for Software and information technology & SME growth fund. Demand loans-upto 36 months for acquisition of assets for period of < 36 months. 80. Mortgage Loans & leasing are general modes of finance chosen whenever plant and machinery are to be financed. 99. Prudence & Profitability are the 2 pillars on which SMEs should be built. 93. 12% ANBC Weaker Section 10% ANBC - DRI 1% - *if indirect lending to agri is > 4. Few of the examples of BDS include CODISSIA-Coimbatore. It is generally referred in the context of perfect markets. FISME-NEW DELHI. b.SME Study Material 77. 91. Market risk-Interest rate risk/forex rate risk. Confederation of Indian Industry is an advisory and consultancy body for governments. Term loans (>2 yrs). 100. d. An innovation which causes little disruptive impact on behavior pattern called continuous innovation. Sovereign( Country) risk-war. SIDBI is nodal agency for implementation of Credit Linked Capital Subsidy Scheme.(1980) 78. 1990 setup by the act of parliament and principle financial institution for SMEs. 83. Bank should monitor Borrower instead of Account. For Govt sponsored schemes upto Rs. Working Capitals a. Total 40% of ANBC. Domestic Banks Foreign Banks. Means if Bills not collected client need to pay. Risk Factors for SMEs a. 86. Systemic/industry risk-Chain reaction of default in FIs. Authorised capital 1000 crores paid up 450 held by 36 financial institutions. 103. Insolvency risks-Liabilities exceed viable assets plus equity capital. 106. 102. Targets to priority sector. 81. Cash Credit-Also called inventory loans. OD-< 2 yrs. SME Study material Page 5 ksp20001@gmail. SIDBI has 64 branches. 104. 89. SIDBI-April 02. and COSIA-Thane. 97. 85. * 20% of total advances to Small enterprise should go to Micro manufacturing sector-investment in P & m above 5 lakh-25 lakh & Service –Investment in P & M above 2 lakhs-10 lakhs. 2 lakhs bank offers loan without any security. 32% ANBC Agri 18% ANBC No target Small Enterprises 10% ANBC Export credit . 90. SBI Factors cover North & West India. 82. * 40% of total advances to Small enterprise should go to Micro manufacturing sector-investment in P & m upto 5 lakh & Service –Investment in P & M upto 2 lakhs. 94. Loan proposals of term loan and working capital upto Rs. 96. * 40% of DRI advance should go to SC & ST and atleast 2/3 of DRI advances granted to rural 7 Semi urban areas. civil disorder c. Technology Upgradation Fund Scheme (TUFS) for textile industry and Integrated Development of Leather Sector Scheme. 1000 lakhs can be processed through CART method. Venture Capital refers to privately held equity. 105. 101. Equity is referred as HURT MONEY. SMEs face discriminatory barriers that prevent a level playing field and these are referred as ‘MARKET FAILURES’. 92. BD b. 95. Sectoral developments provide insight into linking manufacture with services. World association of Small & medium Enterprises located at Delhi. Generally tend to exit within 5 to 7 years. 88. c. Generally a factor with Recourse basis is popular. 98. 79. Hire purchase. SIDBI started foundation for micro Credit with capital of one billion. FAPSIA-APSSI Center-Hyderabad.Purchase of Book debts or receivables. High risk. CAN Factors cover South India. Substitution effects & Diffusion effect. Hybrid Capital is combination of DEBT & EQUITY. Technology causes Innovation effect. Credit risk assessment exercise in banks to be conducted biannually. SIDBI has developed software for CREDIT APPRAISAL & RATING TOOL (CART). BDS –Business Development service providers they help in correcting market failures that occur during growth phase of SMEs. d. SIDBI Venture Capital Ltd-has 2 funds. SSI units financed under national equity fund and Those taking ISO 9000 certification eligible. Identifies viable technologies for implémentations.SME Study Material 107. Substitution-New technology replaces existing product. Existing product modified to change in consumption pattern. TVs & computers. It gives guarantee of 75% of credit risk. b. 111.com . TIFAC-1988. 110. SME Study material Page 6 ksp20001@gmail. c. Expenditure involved in this case met by 50:50 sharing by government and industry. Credit Guarantee fund trust (CGFTS) set up in may 2000 by govt and SIDBI. 112. Ex: Electric tooth brush (For continuous innovation). Ex for discontinuous innovation is automobiles. Project UPTECH-initiated by SBI. Back ended Interest Subsidy scheme- a. The scheme has low cap of 25 lakhs and guarantee cap of 18. If interest rate below BPLR-Difference b/w exact int rate and BPLR or maximum 3% given as subsidy. 108.75 lakhs per barrower. Ex: Black and white TV by Colour TV. If interest rate above BPLR-Difference b/w exact int rate and BPLR or maximum 2% given as subsidy. CREDIT LINKED CAPITAL SUBSIDY SCHEME-Providing 15% capital subsidy for inducing new technology in 44 categories. Innovation effect-New product not created. 109. units with investment in P & M < 25 lakhs availing loan under CGFTS. SSIs obtaining loans for technology upgradation. 113. In India overall policy guidelines for SME’s provided by A Ministry of commerce C State Government B Directorate of industries D Union Government.SME Study Material SET-1 1. In India development of SSI’s is a primary objective of A Ministry of SME’s C State Government B Directorate of industries D Ministry of commerce 11. maintaining & expanding customer relationships is termed as A Consumer Banking C Customer Relation Management B Customer retention approach D Customer service 8. The act provided basis frame work for post independence industrialization strategy. Rashtriya mahila Kosh (RMK) is a A NGO funded and controlled by Department of C State run NGO woman and child development Central government B NGO run by world bank D Government body set up under 5th five years plan 5. The state in India having highest microfinance exposure A UP C Andra pradesh B Karnataka D Haryana 6. Grameen bank model prevails in A India C Maldives B Pakistan D Bangladesh 7. A Industries development and regulation act. C Industries regulations and control act- 1951 1942 B None of these D All the above 10. Banks finance SHG’s through A SHG-Bank linkage programme C Consumer Banking programme B Commercial banking D Poverty alleviation scheme 3.com . In India following SHG model is most popular A SHGs promoted by Govt financed by Bank C SHGs promoted by and financed by NGO’s raising bank loans B SHG’s promoted by NGO’s financed by MFI’s D Urban co-operative Bank model 2. SHG-Bank linkage programme first launched in 1991-92 by A SIDBI C RBI B NABARD D Ministry of rural Development 4. SME Study material Page 7 ksp20001@gmail. The comprehensive approach of creating . CRM in banking includes A Sale & marketing of bank products C Post sales services B Create and expand relationships D All the above 9. D All the above SME Study material Page 8 ksp20001@gmail. In India MSME definition based on investment in plant and machinery with highest cap of A 5 Million C 100 Million B 8 Million D 15 Million 5. C Corporate debt restructuring for SMEs B Doubling credit to SME sector by 2009-10 D All the above 3. MSME development act was passed in the year A 1956 C 2006 B 2011 D 2001 14. A 5 C 10 B 15 D 20 2. A 50% C 30% B 80% D 51% 6. As per the MSME act Commercial bank branches to finance atleast ____new units per annum in Urban & Semi urban. A 25% C 50% B 10% D 20% Answers to Set-1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 C A B A C D C D A C D B C B D SET-2 1.SME Study Material 12. As per the MSME act Public sector banks to attain ___% growth in lending to SMEs. Small business comprises of A Retail trade C Business Enterprise & Professional and self employed person B Transport operators. SMERA was constituted by A RBI & NABARD C NABARD B SIDBI & CIBIL D CIBIL & ICRA 15. The MSME act proposes A OTS in NPAs. Following industry contributes largest share in export done by SSI’s in india A Hosiery & garments C Rubber B Leather D Neem based products 4.VKrishnamurthy) B All the above D None of these 13. In India 2 commissions influencing policies of government both at central as well as state level are A National Commission on un organized C National manufacturing competition sector (Chairman-Dr. Arjun Sen Gupta) council(Chairman-Dr.com . A unit is considered Export oriented unit is the one which exports at least _____%of annual production. com . In case of public ltd company minimum no. In private ltd company which of the statements are true. of share holders are a 5 C 7 b 50 D 100 12. Transfer of shares limited. In case of new industries registration to ESIs to be completed prior to A Commencement of production. A 60 C 10 B 30 D 45 10. A 100 C 10 B 20 D 50 8. In private ltd company minimum number of share holders is 2 and maximum 50. In Europe SMEs contribution to total employment is A 40% C 10% B 7% D 45% Answers to SET. A Philippines C India B USA D Italy 2. fairness act.SME Study Material 7. It cannot issue debentures/IPO. In case of giving loans to companies Charge to be created within ___ days of execution of documents.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 A D A C C D C A B D C B A D A SET-3 1. Cluster approach for SME development followed in. C Registration of the firm B Constitution of the firm D Registration not compulsory 14. If an enterprise is considered as woman oriented if A 51% of equity held by woman entrepreneurs C 50% woman employed B None of these D All the above 15. B Equal access to justice act. A 2 & 20 C 5 & 20 B 5 & 50 D 7 & 50 9. A number of share holders is 2 and C Transfer of shares limited maximum 50 B It cannot issue debentures/IPO. Following SME regulation laws persistent in US A Small business regulatory enforcement C Regulation flexibility act. In case of transport operators if business is considered as small scale . In case of partnership firm which of the statement is false A Partner ship deed must be registered C Minor can become partner B Minor can sign partnership deed D Maximum number of partners is 20 13. In a partnership firm Minimum & maximum number of partners are. number of vehicles owned should be less than. D All the above 11. D All the above SME Study material Page 9 ksp20001@gmail. Law on business activity & Law on acceptability and monitoring of public assistance to entrepreneurs persist in A Poland C Germany B USA D France 4. A 5 lakhs C 10 lakhs B 12 lakhs D 100 lakhs 13. SME Study Material 3. In India Coverage under credit guarantee scheme for SSI’s is available up to A 10 lakhs C 20 Lakhs B 50 lakhs D 100 lakhs 14. A 50% C 100% B 25% D 33% SME Study material Page 10 ksp20001@gmail. Policy guidelines in India regulate SMEs at A the Entry stage C project implementation stage B operational stage D All of these 9. SSBE s upto investment of Rs. Exemption in excise duty for SMEs is up to Rs. Composite Loan limit can be sanctioned without security to SSI is upto A 25 Lakhs C 50 Lakhs B 5 lakhs D 10 Lakhs 12. Investment limit for medium enterprise -100 million (10 crores) A 10 Million C 100 million B 50 Million D 150 Million 10. RBIAM SME report C A G Bhave committee report B Karve committee report D V S Krishnamurthy Committee report 8. Integrated infrastructure development scheme has ____% of reservation for rural areas. B Germany D USA 7. SME basic law & General trading company act present at A France C USA B Japan D India 5. Magna carta of Small enterprises act pertains to. 4. Protective environment for the growth of small industries in India has indicated in.com . Small and medium industries fundamentals act present at A Republic of Korea C India B USA D Pakistan 6. Law of prevention of payment delay to sub contractor’s. _______qualify for priority sector lending. A France C Philippines.Philippines. A 5 Crore C 1 Crore B 10 crore D 15 Crore 11. A Mumbai C New Delhi B Hyderabad D Chennai ANSWERS TO SET-3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 D D A B A C B D C C A C D A B D D A C SET 4 1.com . National board for MSME is having its head office at Delhi. Naresh Chawla & Expert committee report mainly focused on introduction of A PPP C LLP B Amendment to companies act D All of these 3. Agriculture & rural industries B NABARD D SIDBI SME Study material Page 11 ksp20001@gmail. SSI industries board was setup in the year A 1927 C 2001 B 2006 D 1954 5. 1 Lakh from MSME Board B Rs. 75000 from SIDO. C 5 and 25 B 2 & 20 D 2 & 50 4. For investment in technological sector capital subsidy available is upto. For setting up of testing labs of international standard one time capital subsidy available upto A 12% of capital expenditure C 10% of capital expenditure B 75% of the capital expenditure D 50% of capital expenditure 18. Market development assistance (MDA) programme is provided. 75000 from IDBI D Rs. For obtaining ISO certification following grant is available in India A Rs.SME Study Material 15. 17. Minimum and Maximum number of partners for LLP is A 2 & no maximum limit. A Small industries Development C SIDBI organization(SIDO) B IDBI D NABARD 19. C Depot of Small industries. 5 Lakhs from SIDBI C Rs. Following institution promote SSIs in India at Central level is A Commissioner/Directorate of industries. Limited liability concept has its origin from A USA C India B Germany D france 2. A 15% C 11% B 12% D 25% 16. B MSME Board D Both a & c 8. State Financial Corporation Act was passed in the year A 1951 C 1956 B 2001 D 1974 14. Number of State Financial Corporations (SFC’s) in India are A 30 C 18 B 27 D 21 13. C Depot of Small industries. All policies formulated by central government are implemented through A SIDO C National Small Industries Corporation (NSIC). NSIC-national Small Industries corporation incorporated in the year A 1935 C 2006 B 1955 D 1965 12.com . Agriculture & rural industries B NABARD D SIDBI 7. HUDCO(Housing & Urban Development Corporation) incorporated from the year A 1984 C 1988 B 2000 D 1987 ANSWERS TO SET 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 A C A D C A D A D C B C A A C SME Study material Page 12 ksp20001@gmail. NISIET (National Institute of Small Industries Extension & training) located at A Hyderabad C Bangalore B Culcutta D Delhi 9. The apex body which oversees activities of various agencies involved in entrepreneurship development in India A SIDBI C NIESBUD-National Institute for Entrepreneurship & Small Business Development B NABARD D SIDO 11.SME Study Material 6. Following institution promote SSIs in India at State level is A Commissioner/Directorate of industries. SFC’s are refinanced from A SIDBI C NABARD B State Government D RBI 15. B CHENNAI D Delhi 10. Central footwear testing institute is not having branches in A AGRA C MUMBAI & CULCUTTA. B Delhi D Mumbai 4. A NABARD C Khadi & Village Industries Commission B Directorate of Khadi & Village Industries D Khadi Board 3. Which is the nodal agency for implementation of Credit Linked Capital Subsidy Scheme.setup by the act of parliament on and principle financial institution for SMEs. A April 02. Entrepreneur Development Institute of India located at A Hyderabad C Ahmadabad. D None of these 10. National Venture Fund for Software and information technology & SME growth fund are the funds held by A SIDBI Venture Capital Ltd C ICICI B IDBI Business capital ltd D NABARD 11. Two major objectives of SIDBI are Enterprise Creation & Strengthening of existing MSMEs. A UNDP & UNIDO C ADB & World bank B NABARD & SIDBI D IDBI & ICICI 2. Autonomous body set up for promotion of Khadi industry in India. Technology Upgradation Fund Scheme (TUFS) for textile industry and Integrated Development of Leather Sector Scheme? A SIDBI C IDBI B NABARD D SIDO 9. A RBI C IDBI B NABARD D SIDBI 5. SIDBI. The advisory and consultancy body for government in India on industries. Principle financial institution for SMEs in India is A SFC’s C NABARD B IDBI D SIDBI 7. Rural Entrepreneurship Development Programme is conducted by. A DGFT C Confederation of Indian Industry B MSME Board D SIDO SME Study material Page 13 ksp20001@gmail. Authorized capital of SIDBI is A 1000 crores C 500 Crores B 2500 Crores D 300 Crores 8.com . A Enterprise Creation C Both a & B B Strengthening of existing MSMEs. 1990 C September 30 1990 B 30th January 1984 D 1st April 2000 6.SME Study Material SET 5 1. Institute for Design of Electrical Measuring Instruments Started with assistance of UNDP & UNIDO. Among efficient credit management for prevention of NPA’s Bank should A Monitor customer account regularly C Monitor Borrower instead of Account. B Monitor business regularly D Monitor fund flow of business 15. A Equity C Debt B Debenture D Venture Capital 18. World association of Small & medium Enterprises located at A Bangalore C New Delhi. A Debt C Venture capital B Equity D All the above 16. SME lending is considered profitable for bank because of. Following type of capital generally termed as HURT MONEY. B Mumbai D Calcutta 13. Hybrid Capital is refers to the combination of A DEBT & EQUITY C EQUITY & VENTURE CAPITAL B None of these D Both a & b 17. A Term loans C Mortgage Loans & leasing B Hire purchase D All the above 20. A 2 lakhs C 5 lakhs B 10 lakhs D 15 lakhs 19. The type of capital generally refers to privately held equity with higher risk. A High Diversity C Government support B Good Interest margin D All the above 14.com . Which of the fallowing companies in India generally offers factoring services A SBI Factors C Both a & b B CAN Factors D PNB factors 2.SME Study Material 12. Which of the fallowing statement is true regarding factoring services A SBI Factors covers North & West India C Both a & b B CAN Factors covers South India D None of these SME Study material Page 14 ksp20001@gmail. For Govt sponsored schemes upto Rs. General modes of finance had chosen whenever plant and machinery are to be financed. Purchase of Book debts or receivables generally referred as A Factoring C Forfeiting B Hire purchase D Lease finance ANSWERS TO SET 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A C C B A D A A C A C C D C B A D A D A SET 6 1. ________bank offers loan without any security. When Liabilities exceed viable assets plus equity capital then the type of risk termed A Solvency risk C Insolvency risks B Sovereign risk D Systemic risks 7. Risk-war. CART software can be used for appraising A Loan proposals of term loan upto 1000 lakhs C Both a & b B working capital upto Rs. An innovation which causes little disruptive impact on behavior pattern called A Continuous innovation. foreign exchange rates is A Market risk C Insolvency risks B Sovereign risk D Systemic risks 9. The type of factoring generally popular A Factor with Recourse basis C Non recourse factoring B Partial factoring D All the above 4.com . Those who play major role in correcting market failures that occur during growth phase of SMEs. A Innovation effect C Diffusion effect B Substitution effects D All of these 14. Market failures in SMEs generally referred with the context of A Perfect Markets C Imperfect markets B Abnormal markets D Supernormal markets 11. CREDIT APPRAISAL & RATING TOOL (CART) developed by A SBI C ICICI B IDBI D SIDBI 5. CREDIT LINKED CAPITAL SUBSIDY SCHEME-Providing ____ capital subsidy for inducing new technologies. Following are the results of technology causes. Existing product modified to change in consumption pattern is ________ effect of technology. A Banks C BDS –Business Development service providers B MFIs D SIDBI 12. Credit risk assessment exercise in banks to be generally conducted A Quarterly C Biannually. A 10% C 15% B 40% D 50% SME Study material Page 15 ksp20001@gmail. B Annually D Monthly 10. A Innovation effect C Diffusion effect B Substitution effects D All of these 15. C Modern innovation B Robust innovation D New Innovation 13. New product not created.SME Study Material 3. Adverse change in interest rates. 1000 lakhs D None of these 6. civil disorder within the country arises A Solvency risk C Insolvency risks B Sovereign risk D Systemic risks 8. As per sound financial management practice A Short term funds can be put to long term C Long term funds can be put into uses short term uses B Building up high current assets D Having high bad debts in books 3. Back ended Interest Subsidy scheme-Which of the following statements are true A If interest rate below BPLR-Difference b/w C Both a & b exact int rate and BPLR or maximum 3%. Symptoms of sickness of an unit includes A Frequent overdrawing C Frequent LC devolvements B Frequent cheque returns D All of these 5. Following financial indicator may be used as warning symptom for unit is becoming sick A Increase in Debt/equity ratio C Decrease in net profit to sales ratio B External borrowing at higher cost D All of these SME Study material Page 16 ksp20001@gmail. B Interest rate above BPLR-Difference b/w exact D None of these int rate and BPLR or maximum 2%. B Minimum cap of 10% capital expenditure D Covers 50% of capital expenditure ANSWERS TO SET 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 C B A D C C B A C A C A D A C B C B A A SET 7 1. A 75% C 5% B 50% D 40% 20. The unit may become sick due to A Inefficient Management C Inadequate/ delay in bank finance B Non supportive Government policies D All the above 4. When an industry is considered as sick unit A It is a doubtful asset in bank books C Erosion in networth due to cash losses to extent of 50% B Unit which completed one year has last D All the above. Project UPTECH-initiated by A SIDBI C IDBI B SBI D NABARD 17.com . more of its peak networth in proceeding year 2. Credit Guarantee fund trust (CGFTS) scheme has Credit Guarantee with A Low cap of 25 lakhs and guarantee cap of C Maximum cap of 100 LKHS 18.75 lakhs per barrower. 18. Credit Guarantee fund trust (CGFTS) set up in may 2000 by A IDBI C SBI B Central Govt & SIDBI D SFCs 19.SME Study Material 16. Credit Guarantee fund trust (CGFTS) gives guarantee of _____of credit risk. a sick account can be rehabilitated but suitable programme not designed called A Non profitable account C Viable unit B Partially sick account D Sick Grey area account 8.SME Study Material 6. A Sick unit found potentially viable if rehabilitation package is implemented then the package should be implemented within A 1 year C 2 year B 6 months D 15 Months 11. 10 Crore & below C Complete O/s (Principle+Interest) of Rs. OTS stands for A One Time Settlement C Over The counter Settlement B Over True Solution D Over Trade Settlement 15. The process may be used to rehabilitate a sick unit include A Cluster formation C Providing adequate market services B Exemption of stamp duty and other D All the above charges 13. The main advantage of compromise settlement of Non performing assets include A Avoids time consuming legal process C Retains relation customer B Any action affecting bank image can be D All the above prevented 14. Rehabilitation of a sick unit can be taken up if it A Proves viable after rehabilitation C Repays all loans B Brings more capital D Improves its current ratio 7. RBI guidelines for OTS in loan account issued in September 2005 will not cover A Willful defaulters C Fraud B Malfeasance D All the above 16. 10 Crores & below B O/s of 15 Crores & below D None of these SME Study material Page 17 ksp20001@gmail. In case of rehabilitation of a sick unit the repayment period of restructured loans should not exceed ____ years from the date of package implementation A 10 Years C 7 Years B 5 years D 14 years 10. RBI OTS scheme covers assets with A Principle O/s of Rs. Any rehabilitation measure of a sick unit should not be spread over ___ years from the date of implementation A 5 Years C 10 years B 6 Years D 15 Years 9.com . State Level Inter institutional Committee to implement Rehabilitation package for sick unit is set up by A SIDBI C RBI B NABARD D State Government 12. A foundation for micro credit in India has been set up by A NABARD C SIDBI B RBI D Depot of child developement 6. 20% of the projected turn over can be financed as Working capital limit as per A Tandon Committee Method C Nayak Committee method B Shetty Committee D None of these 3.com . Those cases cannot be covered under OTS A Legal suit already filed C DRT cases B Action under Securitization & D Fraud is detected in KYC Reconstruction of financial assets act (SARFAESI) 18. Process of pooling financial assets and issuance and selling of securities termed as A Securitization C Pool formation of financial assets B Reconstitution D Centralization ANSWERS TO SET-7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 D C D D D A D A C B C D D A D C D A SET 8 1. Working capital finance granted to exporter to procure raw materials for export refers to A Pre Shipment Credit C Post Shipment credit B Bill Discounting D Factoring 8. In case of LLP members should subscribe to a document known as A LLP deed C Agreement document B Incorporation document D Liability deed 4. Finance to Small scale Business units will qualify for Priority Sector lending upto an exposure upto A 10 lakhs C 15 Lakhs B 1 Crore D 10 Crores 2. Working capital finance given to exporter from the time of export to the time of actual realization of dues refers to A Pre Shipment Credit C Post Shipment credit B Bill Discounting D Factoring SME Study material Page 18 ksp20001@gmail. In India SME regulations requires at A Entry stage C Implementation stage B Operational stage D All the above 5.SME Study Material 17. In credit appraisal means A Collection of application C Verification of data given by applicant B Issue of sanction letter to borrower D Submission of application by unit 7. SME Study Material 9. The type of advances generally popular as Inventory Loans A OD C Cash Credit B Term Loan D Bill Discounting 13. CLPC refers to A Central Loan processing Cell C Central Loan process center B Central Loan processing & monitoring cell D None of these 11. Upfront payment of invoices accompanied by delivery of goods and services mentioned to a mutually agreed level between client and factor refers to A Bill discounting C Factoring B Bill finance D Letter of credit 10. Demand loans are generally granted for the period less than A 24 Months C 12 Months B 18 Months D 36 months 12. A 40% C 10% B 12% D 5% 18.com . Domestic banks to fund ___% of their ANBC to export sector to meet priority sector obligations A 5% C 10% B 40% D No target 19. Domestic banks to finance ______% of their ANBC to priority sector A 10% C 40% B 15% D 50% 17. Foreign banks to fund ___% of their ANBC to export sector. ___% of total ANBC of Domestic banks should go for Weaker Section A 10% C 5% B 20% D 12% SME Study material Page 19 ksp20001@gmail. A line of credit which can be drawn on as required up to the limit of sales invoices accepted by financial institutions refers to A Bill Discounting C Factoring B Cash credit D None of these 14. SME lending is found profitable and attractive for bankers because A Diversified portfolio C Prudence & profitability B Higher interest rate margins & D All the above government support 16. Most common features of Government sponsored loans are A They are generally having investment cap C They are mainly for weaker section of of < 2 lakhs society B They are sanctioned without collaterals D All the above 15. i. The Geographically bound concentration of Similar or related business with common opportunities & Threats referred as A Group C Cluster B Sector D SEZ 23. v.com . iii. preliminary selection and short listing iii. ii 26. v B iii. vi. Creation of country cluster table A i . ii. Formulation of final cluster criteria v. Abid Hussain Committee mainly suggested on A SEZ creation C Sales Circle formation B Both A & B D Cluster formation in SMEs ANSWERS TO SET 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 A C B D C C A C C A D C A D D C B D A D C 22 23 24 25 26 C D D A D SME Study material Page 20 ksp20001@gmail. v D Vi. Arrange the following activities in sequence which are involved in cluster formation i. Main advantages of MSME cluster formation is A Mutual sharing of information & C Solving Common legal practices technology B Achieving economies of scale D All of these 25. Following SSI units eligible under Back ended Interest Subsidy scheme A SSI units availing bank loan for C Tiny units with investments in plant technology upgradation or availing and machinery of < 25 lakhs finance for ISO certification and R & D availing loan under CGFTS B SSI’s funded under national equity D All the above scheme 21. iv. final selection and declaration iv. A SME cluster characterized with A Similar product range C Similar Market conditions B Similar Trade practices D All of these 24. v. iii. i. ii. iv.SME Study Material 20. iii C i . Identification of cluster in country ii. TUFS scheme is mainly designed for A Pharma industry C Textile industry B Chemical industry D All of these 22. ii. Small & Medium Enterprises Development (MSMED) Act.e. The MSMED Act. (i) A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 2 crore.10 lakh but does not exceed Rs.e. 2006 which was notified on October 2. 2006 The Government of India has enacted the Micro. Enterprises engaged in the manufacture or production. In case of the above enterprises. apart from extending the scope to medium enterprises. 1. 2 crore but does not exceed Rs. small and medium enterprises engaged in manufacturing or production and providing or rendering of services. both Manufacturing and Service are eligible to be classified under Priority Sector advance as per the following: SME Study material Page 21 ksp20001@gmail. the paradigm shift that has taken place is the inclusion of the services sector in the definition of Micro. 1. fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act. 2006 has modified the definition of micro. Definition of Micro. (ii) A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. With the enactment of MSMED Act 2006. investment in plant and machinery is the original cost excluding land and building and the items specified by the Ministry of Small Scale Industries b) Service Enterprises i. 5 crore.SME Study Material Lending to Micro. Bank Loans to Micro and Small enterprises. (ii) A small enterprise is an enterprise where the investment in equipment is more than Rs. Small & Medium Enterprises (MSME) Sector Micro. 25 lakh. 2006) are specified below.5 crore but does not exceed Rs.2. and (iii) A medium enterprise is an enterprise where the investment in equipment is more than Rs.com . 2006 on June 16.1. and (iii) A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs.10 crore. Small and Medium Enterprises Development (MSMED) Act. Small and Medium Enterprises (a) Manufacturing Enterprises i. Small & Medium enterprises. 5 crore. 2006. 10 lakh. Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture. processing or preservation of goods as specified below: (i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. (ii) Loans to cooperatives of producers in the decentralized sector viz. If the loans under General credit Card (GCC) are sanctioned to Micro and Small Enterprises. 1.SME Study Material 1. 2006. The manufacturing enterprises are defined in terms of investment in plant and machinery.2 Indirect Finance (i) Loans to persons involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans. SME Study material Page 22 [email protected]. Loans for food and agro processing Loans for food and agro processing will be classified under Micro and Small Enterprises.1. 1951 and notified by the Government from time to time. (iii) Loans sanctioned by banks to MFIs for on-lending to MSE sector as per the conditions specified in extant Master Circular on Priority Sector Lending.2.5 Khadi and Village Industries Sector (KVI) All loans sanctioned to units in the KVI sector. 1. artisans village and cottage industries. irrespective of their size of operations and location and amount of original investment in plant and machinery. provided the units satisfy investments criteria prescribed for Micro and Small Enterprises. 1.1.5 crore per borrower / unit to Micro and Small Enterprises engaged in providing or rendering of services and defined in terms of investment in equipment under MSMED Act.com .1. 1.2.2. village and cottage industries. Such loans will be eligible for classification under the sub-target of 60 percent prescribed for micro enterprises within the micro and small enterprises segment under priority sector.3 Service Enterprises Bank loans up to Rs.1.2. 1.2.2.6. 1.1 Manufacturing Enterprises The Micro and Small enterprises engaged in the manufacture or production of goods to any industry specified in the first schedule to the Industries (Development and regulation) Act. as provided in MSMED Act.1 Direct Finance 1.2.1. such loans should be classified under respective categories of Micro and Small Enterprises.2.4 Export Credit Export credit to MSE units (both manufacturing and services) for export of goods/services produced / rendered by them. 2006.1. 2006.O. whichever is higher.SME Study Material 1.3 Lending by banks to medium enterprises will not be included for the purpose of reckoning of advances under the priority sector.com . Punjab National Bank. In terms of the recommendations of the Prime Minister’s Task Force on MSMEs. 563 (E) dated February 27. 1993 on clubbing of investments of two or more enterprises under the same ownership for the purpose of classification of industrial undertakings as SSI has been rescinded vide GOI Notification No. Dena Bank. 4 lakh. 2006 does not provide for clubbing of investments of different enterprises set up by same person / company for the purpose of classification as Micro. 25 lakh. IBA and select banks and circulated to all scheduled commercial banks on May 20. the Gazette Notification No. S. Corporation Bank. S.5 crore per borrower / unit to Micro and Small Enterprises engaged in providing or rendering of services and defined in terms of investment in equipment under MSMED Act. a scheme for strategic alliance between branches of banks and SIDBI located in clusters. SIDBI has so far executed MoU with 15 banks (Bank of India. Andhra Bank. Oriental Bank of Commerce. However. 4. (b) 20 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises with investment in plant and machinery above Rs. Ministry of Finance. 2005 for implementation. Indian Overseas Bank. Advances to micro and small enterprises (MSE) sector shall be reckoned in computing achievement under the overall Priority Sector target of 40 percent (32 percent for Foreign Banks operating in India with less than 20 branches) of Adjusted Net Bank Credit (ANBC) or credit equivalent amount of Off-Balance Sheet Exposure. SME Study material Page 23 ksp20001@gmail. Indian Bank. Bank loans above Rs. 2. shall not be reckoned in computing achievement under the overall above Priority Sector targets. Bank of Baroda. 10 lakh and up to Rs.O. Scheme of Small Enterprises Financial Centres (SEFCs): As per announcement made by the Governor in the Annual Policy Statement 2005-06. Targets for lending to Micro and Small enterprises (MSE) sector by Domestic Commercial Banks and Foreign Banks operating in India 1. YES Bank. such loans would be taken into account while assessing the performance of the banks with regard to their achievement of targets prescribed by the Prime Minister’s Task Force on MSMEs for lending to MSE sector. 2009.4 Since the MSMED Act. banks are advised to achieve a 20 per cent year-on-year growth in credit to micro and small enterprises and a 10 per cent annual growth in the number of micro enterprise accounts. SIDBI. IDBI Bank. 1. State Bank of India and Federal Bank). 3. UCO Bank. In order to ensure that sufficient credit is available to micro enterprises within the MSE sector. banks should ensure that: (a) 40 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises having investment in plant and machinery up to Rs. named as “Small Enterprises Financial Centers” has been formulated in consultation with the Ministry of SSI and Banking Division. 10 lakh and micro (service) enterprises having investment in equipment up to Rs. Small and Medium enterprises.2 (E) dated January 1. Government of India. Union Bank of India. Issue of Acknowledgement of Loan Applications to MSME borrowers: Banks have been advised to mandatorily acknowledge all loan applications. 10 lakh. Banks are also advised to extend collateral- free loans upto Rs. 2. in terms of the recommendations of the Prime Minister’s Task Force. Further. The target for lending to Micro Enterprises within the MSE sector (i.e. Banks are further encouraged to start Central Registration of loan applications. Collateral: Banks are mandated not to accept collateral security in the case of loans upto Rs. 4 lakh and up to Rs. Banks are advised to strongly encourage their branch level functionaries to avail of the Credit Guarantee Scheme cover. banks have been permitted to categories their MSME general banking branches having 60% or more of their advances to MSME sector in order to encourage them to open more specialized MSME branches for providing better service to this sector as a whole. Banks may. 60 per cent of MSE advances should go to the micro enterprises.com . Specialized MSME branches Public sector banks have been advised to open at least one specialized branch in each district. 50% in the year 2010-11. (c) While banks are advised to achieve the 60% target as above. Common Guidelines / Instructions for Lending to MSME Sector 1. 60% of total lending to MSE sector should go to Micro enterprises) will be computed with reference to the outstanding credit to MSE sector as on preceding March 31st. The same technology may be used for online submission of loan applications as also for online tracking of loan applications.25 lakh (with the approval of the appropriate authority). increase the limit of dispensation of collateral requirement for loans up to Rs. 3.1 crore can be sanctioned by banks to enable the MSE entrepreneurs to avail of their working capital and term loan requirement through Single Window. including making performance in this regard a criterion in the evaluation of their field staff. Thus. 5. 55% in the year 2011-12 and 60% in the year 2012-13. the allocation of 60% of the MSE advances to the micro enterprises is to be achieved in stages viz. 10 lakh to all units financed under the Prime Minister Employment Generation Programme of KVIC. As per the policy package announced by the Government of India for stepping up SME Study material Page 24 ksp20001@gmail. Composite loan A composite loan limit of Rs.SME Study Material and micro (service) enterprises with investment in equipment above Rs. submitted manually or online. 4. by their MSME borrowers and ensure that a running serial number is recorded on the application form as well as on the acknowledgement receipt. on the basis of good track record and financial position of the MSE units.10 lakh extended to units in the MSE sector. Further. banks have been advised to fix sub-limits within the overall working capital limits to the large borrowers specifically for meeting the payment obligation in respect of purchases from MSMEs. After the enactment of the Micro. 5. early detection of incipient sickness. the existing provisions of the Interest on Delayed Payment Act. on the date agreed on. 1998 to Small Scale and Ancillary Industrial Undertakings. Though their core competence will be utilized for extending finance and other services to MSME sector.SME Study Material credit to MSME sector. Revised Guidelines for Rehabilitation of Sick Micro and Small Enterprises In view of the recommendations of Working Group on rehabilitation of potentially viable sick units (Chairman: Dr. regarding changing the definition of sickness and the procedure for assessing the viability of sick MSE units. he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or. the buyer shall be liable to pay the interest as advised at (ii) above. have been strengthened as under: (i) In case the buyer to make payment on or before the date agreed on between him and the supplier in writing or. penal provisions have been incorporated to take care of delayed payments to MSME units. Delayed Payment Under the Amendment Act. (iii) For any goods supplied or services rendered by the supplier. Chakrabarty). revised guidelines for rehabilitation of sick units in the MSE sector have been issued by RBI The objective of the revised guidelines is to hasten the process of identification of a unit as sick. C. The existing specialised SSI branches may also be redesignated as MSME branches. a reference shall be made to the Micro and Small Enterprises Facilitation Council. if (a) any of the borrowal account of the enterprise SME Study material Page 25 ksp20001@gmail. constituted by the respective State Government. and to lay down a procedure to be adopted by banks before declaring a unit as unviable. Act 2006. a Micro or Small Enterprise (as defined in the MSMED Act 2006) may be said to have become Sick. (ii) In case the buyer fails to make payment of the amount to the supplier.com . a Committee was set up by the Ministry of MSME to look into the issue. K. Based on the recommendation of the Committee. the public sector banks will ensure specialized MSME branches in identified clusters/centres with preponderance of small enterprises to enable the entrepreneurs to have easy access to the bank credit and to equip bank personnel to develop requisite expertise. at three times of the Bank Rate notified by Reserve Bank. Small and Medium Enterprises Development (MSMED). in case of no agreement before the appointed day. The agreement between seller and buyer shall not exceed more than 45 days. 1998 of Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings. (iv) In case of dispute with regard to any amount due. As per the new guidelines. they will have operational flexibility to extend finance/render other services to other sectors/borrowers. Scheduled commercial banks have been advised that the banks could either separately set up special cells at their branches. MSE enterprises are further handicapped in this regard by absence of scale and size. Structured Mechanism for monitoring the credit growth to the MSE sector n view of the concerns emerging from the deceleration in credit growth to the MSE sector. represent formidable challenge for MSE borrowers underscoring the need for facilitation by banks in these critical financial areas. State Level Inter-Institutional Committees (SLIICs) have been set up in all the States. zone-wise and State-wise positions. or vertically integrate this function in the Financial Literacy Centres (FLCs) set up by them. zone. Industry of the concerned State Government.R.SME Study Material 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. giving branch-wise. State Level Inter Institutional Committee In order to deal with the problems of co-ordination for rehabilitation of sick micro and small units. The bank staff should also be trained through customized training programs to meet the specific needs of the sector. business planning etc. Based on the recommendations of the Committee. put in place a system of e-tracking of MSE loan applications and monitor the loan application disposal process in banks.com . as per their comparative advantage. including accounting and finance. and monitor timely rehabilitation of sick MSE units. Banks have been advised that the decision on viability of the unit should be taken at the earliest but not later than 3 months of becoming sick under any circumstances and the rehabilitation package should be fully implemented within six months from the date the unit is declared as 'potentially viable' / 'viable'. It provides a useful forum for adequate interfacing between the State Government Officials and State Level SME Study material Page 26 ksp20001@gmail. region. operational skills. head office) which should be critically evaluated on a regular basis. an Indian Banks’ Association (IBA)-led Sub-Committee (Chairman: Shri K. Moreover. Kamath) was set up to suggest a structured mechanism to be put in place by banks to monitor the entire gamut of credit related issues pertaining to the sector. The position in this regard is to be displayed by banks on their websites. Micro and Small Enterprises Sector – The imperative of Financial Literacy and consultancy support Keeping in view the high extent of financial exclusion (92 per cent) in the MSME sector. The meetings of these Committees are convened by Regional Offices of RBI and presided over by the Secretary. region-wise. The revised guidelines also provide the procedures to be adopted by the banks before declaring any unit as unviable. The lack of financial literacy. To effectively and decisively address these handicaps. it is imperative for banks that the excluded units are brought within the fold of the formal banking sector. banks have been advised to: strengthen their existing systems of monitoring credit growth to the sector and put in place a system-driven comprehensive performance management information system (MIS) at every supervisory level (branch. The progress in rehabilitation of sick MSE units is to be made available on the website of banks. It closely monitors timely sanction of working capital to units which have been provided term loans by SFCs. Cross sell and Contain risk. Empowered Committee on MSMEs As part of the announcement made by the Union Finance Minister. Ministry of Micro. All SLBC Convenor banks have been advised to incorporate in their Annual Credit Plans. Customer focus. and a senior level officer from SFC/SIDC as members. As per Ganguly Committee recommendations banks have been advised that a full-service approach to cater to the diverse needs of the MSE sector may be achieved through extending banking services to recognized MSE clusters by adopting a 4-C approach namely. Clusters may be identified based on factors such as trade record. the representatives of the local state level MSE associations are invited to the meetings of SLIIC which are held quarterly. Cluster Approach (i) 60 clusters have been identified by the Ministry of Micro. b. competitiveness and growth prospects and/or other cluster specific data. Monitoring by the lending institutions. Government of India for focused development of Small Enterprises sector. Government of India.SME Study Material Institutions on the one side and the term lending institutions and banks on the other. to ensure smooth flow of credit to the sector. the credit requirement in the clusters identified by the Ministry of Micro. in dealing with well-defined and recognized groups. Among others. one or two senior level representatives from the MSME/SSI Associations in the state. if any. availability of appropriate information for risk assessment and c.com . Empowered Committees on MSMEs have been constituted under the Chairmanship of the Regional Directors with the representatives of SLBC Convenor. Small and Medium Enterprises. The committees may decide the need to have similar committees at cluster/district levels. Credit Linked Capital Subsidy Scheme (CLSS) Government of India. senior level officers from two banks having predominant share in MSME financing in the state. It will also coordinate with other banks/financial institutions and the state government in removing bottlenecks. The Committee will meet periodically and review the progress in MSME financing as also rehabilitation of sick Micro. Small and Medium Enterprises. at the Regional Offices of Reserve Bank of India. A cluster based approach to lending may be more beneficial: a. the Director of Industries of the State Government. implementation of special schemes such as Margin Money Scheme of State Government and reviews general problems faced by industries and sickness in MSE sector based on the data furnished by banks. Small and Medium units. Cost control. representative of SIDBI Regional Office. A sub- committee of SLIIC looks into the problems of individual sick MSE unit and submits its recommendations to the forum of SLIIC for consideration. Small and Medium Enterprises has conveyed their approval for continuation of the Credit Linked Capital Subsidy Scheme (CLSS) for SME Study material Page 27 ksp20001@gmail. (iv) SIDBI and NABARD will continue to be implementing agencies of the scheme. No.com . SME Study material Page 28 ksp20001@gmail. (ii) The rate of subsidy is 15% for all units of micro and small enterprises up to loan ceiling at Sr. (i) above. (iii) Calculation of admissible subsidy will be done with reference to the purchase price of plant and machinery instead of term loan disbursed to the beneficiary unit.1 crore.SME Study Material Technology Upgradation of Micro and Small Enterprises from X Plan to XI Plan (2007-12) subject to the following terms and conditions: (i) Ceiling on the loan under the scheme is Rs.