The Small and Medium Enterprise Group (SMEG) segment is one of the highest contributors to the financial wealth of the THE Bank, and in the context of an aggressively expanding Commercial Bank focusing on consumer credit, it assumes great significance in overcoming the three main challenges that banks are faced with today, namely, the liquidity crunch, quality of assets, and global penetration .The current economics of globalization and trade have contributed conspicuously towards the opening up of a surge of possibilities for the Bank. Therefore a mention of how THE Bank has reacted to the changing market dimensions, and turned that into its business strength has been identified.
The future of SME's is of prime significance to the economy, the importance and indispensability of which shall be discussed shortly. However, if one needed to summarize in just a few words the reasons behind their growing pertinence, it would suffice to say, that SME's stand for a model of growth, the potential for which seems endless, and the strength of which lies on their sheer contribution towards economic stability for many.
Any talk of reshaping the industrial sector of the economy would include strategizing on the untapped opportunity that exists in this segment. Be it on account of their representation of a socio economic model that emphasizes careful use of imported capital, labor intensive mode of production, employment generation, better understanding of, and adaptability to the industrial environment, or because of their tremendous export potential with the ability to develop the desired entrepreneurial skills; there has always been a considerable emphasis on their scope and importance.
[...] Interpretations: Under Business of banking group, forward contract makes the highest contribution with 58% Bills have the contribution with 22% to the SMEG business 15% contribution is made by remittances Letter of credit makes contribution to the BBG under SMEG business Derivatives has the lowest contribution with Interpretations: Under Medium Enterprise Group (MEG) again there is the highest contribution by the forward contract with 91% to the SMEG business Derivatives has the second highest contribution with contribution has been made by Bills Remittances makes it to contribution Interpretations: Under Cluster Banking Group forward contract has the highest contribution of 58% to the Small and Medium Enterprise group business 22% contribution is made by the Bills Remittances makes upto 15% of the total contribution of SMEG business Letter of credit has the contribution of to the Small and Medium Enterprises business contribution made by the Cluster Banking Group to the SMEG business Competitor Analysis of Assets Introduction Both the opening up of economy and gradual lowering of tariff barriers has exposed the corporate sector to risk of foreign competition. [...]
[...] The advantages of MEGA Account are: Quick payout No documentation No security collateral or approvals The overdraft facility can be used at customer's discretion for one year Small Business Loans: These loans are given to general SME customers. They need not have a current account with the Bank. The requirements in the case of SBL is 3 yrs vintage Should be working in same premises for 3 years Net worth should be more than 5 lakhs Turnover should be more than 25 lakhs per annum Debtors turnover ratio should not cross 120 days, which is calculated as (Debtors Turnover + Closing Stock) * 365 / Sales There is no fixed interest rate. [...]
[...] Given the critical nature of the guarantees, the RBI has issued several guidelines for banks to follow while dealing with BGs which aim at preventing frauds and help banks serve genuine customers. Unlike LCs, BGs are not issued on the basis of a regular standardized format. The terms and conditions of BGs are determined on a case- to- case basis. Types of Bank Guarantees: Deferred Payment Guarantee (DPG) Under the DPG: The banker guarantees that his customer will make the payments of specific amounts in the form of installments, on specified due dates. [...]
[...] Asset Characteristics Assets have three essential characteristics: The probable future benefit involves a capacity, singly or in combination with other assets, in the case of profit oriented enterprises, to contribute directly or indirectly to future net cash flows and in the case of not-for-profit organizations, to provide services The entity can control access to the benefit The transaction or event giving rise to the entity's right to or control of the benefit has already occurred It is not necessary in the financial accounting sense of the firm, for control of assets to the benefit to be legally enforceable for a resource to be as asset, provided the entity can control its use by other means. [...]
[...] by the Solutions Manager, a real time project of Analysis of Assets for Small and Medium Enterprise was undertaken Observing market trend and obtaining relevant feedback from the clients who have either lowered or discontinued their transactions with the Bank. A comparative analysis of assets of the bank with major public and private sector players with respect to their financial services Limitations Many merchants were reluctant to reveal even basic financial data information such as net profit figures, amount of interest paid on their transactions with other banks etc. [...]
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