Inauguration of MCCPC. Sri. V.G. Mathew,MD & CEO lighting the lamp. Sri. Thomas Joseph K., EVP (Operations), Sri. Sivakumar G., EVP (Credit), Sri. Benoy Varghese, SGM (Credit) & Sri. Balakrishnan K.N., JGM (MCCPC) are seen.
Objectives:
To instil in the bank staff a sense of belonging and involvement in the bank’s affairs Corporate Family Magazine of To appreciate and applaud the individual achievements of our members of staff South Indian Bank To act as a communication medium between management and the staff Advisory Board: To increase the professional competence of our bank staff Mr. Sivakumar G., Inside Executive Vice President (Credit) Mr. John Thomas, Message Sr. Gen. Manager (Business Development Dept. ) Mr. Paul V.L., Articles General Manager (Admin) MSMEs – The “POWER HOUSE” of Indian Economy Romita Chakraborty Editorial Board: MSME in India: Opportunities, Issues & Challenges Vivek Viswan Mr. Peter A. D., Credit Guarantee Fund Trust for Micro and Small Enterprises Lakshmi Krishnakumar Dy. GM & Principal, SIBSTC, Thrissur Accident – Story of a Survivor Nikhil A.B. Mr. M. T. Jose, “UTSAV-2017-A gala to cherish” Glaxon K.J. Dy. GM (Personnel) Pages from the diary notes of a banker Prakash M.K. Mr. Ajit C Jacob, Stand Up India Ramya K. Dy. GM (CRD) Know your Branch & Know your BanK Mr. Biju E. Punnachalil, Kerala Start-up Mission Jenish Paul AGM (IRMD) Mr. Francy Jos E., Regular Features CM (CCO) Mr. Nanda Kumar C., Manager, STC Publisher: Editor Layout, Typeset & Printing Mrs. Sherin Thomas, Mr. Thomas Joseph K. Mrs. Sheela Davis, Lumiere Printing Works Clerk, HO Inspection & Vigilance Executive Vice President (Operations) CM, Staff Training College Thrissur 680 020 2 VISION To be the most preferred bank in the areas of customer service, stakeholder value and corporate governance.
Mission To provide a secure, agile, dynamic and conducive banking environment to customers with commitment to values and unshaken confidence, deploying the best technology, standards, processes and procedures where customer convenience is of significant importance and to increase the stakeholders’ value.
Mr. Raphael T.J, Senior General Manager (Technology and Marketing) and Mr. Sony A, DGM (IT) South Indian Bank receiving the Banking Technology Awards instituted by IBA from RBI Deputy Governor Mr. Viral Acharya, and Padma Vibhushan Mr. Raghunath Mashelkar. 3 ‘SIB Scholar. Our MD & CEO Sri. V.G. Mathew and Metroman Dr. E. Sreedharan, along with the students from various colleges in Kerala, who won the ‘SIB Scholar’. Sri. Sivakumar.G E.V.P. (Credit) and Sri. V.L. Paul, G.M. (Admin) also seen.
ISO 27001:2013 : Our MD & CEO Sri. V.G. Mathew receiving the ISO 27001:2013 certificate from BSI Group India’s MD Sri. Venkataram Arabolu. Also seen Sri. Raphael T.J.,Senior General Manager and CIO. 4 MD & CEO Speaks ....
The latest quarterly results of our Bank announced on 11th July 2017 shows that MSME business grew Y.O.Y by 10.85%. While Q1 generally registers a tepid growth, we will all agree that the growth trend needs to at least double during the rest of the year.
It is often argued that the banking system has grown only in low single digits and hence our growth is pretty good. But we need to remember that, given our relatively small base, we can and need to grow much faster than the larger competitors.
Why is MSME so central to our growth plans?
The relatively small ticket MSME loans, covering a large number of customers belonging to a variety of industrial and trade sectors, offer opportunities for well diversified and risk controlled growth of advances. MSME relationships present multiple opportunities of engagement with the customer. Apart from the primary credit requirements of working capital finance and term loans, such customers need an array of products such as LCs, BGs, Forex Products, Investment products, Insurance facilities, Salary accounts, POS machines, Current and Savings accounts and personal credit products such as Housing Loans, Auto Loans, Personal Loans etc. Since most of the MSME relationships are on sole banking basis a growing MSME venture can bring many valuable business opportunities to the Bank. A strong MSME account is hence an anchor relationship for a number of other ancillary business in the retail space all of which are very important for our Bank.
The current issue of Siblink will discuss a number of these aspects in greater detail.
I sincerely wish that each one of our branches would appreciate the importance and value potential of MSME business and work tirelessly towards achieving our chosen mission of becoming a Retail Banking Power House by focusing on MSME opportunities in their areas.
Wishing you all the best, .... a growing MSME venture can bring many valuable business opportunities to the Bank. A strong MSME account is hence V.G Mathew “ Managing Director & CEO “ an anchor relationship for a number of other ancillary business in the retail space all of which are very important for our Bank.
5 MSMEs – The “POWER HOUSE” of Indian Economy (Turning Potential to Profit)
“AN OVERVIEW” Why MSME?? Brief Idea: MSME IS THE BEST REVIVER IT IS NOT A SECTOR OF ECONOMY BUT A “Changes are the driveway to success”; rightly Romita Chakraborty said so, several changes had occurred in the CATEGORY OF ECONOMY Asst. Manager global economy since the 1990s.Economies Br. Behala have become more independent and the markets have become more open and competitive. Developments in international changing focus from economic growth to trade and finance have altered the pattern of inclusive growth, MSME sector’s role in the commodity and investment flows all over the socio economic development of India needs to world. Technological upgradations in emerging be understood, explored and facilitated. The sectors e.g. biotechnology and the knowledge opportunity in MSMEs exists; however, the fact based industries, is expected to drive the remains that most of the funding goes to the economic growth. The new policy framework larger and more solvent MSMEs and to those st that has emerged at the beginning of 21 who have business linkages with large century is more outward oriented, less corporates. The banks compete with each other restrictive, and more flexible in terms of to grant loans to the top running MSMEs. strategies. Emergence history: Small and medium enterprises are the The Indian economy is expected to grow by over backbone of industrial development that have 8% per annum until 2020 and can probably always represented the model of economic become the third largest after China and US by growth and upliftment, contributing highest 2032 and second largest in the world ahead of to domestic production, significant export US in 2050. The emergence background of earnings, low investment requirements, MSMEs in India can be summed up as follows; employment generation and foreign exchange earnings of the nation with low import 1. The emergence of MSME is based on Classification of MSMEs: intensive activities. Gandhi model. 2. During pre liberalization before 1991 India MSME sector has emerged as a dynamic as well adopted Industrial policy resolution 1948 as prominent sector of the economy. There is that defined the role of state in industrial a growing trend that the Micro, Small and development for the first time. Medium Enterprises play a catalytic role in the 3. At that time India accorded high priority to development process of most economies. This small and medium enterprises. position gets reflected in the form of their 4. Despite numerous protection and policy increasing number and rising proportion in the measures MSME has remained mostly small overall product manufacturing, exports, & technologically backward. manpower employment, technical innovations 5. The scenario of small scale sector changed and promotion of entrepreneurial skills. In with industrial policy establishment in India, the MSME sector is the second largest 1991. manpower employer, after agriculture and the 6. Liberalization came into existence. It was output from this sector alone constitutes 40 the post liberalization era (1991 to 2006) percent share of the value added in the that reflected the growth of SSI’s. In 1991 manufacturing sector and one third of national the growth rate of SSI was almost 3 times exports. of the total industrial sector from 1992 to Industries coming under MSME: 1995. In accordance with MSMED Act, 2006, the The importance of Micro, Small and Medium 7. However in 1995 the growth rate was various types of industries coming under enterprises (MSME) for its contribution in the slightly lower but again it increased in manufacturing and service sector can broadly growth of Indian economy is something that 1996. be subdivided into the following categories; needs to be addressed. However, with the 8. It is encouraged by setting up of MSMED Act, 2006. 6 enterprises are some of the other features of this legislation.
The Government has also announced a Policy Package for Stepping up Credit to Small and Medium Enterprises assuring, inter alia, a 20 per cent year-on-year growth in credit flow.
PRESENT INDIAN SCENARIO According to the fourth All India Census of MSMEs , more than 92 per cent of enterprises are in the unregistered sector and these account for more than 81 per cent of employment. Less than 8 per cent of the enterprises are in the registered sector accounting for more than 18 per cent of employment. As expected, the top 10 in terms of the number of MSMEs is dominated by the larger states with Uttar “MSMED ACT, 2006”-BACKBONE OF MSMEs 4. Simplification of registration procedure. Pradesh at the top with 4.4 million MSMEs. West The conceptual and legal framework for small 5. Progressive credit support. Bengal has around 3.7 million followed by Tamil scale and ancillary industrial undertakings is 6. Penalty for delayed payments. Nadu (3.3 million), Maharashtra (3.1 million), derived from the Industries Development and 7. Provision for exit policy. Andhra Pradesh (2.6 million) in the top five. Regulation Act, 1951. The Act provided the The other states in the top 10 are Kerala, necessary powers to the Central Government Gujarat, Karnataka, Madhya Pradesh & to amend the provisions of this act from time Rajasthan. to time so as to encourage small scale and ancillary undertakings. MSME sector which has large employment potential of 59.7 million persons over 26.1 The Small and Medium Enterprises million enterprises, is considered as an engine Development Bill 2005 which was enacted in for economic growth and for promotion of June 2006 was renamed as “Micro, Small & financial inclusion in rural areas. MSMEs Medium Enterprises Development Act, 2006” primarily depend on bank credit for their aims at facilitating the promotion and This Act provides the first-ever legal framework operations. development of small and medium enterprises. for recognition of the concept of “enterprise” Various notifications issued by the Central (comprising both manufacturing and services) Bank credit to MSME sector witnessed a CAGR Government from time to time relating to and integrating the three tiers of these of 31.4% during the period March 2006 to increase in slap rate of investments in plant & enterprises, namely, micro, small and medium. March 2012. Of total credit to MSME, public Machinery for manufacturing enterprises and Apart from clearer and more progressive sector banks contributed the major share of equipments in service enterprises provides a classification of each category of enterprises, clear cut proof that the economy of our country particularly the small, the Act provides for a is striving towards achieving the economies of statutory consultative mechanism at the scale by increasing the volume of production national level with wide representation of all of goods. sections of stakeholders, particularly the three classes of enterprises; and with a wide range of The Micro, Small and Medium Enterprise advisory functions. Development Act, 2006 (MSMEDA) extends the scope to accomplish many long -standing goals Establishment of specific Funds for the of the government and stakeholders in the promotion, development and enhancing MSME sector including the service sector. competitiveness of these enterprises, notification of schemes/programmes for this The salient features Micro, Small and Medium purpose, progressive credit policies and Enterprises Development Act, 2006 are, practices, preference in Government 1. Industry replaced by enterprise which procurements to products and services of the includes service enterprises also. micro and small enterprises, more effective 2. Sector enlarged to cover medium mechanisms for mitigating the problems of enterprises. delayed payments to micro and small 3. Constitution of MSME Board. enterprises and simplification of the process of closure of business by all three categories of
7 Plastic Bottle Recycling Machine at Kochi Nari Shakthi Puraskar Award 2017 Metro Station
Our MD & CEO Sri. V.G. Mathew along with Sri. Elias George, MD, Kochi Metro inaugurates the first Plastic Bottle Recycling Machine installed at Palarivattom Metro Station National Payment Excellence Award
Mrs. Radhika Varma C.K., Senior Manager, South Indian Bank Eruveli branch receiving Nari Shakthi Puraskar Award for the year 2017 from His Excellency Sri. Pranab Mukharjee, President of India on behalf of Tripunithura Kathakali Kendram Ladies Troupe in a royal function con- ducted at Rashtrapathi Bhavan, New Delhi on 08-03-2017 on World National Payment Excellence award was received by Sri. Bobby James, Women’s Day. Mrs. Radhika Varma is a founder member of this ladies SGM-Inspection & vigilance and Sri. Sony A, DGM-Digital Division from troupe. Sri. N. S. Vishwanathan, Deputy Governor, RBI, on 8th March 2017 in the presence of Sri. Balachandran M, Non Executive Chairman, NPCI, Sri. A.P. Team Siblink Congratulates Mrs. Radhika Varma and her team members Hota, MD & CEO, NPCI at a glittering event held by NPCI.
8 adopted conservative policies to minimize both stages of growth. Furthermore, it is interesting credit risk and cost of delivery. They have taken to note that a number of originators have far greater comfort in financing formal and developed their own niche of operations to meet medium enterprises, leaving a gap in the specific gaps – working capital needs of market. Over the years, India has witnessed the corporates, equipment financing for larger evolution of various models to try and fill this MSMEs, ongoing business requirements for gap and meet the credit needs of the smaller businesses etc. Others have focused on unorganised sector. developing their networks in specific geographies. Non-banking finance companies (NBFCs) with localised presence and domain knowledge have Major Schemes implemented to support started to look at small business finance market MSMEs: as an opportunity. Presently, the small business 76%, while private sector banks accounted for finance market comprises of NBFC-MFIs, large Credit Support 20.2% and foreign banks accounted for only and old NBFCs along with new NBFCs. The Public sector banks advised to double the 3.8% as on March 31, 2012. aggregate AUM(Assets under management) of flow of credit to MSMEs within 5 years (20% NBFCs focussing on small business financing annual growth) Contributions and Performance of MSMEs is estimated at INR 33,000-35,000 crores. A minimum of 40% of bank credit earmarked in India(Approx): Within this segment, large NBFCs dominate the for priority sector lending which includes market, catering to borrowers in both the formal loans to MSEs for both public and private sector, who are able to produce documented sector banks proofs of income, and the informal sector. Large Specialised SME Bank branches in industrial NBFCs dominate the market with over 90% of clusters for smooth flow of credit to MSMEs the aggregate AUM. Other players include One Time Settlement (OTS) scheme for NBFCs, a number of whom have partnered with settling NPAs of MSMEs IFMR Capital, to focus on mortgage loans or secured and unsecured loans to small Technological Support Evolution of MSME lending: businesses. Credit Linked Capital Subsidy Scheme for Adequate and timely availability of Finance is Technology Upgradation one of the most important key inputs for any Microfinance emerged as a step forward in x Scheme meant to improve quality of business. This is equally applicable while addressing the continued challenge of financial products by technology upgradation setting up of a MSME unit by an entrepreneur. inclusion. Some MFIs such have even started x Investment upto INR 10 million (US$ Micro, small or medium business owners are offering Individual Loans to customers with 250,000) eligible for support with generally first time entrepreneurs with very long standing relationships, while others have subsidy upto 15% on investment. little capital or without capital, need not only created a small customer base of individual run Testing Centres for Quality Certification technical, marketing and managerial support micro enterprises. Tool Rooms and Training Centres for skill but also require the much needed seed capital upgradation to start the business. Many MSME units also Non-banking financial companies (NBFCs) with Incentive scheme for obtaining ISO need additional capital for technology up a sectoral focus on MSME finance have steadily Certification by MSEs gradation, capacity expansion growth, and developed their business. Their unique model marketing and for imports and exports. Banks of underwriting and credit delivery has helped Marketing Assistance and Export Promotion in India have been providing financial facilities them scale-up financing to small businesses Support for participation in trade fairs and to numerous businesses through their branch while maintaining strong portfolio quality. The exhibitions – national as well as offices, regional offices in across the length loans offered facilitate occupational needs international. and breadth of the country. including, equipment purchase, business Training programmes on packaging for expansion, technology upgradation and exports. The Micro, Small and Medium Enterprises working capital requirements. Purchase preference in Government (MSME) sector has consistently grown at a procurement. quicker pace than India’s GDP, but has not been Over the past 5-7 years, newer NBFCs sensing Market Development Assistance Scheme for supported by adequate financing opportunities. opportunity have made a foray into SME lending publicity, market studies and adoption of This is largely because many of these with innovative business models. These NBFCs modern market practices businesses are in the informal segment, and analyse informal records that banks generally lack proper documentation and liquid do not accept, and conduct background checks Cluster Development Programme collateral, making underwriting difficult for on potential customers through an exhaustive Cluster formation has been considered banks. evaluation process. important for MSME development. A cluster may be defined as a local agglomeration of Traditionally, banks consider lending to small A number of private equity firms have expressed enterprises (mainly SMEs, but often also businesses a relatively risky business, and have an interest in these originators at their early including some large enterprises), which are 9 Inaugurations
Inaugural ceremony of our 843rd branch at Tirupati under Hyderabad Region, by Smt. Inauguration of Haripad Branch by Prof. Sudha Suseelan (Chairperson, Haripad M. Suguna (MLA, Tirupati Constituency) in the presence of Sri. Chadalawada Municipality). Mr. Peter A. D. (Dy Gen. Manager & Regional Head, Thiruvalla),Mr. Krishnamurthy (Chairman, Tirumala Tirupati Devasthanam), Mr. John C. A (Deputy Baburaj B. (Councillor, Haripad Municipality), Mr. Reswin R Nath (Branch Manager, General Manager and Head, RO Hyderabad) Haripad), are seen.
Inauguration of TBD, Bangalore by Head & DGM (TBD), Mr. Sreekumar Inaugural Ceremony of new Offsite ATM at Seemas Wedding Collection, Aluva by Ms. Lissy Abraham (Chairperson, Aluva Municipality) in the presence of Mr. Reddy Chengath in the presence of Mr. Joseph T P, AGM (RO-Bl’re) and Mr. Suresh N. J., (JGM and Regional Head, RO Ernakulam), Mr. K. P. Kunjumohammed (MD, Srinivas Rao, SM & Center Head (TBD-Bangalore). Seemas Textiles), Mr. Manu Jose( Senior Manager and Aluva Branch Head
Inauguration of new Offsite ATM at Mini Civil Station, Pathanapuram by Rev. Fr. Inaugural ceremony of new onsite ATM attached to Pune Viman Nagar Branch, by Mr. K. V. Paul (Secretary, Mount Tabor Daira) in the presence of Mr. Shaik Pareed Jagdish Mulik (MLA, Wadgaonsheri Constituency) in the presence of Mr. Vijith S (Ward member, Nadukkunnu), Mr. K. S. Satheeshkumar(Dy. Gen. Manager and Head, (Regional Head, Pune), Ms.Manisha Shrivastava (Branch Head, Viman Nagar) RO Thiruvananthapuram), Mr. Harikrishnan S. (Branch Head, Pathanapuram)
10 Though Banks have lend around Rs 8 trillion to MSME sector, MSME sector is still under funded and badly in need for capital infusion. According to International Finance Corporation (IFC), MSME sector faces a severe capital shortage of Rs 32.5 trillion. Out of this, debt shortfall is Rs 26 trillion. This is the shortfall that the organised financial sector will have to provide to MSMEs to ensure that they are properly capitalised and can continue to grow. For the banks, the challenge is to access and tap the wide MSME segment and for small business owners to access finance. The key products through which banks lend to MSME is working capital finance (in form receivable discounting and / or basis trade assets), loan vehicle / equipment purchase, project finance, and long term finance. The hurdles faced by MSME in accessing finance is lack of comprehensive formal documentation relating to accounts, income and business transactions.
Nearly all banks prefer to lend to MSMEs only against collateral. Current trend is that majority of lending to MSME sector is against property mortgaged by promoters or owners or partners of MSME unit to the bank. A significantly large chunk of MSME loans between Rs. 30 million “SLOW BUT STEADY STEP TOWARDS FUTURE” to Rs 150 million are actually nothing but Loan producing and selling a range of related and Against Property (LAP). This t is actually because complementary products and services. THINK ABOUT IT??? of the risk framework adopted by Banks to avoid bad loans in their portfolio. International Cooperation Programme MSME is still a highly untapped sector…………. Provides exposure to MSMEs to the latest technologies, manufacturing practices prevalent in their fields in different countries. Encourages their participation in international exhibitions for exports.