enterpreneurship 2
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TRANSCRIPT
Everyone in the world has at least one
talent, one passion, one hobby that can
become profitable if used correctly.
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Entrepreneur
one who organizes, manages and assumes the risks of a
business or enterprise
"Entrepreneurship is the process of creating or seizing an
opportunity and pursuing it regardless of the resources
currently controlled"
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Impact of entrepreneurial firms
Job creation
Economic growth
New technology
Serving small markets
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Entrepreneurship Development: Role of Financial
Institutions
Industrial growth and economic development of developing nations depend to a
great extent on the role played by entrepreneurs. There are many instances of
individual entrepreneurs whose creativity has led to the industrialization of
many nations.
However, in India the economic and industrial growth was slow due to lack of
efficient entrepreneurs, industrial environment, technical know-how .
Government and financial institutions have played a very important role in the
entrepreneurship development.
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Efforts to Foster Entrepreneurship in India Many of India's leaders have perceived the need for the development of
entrepreneurship in their country, and a number of programs have emerged to meetthis need. Various agencies participate in entrepreneurial development across India.Such as:-
The National Institute for Entrepreneurship and Small Business Development(NIESBUD).
The Entrepreneurship Development Institute of India (EDII).
Industrial Development Bank of India (IDBI).
Small Industries Development Bank of India (SIDBI).
North Eastern Development Finance Corporation Limited (NEDFi)
RBI’s role and steps for the development of SSI sector
s
The Entrepreneurship Development Institute
of India
Sponsored by several financial institutions, namely (ICICI), (IDBI), the
Industrial Finance Corporation of India (IFCI), and the State Bank of India.
One of the institute that, focuses on creating entrepreneurial personalities
among youth.
EDII launched a variety of programs to do just that. The Rural
Entrepreneurship Development division, for instance, concentrates on rural
development, employment generation, and poverty alleviation through the
promotion of micro-enterprises. This division also has an informal micro-credit
delivery system.
s
Contd…. EDII's entrepreneurship camp involves teenagers from across India coming to
the EDII campus for a ten-day period.
The program is designed to increase the self-confidence and thereby to developtheir concern for enterprise and for achievement. Methodology includes roleplaying and simulation exercises, with the following objectives in mind:
enabling participants to realize their latent potential;
developing capabilities by sharpening skills;
motivating individuals to seek independent, innovative, and challenging careers;
fostering entrepreneurial traits including creativity, concern for excellence,leadership, and problem-solving;
providing an opportunity to interact with achievers.
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Credit Flow of Commercial Banks to Small Scale
Industry(SSI) and Tiny Sectors
Credit to (
in lakhs )
1995 1996 1997 1998 1999
SSI sector 25,8431
(15.29)
29,485
(15.99)
31,542
(16.6)
38,109
(17.5)
42,674
(17.33)
Tiny
sector
7,734
(29.93)
8,183
(29.93)
9,515
(30.2)
10,273
(27.0)
NA
Net Bank
credit
1,69,038 1,84,381 1,89,684 2,18,219 2,46,203
s
RBI website source
Credit Flow of Commercial Banks to SSI and
Tiny Sectors ie,very small sector
0
50000
100000
150000
200000
250000
1995 1996 1997 1998 1999
SSI Sector Tiny sector Net Bank credit
S
RBI website source
Role of Small Industries Development Bank of India(SIDBI) SIDBI was established in April 1990 under an Act of Parliament as a wholly-
owned subsidiary of Industrial Development Bank of India and as the principal
financial institution for the following three-fold activities:
Financing the small scale sector by providing:
Indirect assistance to primary lending institutions
Loans granted by PLIs for new SSI projects and their expansion, technology up gradation,
modernization, quality promotion etc.
Loans sanctioned by PLIs to small road transport operators, qualified professionals for self-
employment, small hospitals and nursing homes and to promote hotels and tourism-related
activities.
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RBI website source
Contd… Direct assistance to small scale units SSI units for new/expansion/diversification/modernization projects.
Marketing development projects which expand the domestic and international marketability of SSI products.
Existing well-run SSI units and ancillaries/sub-contracting units/ vendor units for modernization and technology up gradation.
Infrastructure development agencies for developing industrial areas.
Leasing and hire purchase companies for offering leasing/hire purchase facilities to SSI units.
Existing export-oriented units to enable them to acquire ISO-9000 Series Certification
Promoting small industries through development and support services;
Coordinating the functions of other institutions engaged in similar activities
Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
Growth of Credit Flow from SIDBI to SSI Sector
Year Sanction ( in
cr) (express
permission)
Disbursemen
t
(pay out
money)
Sanction
Disbursemen
t Gap
Growth of
Disburseme
nt (%)
1990-
91
2410 1839 571 -
1991-
92
2847 2028 819 10.23
1992-
93
2909 2146 763 5.82
1993-
94
3357 2672 685 24.51
1994-
95
4706 3390 1316 26.87
1995-
96
6066 4801 1265 41.62 Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
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Growth of Credit Flow from SIDBI to SSI Sector
0
1000
2000
3000
4000
5000
6000
7000
8000
1990
-91
1991
-92
1992
-93
1993
-94
1994
-95
1995
-96
1996
-97
1997
-98
Sanction(in cr) Disbursement Sanction Disbursement Gap
M
Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
Growth of Credit Flow from SIDBI to SSI Sector
0
10.235.82
24.5126.87
41.62
-4.5
14.31
-10
0
10
20
30
40
50
1990
-91
1991
-92
1992
-93
1993
-94
1994
-95
1995
-96
1996
-97
1997
-98
Growth Disbursement(%)
MSource: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
Role and Steps taken by RBI for the Development
of SSI Sector
Credit to SSI sector is monitored periodically by Reserve Bank of India,Department of SSI and National Advisory Committee of SIDBI, State LevelBankers Committee and District Level Coordination Committees of theBank.
The Central Government on the recommendation of RBI has raised theinvestment limit for SSIs from Rs.60 lakhs to Rs.300 lakhs and for tiny unitsfrom Rs.5 lakhs to Rs.25 lakhs.
Public sector banks have been advised to make it operational morespecialized SSI branches at centers where there is a potential for financingmany SSI borrowers.
To extend 'Single Window Scheme' of SIDBI to all districts to meet thefinancial requirements (both term loan & working capital) of SSIs.
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Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
Contd….. With a view to moderating the cost of credit to SSI units, banks are
advised to accord SSI units with a good track record the benefits oflower spread over the Prime Lending Rate.
In order to take expeditious decision on credit proposals of SSI units,banks have been advised to delegate enhanced powers to the branchmanagers of the specialized SSI branch so that most of the creditproposals are decided at the branch level.
Initiatives Announced:-
a) Launching of A New Credit Insurance Scheme
b) Enhancement of Limit of Composite Loan Scheme
c) Enhancement of Limit of Working Capital
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Source: CMIE, Money and Banking, Economic Intelligence Service, Sept. 2004, pp. 163-164.
Institutional Network: Finance and Credit in India
Long-term
-All India
Financial
Institutions
(AIFIs)
-Regional DFIs
Short-term &
Medium-term
-Commercial
Banks
--Regional Rural
Banks ( RRBs)
Agriculture
Credit
-Cooperative
Banks
-NABARD
Non-banking
Finance
Companies
(NBFCs)
Government
owned
Institutions/
Corporations
Non-Govt.
Organisations
(NGOs) & Micro
Finance
Institutions
(MFIs)
RBI website source & FICCI Source
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All India Financial Institutions(AIFIs)
Financial Assistance
228570
206655
103658 104484
0
50000
100000
150000
200000
250000
2003-2004 2004-2005
YEAR (April - September)
RS
IN
MIL
LIO
N
Sanctions Disbursements
(Data Relate to All India Development Banks and Investment Institutions only)
Viz. IDBI, IFCI, SIDBI, IIBI, IDFC and LIC, GIC, National Insurance Co. Ltd,
New India Ass. Co. Ltd , Oriental Insurance Co. Ltd., United India Insurance Co. Ltd.
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ALL FINANCIAL INSTITUTIONS
0
200000
400000
600000
800000
1000000
1200000
1400000
1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
YEAR
RS
IN
MIL
LIO
N
Sanctions Disbursements
Source : Report on Development Banking in India 2003-04
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Long Term Loans by Commercial Banks
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Mar-90 Mar-95 Mar-00 Mar-02
Year
Amt (in Crs)
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
% of Tot. Credit
Amt(Crs) % of Tot. CreditSource : RBI Website
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Long Term Loans by AIFIs
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Mar-90 Mar-95 Mar-00 Mar-02
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
LT Credit % to totalcreditSource: RBI website
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Comparative Chart – in Rs cr
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Mar-90 Mar-95 Mar-00 Mar-02
Banks AIFI
Rs in crores
Source: RBI website
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FICCI STUDY ON
LONG TERM FINANCING NEEDS OF THE INDIAN
INDUSTRY AND THE ROLE OF DEVELOPMENT FINANCIAL INSTITUTIONS
IN PROMOTING “Entrepreneurship” IN VARIOUS INDUSTRIAL SECTOR
Survey conducted Feb – March 2004, elicited(factual) response from 248 companies with a wide geographical and sectoral spread
The companies which participated in the survey ranged from Rs. 1 million to 5000 million
The Survey represents a wide array of activities and includes sectors such as paper, cement, automobiles and auto ancillary, consumer electronics, electrical machinery, textile, wires and cables, petrochemicals, iron and steel, real estate and pharmaceuticals.
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PLANS FOR FRESH INVESTMENTS IN NEAR FUTURE
Yes
89%
No
11%
Yes No
Source : FICCI Study – March 04
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SOURCE OF FINANCE PROPORTION OF RESPONDENTS*
EQUITY CAPITAL 22
DEBENTURES AND BONDS 08
TERM LOANS FROM FIs 46
TERM LOANS FROM BANKS 59
ANY OTHER (MAINLY INTERNAL) ACCRUALS & ECBs
33
(* Figures will not add up to 100 as multiple responses were allowed)
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PROPORTION OF PROJECT COST TO BE MET FROM DEBT FINANCE
1
10
7
20
22
24
7
9
0
5
10
15
20
25
30
less than
20
20-40 40-50 50-60 60-70 70-80 80-90 90-100
PROPORTION OF DEBT FINANCE
PR
OP
OR
TIO
N O
F R
ES
PO
ND
EN
TS
Source : FICCI Study –
March 04
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FICCI STUDY ON LONG TERM FINANCING NEEDS OF THE INDIAN INDUSTRY AND THE ROLE OF DEVELOPMENT FINANCIAL INSTITUTIONS
The economy today stands at the beginning of an investment cycle
A whopping 80% of the respondents are of the opinion that revival and strengthening of DFIs is extremely important
Corporate India’s heavy dependence of debt financing for fresh investments continues
Respondents have voiced concerns about the low levels of activity of the DFIs
HIGHLIGHTS
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Cont…
The Industry is divided in its opinion on the emergence of alternative structures for raising debt finance
An important finding in the above context is the skewness, in terms of turnover, that emerges
The participants in the present survey have expressed apprehensions about the role Universal Banks can pay
Revival and Strengthening of DFIs would go a long way in ensuring that fresh investments in the economy are not hampered
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The National Institute for Entrepreneurship
and Small Business Development
The institute organizes:-
Entrepreneurship development programs,
Prepares manuals, and produces educational videos;
Its training activities are stimulating, supporting, and sustaining
entrepreneurship.
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Industrial Development Bank of India (IDBI)
IDBI is the tenth largest bank in the world in terms of development.
The National Stock Exchange (NSE), The National Securities DepositoryServices Ltd. (NSDL), Stock Holding Corporation of India (SHCIL) are some ofthe institutions which has been built by IDBI.
IDBI is a strategic investor in a plethora of institutions which haverevolutionized the Indian Financial Markets.
IDBI Bank, promoted by IDBI Group started in November 1995 with a branchat Indore with an equity capital base of Rs. 1000 million.
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Main functions of IDBI
IDBI is vested with the responsibility of coordinating the working of institutions
engaged in financing, promoting and developing industries. It has evolved an
appropriate mechanism for this purpose.
Developmental Activities of IDBI:-
Promotional activities:
the Bank continues to perform a wide range of promotional activities relating to
developmental programmes for new entrepreneurs, consultancy services for small
and medium enterprises and programmes designed for accredited voluntary agencies
for the economic upliftment of the underprivileged
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Technical Consultancy Organizations:
With a view to making available at a reasonable cost, consultancy and advisory
services to entrepreneurs, particularly to new and small entrepreneurs, IDBI, in
collaboration with other All-India Financial Institutions, has set up a network of
Technical Consultancy Organizations (TCOs) covering the entire country.
Entrepreneurship Development Institute:
Realizing that entrepreneurship development is the key to industrial development,
IDBI played a prime role in setting up of the Entrepreneurship Development
Institute of India for fostering entrepreneurship in the country.
It has also established similar institutes in Bihar, Orissa, Madhya Pradesh and Uttar
Pradesh. IDBI also extends financial support to various organizations in conducting
studies or surveys of relevance to industrial development.
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Role of North Eastern Development Finance
Corporation Limited
NEDFi is the premier financial and development institution of the North East ofIndia.
The main objectives is to carry on and transact the business of providing creditand other facilities for promotion, expansion and modernization of industrialenterprises and infrastructure projects in the North Eastern Region of India
Also carry on and transact business of providing credit and other facilities forpromotion of agro-horticulture, and sericulture plantation, aquaculture, poultry,dairy etc in order to initiate large involvement of rural population in theeconomic upsurge of the society and faster economic growth of the region.
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NEDFi Initiatives
The corporation launched its Micro Credit Finance Scheme to benefit agriculture,fishery, animal husbandry, horticulture and rural industries.
Its initiatives which is being sponsored by UNDP with NEDFi being theimplementing agency, and the Design Centre for Handloom and Handicrafts, wereundertaken not only to improve the lot of thousands of rural artisans all over theNorth-East, but also help promote exports in the sector.
Establishment of IT Park at Guwahati and an appropriate financing scheme for ITindustries to help increase the lending portfolio of NEDFi.
Making some headway in promoting bio-technology in the region by negotiatingwith foreign promoters.
Preparing a master plan for the development of tourism and particularly embarkingon a big private sector adventure tourism project.
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