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Upgrading technology must for SMEs' survival
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Bikky Khosla | 12 May, 2009
Despite the latest study by ASSOCHAM that SMEs' share in GDP will be 22 percent in 3 years, there's no doubt that they (SMEs) are still languishing in the backwaters of development - thanks to our nonchalant authorities.
Currently the sector contributes about 17 percent to India's GDP which itself is a big thing considering the fact that they have to face several problems like lack of credit, high rate of interest, red-tape and lack of clarity in government policies. It however surprises me that despite the potential shown by the sector, it still faces several constraints. Whatever banks might say, there's no doubt that SMEs still remain a neglected lot.
The good news however is that SMEs have now decided to take things into their own hands. Instead of waiting for government support they are now taking initiatives to take them to the next level -- one of them being upgrading their technologies.
Without doubt at this point of time when both morale and demand is low, upgrading technology to reduce input cost and increase production is the best thing SMEs can do for themselves. This will subsequently go a long way in increasing their share in the country's exports which is currently about 40 percent.
SMEs will now have to understand the value of technology upgrade as a strategic business tool and thus try to obtain information and explore opportunities for technological cooperation. We need to understand that there is no escaping the upgrade and improvement cycle and we have to now choose exactly which technology will yield the best results and increases performance and stability.
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Bank Finance
Deepak Paul | Thu May 21 16:55:37 2009
SMEs are not getting easy finance from Banks despite Govt desires the development of SME sector. Bank insist for liquid securities to the tune of 25% to 30% even more,even in the projects which are eligible for 33.33% back-ended Govt. grant. Thus small entrepreneurs are facing problems and could not set up the projects easily and in most of the cases they dropped the idea due to the negative attitude of banks. Govt of India, should form a seperate financial institution who can deal with solely for SME sectors inplace of commercial banks. I feel in that case, govt can implement their noble schemes for the development of economy of India.
problem in getting finance for SME from Nationalise Banks
Chintan Kanojia | Sun May 17 21:05:21 2009
Nationalise Banks are never interested in financing SME.All the Nationalise banks thinks that all the SMEs are defaulter and they show no interest in helping them.In my case, we are running SME since 1980 and our banker is State Bank of India. We using working capital facility of Rs 3 lacs given by bank. But when ever we approach them for enhancement of working capital, their approach is always negative.We think that if same approach is continued by banks for SME then one time will come that all SME will be vanished.
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Re: problem in getting finance for SME from Nationalise Banks
Allen Loh/Singapore | Wed May 20 00:44:13 2009
SME forms a major part in contributing to
the GDP of the country. Although the size
is different from MNC, the risks should be
much lower depending on the type of trades
the SME is engaging in the country. It is a fact that only nationalised banks are
interested in working with SME which is
evident in other first world countries.
Thank you,
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Re: problem in getting finance for SME from Nationalise Banks
priyash bhargava | Thu May 21 04:21:11 2009
i agree with you these bank only finance big companies like satyam and all . i never under stand , many news papers they are adding thousands of crores relieve for smes where these funds go.
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Re: problem in getting finance for SME from Nationalise Banks
Rahul C. | Thu May 21 09:36:31 2009
I agree with you. The banks always demand additional security whenever approached for a loan or limit enhancement. Even if your balancesheet is good, your turnover is good & conduct of the account is satisfactory. If a SME has some meens to meet it's fund requirement why would it approach a bank for the same. But the banks does not understand this & demand security of the same value or higher than what is required.
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Re: problem in getting finance for SME from Nationalise Banks
Vara Prasad G | Wed Jun 24 08:45:21 2009
HI, Your view on your bank's response to your credit requirement is true as it is out of your experience. But have you evaluated yourself i.e., your business and known why are you being ignored by banks? what gaps are to be filled? what would make your business get a totally different perview? Banks have a guideline to use external rating opinion which will reduce thier risk perception for lending. If your rating is high or highest the report can negotiate for your finance need. Crisil ratings does he job for you. have you contacted them? to know more call 98407 25262 - Vara Prasad.G, Manager - SME Ratings, Crisil Ltd.
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obstacle in SME development
girish | Wed May 13 20:53:07 2009
problems like lack of credit, high rate of interest, red-tape and lack of clarity in government policies--THESE PROBLEMS ARE SOMEWHAT EASED BY GUJRAT GOVT. once we register them SME dept follow up the upcoming project and help themm to get credit ,issue necessory supporing letter, help in clearing blocks with perticular govt.dept. Well technolgy development part is the enterprenour.
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Re: obstacle in SME development
DEVADAS, AL AIN, ABUDHABI UAE | Thu May 14 10:55:26 2009
Thanks for Chief Minister Modi's attitude. Work in accordance with the dream. Do not clash ideological action with others. Understand the International
conspiracy in IMF,ADB, SECURITY COUNCIL(UN)and others. Should keep vigil about not only neighbours gesture but also International including USA, WESTERN COUTRY and others to spoil INDIA AND PAKISTAN RELATIONS. Actually we need to get benefit thru commercial dealings. It also keep our Pakistani brothers to live happily by getting fresh and genuie material from India at competitive price.
How china grab all market and suppling thru the world. Commitment for quality and price, stock control, production faciltiy, raw materials, transport and so called RED TAPE should be discuss with our FICCI and ASSOCHEM and SEBI.
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Upgrading technology by SMEs
Shrinivas k Moghe | Wed May 13 10:01:43 2009
Its not been a newly developed need,but a decade-old problem. The basic problem has three causes:01.lack of understanding the importance of upgraded technology,02. lack of source-knowledge,to seek upgraded technology,03.lack of financial means to adopt new technology.
Of the above three,the lack of financial means/support,is the real big hurdle,for SMEs. The financial institutes have funds,but they dont trust SMEs. The SMEs have ideas and good business prospects,but lack capacity to secure such loans. In such a situation SMEs have only two options;according to me;though not very sound:
01. Upgrade technology in parts by using slowly rising cash-accruals,&
02. Up-grade your technology at the cost of increasing creditors.
But one thing is for sure,and that is,with scarecity all around SMEs,still the sector is doing well,though not the best.
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Re: Upgrading technology by SMEs
Rahul C. | Thu May 21 09:30:02 2009
Sir, SMEs don't get loans from nationalised banks whithout cash securities & upgrading technology in parts take so much time since accural of cash funds is so slow that by the time u have funds that technology becomes absolute or some new technology takes it's place.
I am into flexible packaging (Rotogravure Printing) & doing bussiness since last 13 yrs. My bankers are same, They have seen me growing in terms of turnover over the period. Yet when we go to them to get a loan of even 2-3 lacs they still demand a additional security for that.
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