Monday, December 19, 2011

Friday, December 16, 2011

Improving quality of life with Footpaths

Everyone dreams of living the big life in a big city in India or abroad. But except for maybe the super-rich, the whole experience is laden with huge trials and tribulations. The most common issues are traffic and stress.

Let us look within the limits of Thane city. Travelling anywhere in the city is a struggle especially during the peak hours. Parking is another challenge with the growing number of vehicles.

There are many long and short term reasons – encroachment, arbitrary repairs like holes dug up, vehicle that has broken down, irresponsible parking of a vehicle with the owner missing from the site, or double parking, a driver driving slowly while speaking on the phone, an auto-rickshaw driver settling the fare with the passenger, a slow moving vehicle driving on the right most lane and the fundamental cause of non-compliance with traffic rule. Well the list can go on and on.

There is one area where efforts can be made to alleviate the situation of traffic and stress – developing real footpaths or pedestrian system to actually walk on.

A huge portion of our population walks due to reasons which range from economic condition to lack of adequate public transport system and need to travel short distances. This is a common trend across the country but sadly India lacks proper footpaths. People mostly walk on the roads and that is a huge reason for slow moving traffic. People cross the road anywhere they want. Zebra crossing is restricted to our civics text books and few specific areas in cities.

Walking is the most common mode of transport in average European cities. Most developed countries have consciously built pathways thus encouraging people to walk. The ulterior motive is to improve the quality of life of its citizens and visitors alike and of course to keep a check on vehicular traffic. Look at Times Square in New York, Las Ramblas in Barcelona, embankment by Siene River or Place Charles de Gaulle again in Paris, Bahnhofstrasse in Zurich, downtown Shibuya Tokyo, Camden Street or Trafalgar Square in London. There are numerous examples. It is time to emulate them in this regard.

Footpaths serve multiple purposes. They help the city remain cleaner by reducing pollution levels as more people would prefer to walk. The walking in itself helps maintain our health and a good infrastructure makes walking very less taxing. It also reduces traffic congestion. Alternately, it is also less risky as chances of being hit by a vehicle from behind are minimal on a footpath compared to walking on the main road.    

Thane also has its fair share of footpaths. But many of them have been hijacked by hawkers or public toilets have popped up on them thus rendering that area useless for walking. In other areas, there are gaping holes as the gutter covers made of concrete or metal are either broken or stolen. That makes footpath dangerous for walking especially at night.

The future will slowly propel us towards creating smart cities that are capable of making optimum use of resources to provide a good life to the citizens. In my opinion, footpaths would be one of the key development indicators.

Thursday, December 15, 2011

Practicality of MIS Report

This article was published in Dec 2011 issue of TISA.

Wednesday, December 14, 2011

Ajay Shah's blog: Be skeptical. Be very skeptical.

Ajay Shah's blog: Be skeptical. Be very skeptical.: Mistake upon mistake In recent months, we've had a few slip-ups by the official statistical system in India: Yesterday's IIP release ...

Good read.

Monday, December 12, 2011

Governance Propels Growth and Glocalization


In the last few years, whenever a discussion has commenced on economic development, investments, increase in GDP, per capita income etc., Gujarat has always been on the forefront. What is the core reason that has helped prop it to this enviable position? Why are so many companies investing in the state and trusting it with so much money and efforts? Why is the economy booming there? Why does everyone want a share in the growth pie even though there are frequent negative publicity of the state and its administration? Why the other states are lagging behind or are not pursued like Gujarat for investments? 
One word says it all – Governance!

Gujarat today, proudly stands as an epithet for the word governance. And it is this which is driving growth and tremendous development all over the state. 

Read the complete article in SMEWORLD Dec 2011 Issue (Gujarat Special) Click Here

Notifications on MSME (Useful Govt. Link)

Gazette Notification Development Commissioner MSME

This is an useful link to follow any changes in the MSMED Act 2006.

Tuesday, November 22, 2011

Literature Review of “Innovative Financing for SMEs”

Importance of SMEs Globally

There is ample empirical evidence that SMEs are present in all countries across the globe and significantly contribute (directly) to

  • Total No. of Firms/ Businesses in a country 
  • Employment generation 
  • Contribution to GDP
The SME sector has been the cynosure of research in many countries. Each and every aspect of SME businesses have been studied using a fine tooth comb type approach. Countries have tried to find and employ all possible avenues of financing options. This seminary aims to present and discuss the highlights of random domestic and international papers, articles, research and view-points to add to the knowledge of our esteemed readers.

Published in SMEWORLD - SEMINARY - Special Supplement, Oct-Dec'2011. Click Here

Tuesday, November 15, 2011

7 Steps to choose a MBA specialization

A degree in MBA after graduation has become one of the most sought after courses of education in the past decade and has become de rigueur now. It is not surprising to see even doctors and lawyers opting to do a post graduation in business administration. But the degree in itself does not propel anyone to the big league overnight rather fortifies ones strengths and enhances the skills to make them employable. It is often mistaken to be an end in itself rather than just one of the means to an end.
The complete article is available online at LearnHub. Click Here

Self-Study for GRE

Graduate Record Exam consists of two broad parts - the General Test (which is compulsory) and the Subject Tests (optional but considered by universities if provided alongwith the General Test scores). The preparation for GRE should be largely focused on the General Test. The attempt to take the Subject tests should be judged based on the preparedness of the General Test.
The complete article is available online at LearnHub. Click Here

Development and SMEs: Synergize to Sustain

What Economic Development means (to me)
We hear and read about economy and its development regularly. It is a very broad term pointing towards improvement of economic well-being of a nation and therefore of its population on the whole. A layperson's yardstick of measuring this development could be through analysis of the general quality of life in a country. 

Read the complete article which has been published in the Nov 2011 issue of SMEWORLD. Click Here

Thursday, November 10, 2011


This article was published in the November 2011 issue of TISA.

Tuesday, October 18, 2011

GRE preparation through Internet

Graduate Record Exam is a common entrance test with widespread appeal. One can prepare for it from books, from material downloaded from Internet or directly attempt to solve online test questions. Our first instinct while preparing for the test is to go online and search for course-related information and study material. True! There are vast resources but not all of them are worth accessing.
To read more, click here
This article of mine is featured in 
It is one of the initiative to write education related articles.

Stree Shakti Welfare Association - Bitiya Bina Ghar Suna

Stree Shakti 
A home is built with a man, woman, children, relatives, friends, mental and physical health and satisfaction and not with bricks and cement. Quality of life is basically enhanced and sustained with good education and health supported by a society adhering to just norms and an unbiased legal and social framework for everyone to exist with honor and dignity. 

This was the core six-point concept behind Stree Shakti’s “Ghar ek Sapna”. 
Today the basic foundation of this dream is under serious distress. On one side there are people like Shikha Sharma heading Axis, Geetu Verma, head of foods in HUL, Anupama Ahluwalia, Head Marketing, Coca-Cola, Nandini Sethuraman, Head Marketing, Bharti-Walmart, Saina Nehwal in badminton, the four female chief ministers in Delhi, Uttar Pradesh, Tamil Nadu and West Bengal, a female President, female speaker of the Lok Sabha and the leader of the Congress and on the other end of the spectrum we have rampant female infanticide, selective sex-determination and abortion, unequal treatment in society based on gender. 
Let us see current statistical data to actually understand the gravity of the situation!

Countries with more females are North America, South America, Europe, Australia and South Eastern African countries. India ranks with China, Middle Eastern countries and North Africa with more males than females. 
Consider the economic development, level of education, health-care, equality and standard of living of the various countries mentioned above. It will speak of how nations actually develop. 
The dismal sex ratio in the recent census study strengthens the thought that there is a gigantic necessity of serious dedicated efforts in the way our society is functioning. We need Transformation of the mindset of people of all age groups especially 15 years and above. There is an acute need for change in our thought process, attitude, focus, priorities, culture, ethics, morals and values. 
Owing to these statistical data and reality in our society, Stree Shakti has launched its new initiative titled: Bitiya Bina Ghar Suna. We as a society today require multi-pronged approach to tackle this gender menace. This is not a feminist issue rather a concern for the growth and sustenance of our society in the future. We need action from the Government, NGOs, society on the whole and active participation of families to address the issue. It is the women who propagate; they beget children and not men. Let this fact not ever escape our mind. If we do not have a society of healthy, educated women, our progeny will slowly become extinct. 
The patriarchal society flourishes because women bear children after carrying them within themselves for nine long months. The role of a mother is equal to the role of a father. The laws of our government are not sufficient as they might just act as a deterrent but will not stop people from discriminating based on gender the way they are today. From the legal perspective, India as enough laws and acts. 

Women and especially the girl child in our families today need equal opportunities for getting education, nutrition and healthcare. A recent study sadly showed how females are neglected when need for specialized medical care arises. Children today need equal property rights so that there is no preference for a specific gender. Women manage the house, raise children and care for the overall family. It is time to protect women and children especially the girl child
The gist of the problem can be understood from the lines of the following folk song from UP: 
Prabhuji main tori binti karoon, Paiyan Paroon Bar Bar, 
Agle janam mohe bitiya na dije, Narak Dije Chahe Dar 
Stree Shakti, under the aegis of Bitiya Bina Ghar Suna, will spearhead this transformational approach with a five-point plan of meeting, counseling and convincing the various stakeholders. 

According to our Vedic culture, this initiative will commence with a Sudarshan Maha Yagya with 100,000 Ahuti for the blessings of our Almighty. 50 couples/ individuals will be taking part in the main Yagya. It will start at 6:00 am in the morning and conclude approximately by 3:00 pm. All others can give a single Ahuti in the end. Apart from the Panchsutriya Karyakram, Stree Shakti would also launch an incentive scheme in the shape of a fixed deposit of Rs.5000/- for a second girl child born after 9th Oct 2011 to parents who register with Stree Shakti and redeemable when the girl child is of 20 yrs of age. (Conditions apply) Let us all step up, join hands and try to change our society for a better equitable future not only for ourselves but for our children. Today, we still have time to create a balance; tomorrow we will be late. 
There is a saying – A son is a son till he gets a wife, a daughter is a daughter all her life. 

For more details, contact Stree Shakti -

Donate through cheques - Stree Shakti Welfare Association 

I had the honor of attending a "Save the Girl Child" function in Thane, Mah. It was a moving experience. I had written the above piece for them but actually attending the event made me understand each word. 

The Decision Conundrum

Making or taking decisions is a continuous activity in our lives both at an individual personal as well as professional and at an organization level. Everything ultimately depends on 'that' particular decision or choice that is made. This article was published in TISA's October 2011 Issue.

Monday, October 10, 2011

Education - The Emerging Sector : Catch the wind in your sails

India is expected to have huge growth in its working population where other countries seem to be facing a decline. This growth is forecasted most in the middle – income group category. The predicament in this positive attribute is our dismal literacy rate. Innovation and development of the education sector can be instrumental in circumvolving our burgeoning population from being a hindrance to a matter of strength both domestically and internationally. It can also act as a tool for socio-economic development and source of economic independence. In emerging markets like India, there is tremendous potential for various sectors like education as there is ample scope for growth and expansion before saturation sets in. “Education is not the answer to the question. Education is the means to the answer to all questions.” William Allin Original Article published in SME WORLD Oct 2011 Issue. Click Here

Wednesday, September 14, 2011

Ambiguity Looms Large - Surviving Economic Mood Swings

Surviving Economic Mood Swings The economic trends around the world these days are fickle and worrisome. It is extremely challenging for common man to gather how things will shape up in the future. The investment plan assumptions of individuals are going awry and people are trying to grapple with the growing uncertainty. Businesses are also not remaining insulated from this ambiguity. Original Article published in SME WORLD Sep 2011 Issue. Click here

Friday, September 9, 2011

Developing Workforce, Developing You

The most intriguing part of any business is its human resource. It has an element of unpredictability and randomness. As it is business is enveloped with multiple variables which are constantly changing. Development of an organization cannot happen in isolation. It is strongly laced with the development of its workforce. Published in TISA Magazine September 2011 Issue.

Wednesday, August 10, 2011

The METRICs of SME Challenges

Adaptation of Dr. Subhash Sharma's METRICs model to analyze the Challenges faced by SMEs in India.
The article was published in the August issue 2011 of TISA magazine.

Saturday, August 6, 2011

The Whys and Wherefores: Mystery of Missing Labourers

Status Quo
Reams of paper have been filled with glowing narratives of India's growth story. It is also predicted that by 2040 – 2050, India will become one of the largest nations in terms of GDP. This should be a welcome pointer for businesses especially SMEs in India. Sadly, the story at ground level says something else. SMEs (in general) today are struggling for their mere survival instead of firing on all cylinders for expansion and growth. Yes, finance is one of the key obstacles. But dearth of adequate laborers for SMEs is becoming a reverberating cause of concern across the nation. The “growth driver” of the economy is sputtering for life. It is deeply affecting productivity.
For the complete article published in SMEWorld August 2011 Issue, click here

Wednesday, July 20, 2011

Invisible but Ubiquitous - Organization Culture (TISA Magazine Jul 2011 Issue)

Owning Your Own Home: The Real (E)state of Affairs

Circa 2007, we were looking for a flat to invest in. We had checked the offerings of many projects, compared the features and costs. The sales person of a particular “prestigious” project told us that all 3, 4 BHKs have been sold off and few 2 BHKs are remaining, if we are interested in. The prices were rising each day while we were searching for a flat to suit our needs. Finally, we went ahead and bought a flat in a different project. Early 2009, we started getting regular text messages of “very good deals for 3, 4 BHKs” in the same “prestigious” project!

Complete article is available in SMEWorld July 2011 issue. Click here.

Thursday, June 9, 2011

New Age Challenges, A Test for SMEs: Pharma Sector Poised to Grow

Indian pharmaceutical sector is on the threshold of growth in multifarious areas. Owing to changes in regulations and opening up of the sector as part of globalization, the country is on the 'most-wanted' list of many international pharmaceutical giants.
Indian pharma sector is growing at the rate of approximately 8-9% and is presently considered to be ranked 14th in terms of value. This ranking is predicted to go up in this decade and India is expected to become a lucrative market in the coming years due to many complementing factors. At present selected few companies like Cipla, Sun Pharma, Ranbaxy, Lupin, Dr. Reddy's Labs etc. have a formidable presence in the overall domestic market share and have considerable exports. There are around 250 – 300 large units and more than 8000 small scale units. But there is a huge scope for growth in this country owing to its massive population, majority of them are still bereft of basic medication and healthcare.

Published in SME World June 2011 Issue

Opportunities & SMEs: “India Can Become Global Pharma Hub”

An Interview with Pharma Analyst Mr. Prashant Vaishampayan.
The Pharma stocks are also performing well in case of Mutual Funds. A review of fund category returns in the last five years places Equity: Pharma at 12.78% returns second only to Equity Banking which tops the list.

Published in SME World June 2011 Issue

Innovation Strategies for SMEs

The entrepreneurial zeal of one person or a group of people trigger the birth of an enterprise. Once the business has been setup, it requires continuous monitoring and evolving strategies to keep it competitive and on the growth path. Most enterprises which have become successful and are growing today are those which have been able to do something different. The element that segregates them from the crowd is Innovation.
The article has been published in the 2nd Issue of SME Connect by SME Chamber of India.
Original Link: 2nd Issue of SME Connect Page 34

Monday, May 16, 2011

Assimilating Product Life Cycle and Marketing Mix

A short discourse on understanding the product life cycle and implementing an appropriate marketing mix to support the product at each stage and elongate the life.
The article was published in the May Issue of TISA.

Tuesday, May 10, 2011

Withering Heights: SMEs Wilting Under LE Dominance

Published in May 2011 Issue of SME World.
Most businesses have evolved from the entrepreneurial initiatives of one individual or a group of people. The idea behind such initiative is either an innovative product/ service to fill a gap in the market or a banal copy of an existing one with or without a twist. But whatever be the germinating reason, an enterprise does not become a large company from day one unless it is the sister concern of an established large enterprise. Companies have to go through the stages of small, medium and then become large albeit with different rate of growth for each company. Today, though we are constantly berating government and industry policies, banking norms, economic reform measures etc., for the stunted growth of the biggest employment generation segment – small and medium enterprises; it is the large enterprises that are significantly instrumental in impeding the growth in more ways than one. This article aims to look at the various spheres where large industries' (LEs) clout is wilting the SMEs.
Click here to read the entire article

Wednesday, April 27, 2011

APA Style Blog

Just a nice resource for Bibliography - APA Style

Click to read

Tuesday, April 26, 2011

Qualitative Methods Workbook - Good Online Resource

Dr. C. George Boeree has compiled a wonderful resource for qualitative methods. He can be reached at
The resource page states:
"The Qualitative Methods Workbook is an "e-text" prepared for the college course Qualitative Research Methods (PSY 405) at Shippensburg University. While the contents are copyrighted, they may be downloaded and hardcopied for educational and personal uses without permission, as long as the source is noted. All other rights are reserved."

Click here to view the resource

Sunday, April 17, 2011

Wednesday, April 6, 2011

Time to Re-evaluate, Restructure, Rejuvenate

Published in SMEWorld April 2011 Issue

To everything there is a season and a time to every purpose
The new business year has begun. The recent central government budget has been presented with certain changes – positive and negative. There are strong undercurrents of General Sales Tax as well as the Direct Tax Code in the coming years. What impact they will have is anybody's guess at the moment but they will definitely create some ripples or waves in various aspects of the business environment. It is time for SMEs to do a 360 degree evaluation of their business, to fortify themselves for the future and to brace against competition in this decade – both indigenous and global.

Read the complete article click here

Monday, April 4, 2011

What Indian SMEs can learn from the Indian Cricket Team

What Indian SMEs can learn from the Indian Cricket Team

India has won the Cricket World Cup on 02.04.2011 after 28 long years. It is a wonderful achievement by the team.
There are some lessons to be learned from this victory.
1. It is never impossible just arduous and need to be relentless to reach the top. The need is to be relentless but also remain alert for any changes in the environment.
2. All opponents are important and potential threat. No one should be taken lightly. Knowing their game plan is a must. Improvisation is crucial in business. One has to constantly juggle the strength and weaknesses to their advantage.
3. A cohesive team working as one can only bring results. One can have the best personnel in various positions but if they don't work in synergy than nothing can be achieved.
4. The role of workers, managers, leaders and owners are equally pivotal. Each has to play their part in order to achieve the bigger goal.
5. Environment plays a big role. Preparation and strategy does not work in isolation. One has to factor in the environment elements to succeed.
6. The captain has to lead from the front. The business owner cannot simply delegate tasks and expect results.
7. The team was constantly aware of the game plan. Communicate. Nothing should be left to imagination or perception. The mission, vision, goals, objectives, process, measurements - everything should be carved on stone and made transparent for the entire company to know and be aware of. No one likes being ambushed.
8. There are good coaches and bad and they have impact. A certain percentage of the win goes to proper coaching and mentoring. Everyone needs some from time to time.
9. Players who were unfit were not selected to play. Also players were not chosen based on their age, religion, caste or creed. The choice was based on merit and performance. Reservation, favoritism, bias - all will spell sure-shot doom.
10.With all the hard work, there is always the need for a wee bit of luck. Prayers are a must. Even the agnostic and atheist definitely have something to fall upon.

Monday, March 7, 2011

Enterprise Resource Planning (ERP) for SMEs: Random Musings

Today with advancement in technology, the conventional chopdi is steadily getting replaced by applications to fulfill similar aims albeit with greater efficiency and effectiveness. What does a chopdi generally do? Casting a cursory glance will reveal that it helps manage the receivables, payables and highlights the gain or loss position of the business.
The complexity and the environment of conducting business are getting proliferated. Establishing systems to manage enterprises from its fledgling days is becoming paramount if we look around for examples. The effort pays off handsomely in the long run. This compounded with use of technology to manage the systems can be a marvelous arrangement.
Published in SMEWorld March 2011 Issue
Click here to read

Tuesday, February 15, 2011

Impact of Globalisation on SMEs

Liberalization led to favorable environment for larger number of entrepreneur-promoted businesses who looked beyond the shores for a market to cater to. The success of the software industry is widely evident and so is the employment impetus created by the BPO business.
The SME sector will also not remain untouched by this global onslaught but it should be seen both as a boon as well as bane. 40% of Indian exports are through SMEs.
Click here to read the article

Monday, January 31, 2011

Slew of changes: North Africa and Middle East

Tunisia hit headlines in Indian news recently. There are some upheavals happening in this small North African country.
Timeline of Tunisia on the BBC official website. Click to view.
Some sections of the media are considering Tunisia to soon become as significant as Gdansk, Poland.
Soon after news poured in about the secession of South Sudan from rest of Sudan thus giving rise to South Sudan and North Sudan.
This is now followed by strong movement in Eqypt. Ruler Hosni Mubarak's position seems highly fragile considering the subtle support of defense forces towards their countrymen. Incidentally, Egypt also maintains the important Suez Canal. What will be the implication of political changes in Egypt on the canal? Will it have impact on trade and commerce?
The point to be considered now is that whether this wave of change and civil movement will spread to adjoining nations like Jordan and Syria and subsequently spill over to Saudi Arabia. I believe the people in these countries are now looking for a much needed change and a serious rejuvenation of the entire political, economic and social system. I am no Nostradamus so only time will tell.
Meanwhile, it will be worth following BBC's site on Middle East. Click here
World Map for reference (original map located at

Sunday, January 30, 2011

Earthquake of 2001

Our memory is generally short.
A news item recently caught my eye. It was highlighting how Kutch has re-developed itself in the last 10 years.
Re-developed? Yes after the huge earthquake that shook Gujarat on 26th January 2001.
Suddenly I remember clearly how my parents were on a train from Kolkata to Surat and I really could not inform them about the disaster. Mobile phones were not so common in those days in India. They narrated the scenes in Surat (which is miles away from Kutch) after they reached. People were sleeping on the open areas as the after shocks continued. I could just imagine what it must have been like in the heart of the quake.
Today, the resilient Kutchis have turned everything around and made it nice and bright. Two stories in the Times of India describe the same. There are many more success stories there. Click here to read 1 and 2.
I also offer a silent prayer to all the lives that were lost......

Tuesday, January 25, 2011

Media and Corruption - Gujarat NRE Presentation Contest 2011

The Gujarat NRE Presentation Contest 2011
I chose to send in my presentation on the topic of Media and Corruption along with my research guide Dr. Renuka Garg.

Click here to see my presentation

Saturday, January 15, 2011

Wall Street Journal Article on Gujarat's Business Environment - Interesting perspective

A very balanced perspective has been presented in the article titled:
A Glimpse at India, Minus the Red Tape
(Gujarat Leader's Moves Wooed Firms, Spurred Growth; Violence Casts a Cloud)

Click to read the article

Friday, January 14, 2011

Credit Ratings Need Pragmatic Approach: A cogent Analysis

Article in SMEWorld Jan 2011 Issue

Independent agencies are present world over that are involved in rating the creditworthiness of a nation as a whole or of firms in specific. The aim is to evaluate the health of an enterprise in a holistic fashion thereby establishing its soundness. A positive credit rating helps in boosting the image of a firm which leads to possible investments or availability of loans or financing.

In layman's terms – it is the analysis of a firm's ability to pay back any debt either by cash or other movable or immovable assets.

Click to read

The concluding part of the above article has been published in the March Issue of SMEWorld.

Need for Credit Rating in SMEs in India – Ground Reality
Last month in an article titled “Need for Credit Rating in SMEs in India – A cogent analysis”, the claims of credit rating agencies were highlighted. In this concluding part, the discussion is continued with a specific focus on the banks’ standpoint with regards to credit rating and the ground reality.
What do the banks say?
It is established fact now that finance is the most important prerequisite for any SME to function smoothly. All other factors are directly related to the availability of loans, capital and funds.
Most rating agencies as presented in the previous section claim that they are recognized by banks and financial institutions and getting a rating done by them would help in availing loans easily. The best way of analyzing the veracity of such claims is by presenting the actual text from selected banks’ website. For brevity’s sake, the presentation is restricted to three well known banks in India. It is left to the readers to draw their own conclusion.

(a) State Bank of India
The FAQs section has the following question:
What are the eligibility criteria for these term loans?
The SSI unit that takes the loan should not have any history of defaults in payment of interest or installments of the principal. The unit should have a strong performance record and a respectable credit rating as per the bank’s own credit assessment scales (In case of loan above Rs. 25 lakhs).
(Source: retrieved on 06.12.2010)

(b) Axis Bank
The following line is an excerpt from a page on Microfinance in the Axis bank website.
“Note: All loans are at the sole discretion of the Bank.”
(Source: retrieved on 06.12.2010)
The following excerpt is from the Basel – II Disclosures document available on Axis bank website.
(Source: retrieved on 06.12.2010)
Page No. 6
Credit risk in respect of exposures on corporate and micro and small and medium enterprises (MSME) is measured and managed at individual transaction level as well as portfolio level. Credit rating tools are an integral part of risk-assessment of the corporate borrowers and the Bank has developed different rating models for each segment that has distinct risk characteristics viz. Large corporates, MSME, small traders, financial companies, micro-finance institutions, project finance etc.
Page No. 7 Credit Rating System
The Bank has developed rating tools specific to market segment such as large corporates, mid-corporates, SME, financial companies and microfinance companies to objectively assess underlying risk associated with such exposures. For retail and schematic SME exposures, scorecards and borrower-scoring templates are used for application screening. The credit rating tool uses a combination of quantitative inputs and qualitative inputs to arrive at a 'point-in-time' view of the rating of counterparty. The monitoring tool developed by the Bank helps in objectively assessing the credit quality of the borrower taking into cognizance the actual behaviour post-disbursement. The output of the rating model is primarily to assess the chances of delinquency over a one-year time horizon.
Page 8 Credit Risk Asset Quality
The rating tool for SME has an 8-point rating scale, which ranges from SME 1 to SME 8. The Bank has separate rating tools for financial companies and schematic SME exposures.

(c) Bank of Baroda
The following excerpt is from Bank of Baroda’s SME Policy document:
Page 8 and 9 Point no. 10
Credit rating:
Internal Credit Rating System
The internal comprehensive credit rating system under CRISIL Model has been approved by the bank and is already in place as advised to all branches. Pricing of loan to be decided based on the guidelines issued from time to time.
External Credit Rating System
Small Enterprises borrowers are rated by few external credit rating agencies. In case of MEs, some of the borrowers are getting their accounts rated by external credit agency like CRISIL etc. Our Bank has entered into MOU with SMERA, CRISIL and Dun & Bradstreet to get our SME borrowers rated at concessional rate. External credit rating should be carried out in all Medium Enterprise accounts going for expansion and fresh sanction involving exposure above Rs 5.00 crores by the agencies approved by RBI. Pricing be continued to be linked to our internal credit rating system. However, due weightage will be given for the credit rating of the external agency.
(Source: retrieved on 06.12.2010)
The following excerpt is from the SME Short Term Loans page on the bank’s website:
SME Short Term Loans
ENTERPRISES GROUP: Micro, Small & Medium Enterprises as per Regulatory definition and all other entities with annual sales turnover of Rs. 1/- crore to Rs. 150/- crores.
Eligibility Criteria
• Satisfactory credit rating for the last three years
• Latest Balance Sheet etc. should be available.
• Satisfactory financial performance in terms of sales / turnover and profits. Negative variance, if any, should not be more than 10%.
• Satisfactory dealings with the Bank for at least three years.
(Source: retrieved on 06.12.2010)
HDFC Bank’s Working Capital Finance section in their website does not state any requirement for credit rating. It rather lists the documentation required to avail the facility with a final line “Any other documents as required by the bank at a later stage”
(Source: retrieved on 09.12.2010)
ICICI Bank also does not state any specific credit rating requirements in its Business Advantage Loan section.
Source: retrieved on 09.12.2010)
The Code of Bank’s Commitment to Micro and Small Enterprises May 2008 document by Banking Codes and Standards Board of India ( available on SBI’s website has the following excerpts:
(Source: retrieved on 06.12.2010)
Page 9 5.2 Credit Assessment (Only the relevant points have been presented)
a. We will
ii) Before lending you any money, or increasing your overdraft or borrowing limit/s, assess whether you will be able to repay it. We shall carry out proper assessment of your loan application by carrying out detailed due diligence and appraisal.
b. This assessment may include looking at the following
i) Information you give us, including the purpose of borrowing.
ii) Your business plan.
iii) Your business’s cash flow, profitability and existing financial commitments supplemented, if necessary, by account statements.
iv) Your personal financial commitments.
v) How you have handled your finances in the past.
vi) Information we get from credit reference agencies.
vii) Ratings assigned by reputed credit rating agencies, if any.
viii) Information from others, such as other lenders /creditors.
x) Any security provided.

Ground Reality
It is established that SMEs need financing and banks or financial institutions can provide so but only after due diligence and evaluation of the enterprises’ ability to repay the same. The independent credit rating agencies provide services to enterprises wherein they can get their business evaluated and get an unbiased overall report. The importance and role of independent credit rating agencies in India cannot be negated. The lenders might not always depend on these third party ratings to decide whether or not to disburse the loan to a SME but a positive rating can definitely provide credibility to the enterprises. This is especially useful when banks or NBFCs conduct their own analysis of the health of an enterprise. Secondly, credit rating exercise can help enterprises understand their lacunae and get their house in order. Since these third party agencies are not part of any single lender, hence their evaluation process is much more generic and all-encompassing. This will help ensure that an enterprise is compliant to the requirements of more than one lender and thereby increase their chances of financing from one source or the other.
A general view that has evolved from the analysis of the requirements for becoming eligible for loans is a clean track record of repayment of any loan apart from organized account books and regular payment of statutory duties and taxes. The timely payment to creditors as well as receipt from debtors also is indicative of good health. An internal management control system further strengthens the firms’ strategies and processes.
A development in this decade is that of the Credit Information Bureau (India) Limited (CIBIL). It is a Government of India and RBI initiative to cleanse the “financial system” in the country and focus on defaults and non-payments. The participating banks share detailed information on borrowings, lending and their history. Thus, an individual or entity cannot continue to default on loans and still get further benefits from other lending agencies. The shareholding pattern of CIBIL has evolved from four original firms namely SBI, HDFC, D&B and TransUnion International Inc. to most of the leading banks in the country. A detailed shareholding pattern pie chart can be viewed from
When a loan is applied for by an individual or entity, the concerned lending agency makes a CIBIL database check to identify the history of repayment, number of credit facilities, outstanding amount, willful defaulter etc. If the CIBIL record comes out clean then the chances of receiving the loan is highly likely.
SMEs in India today need one such agency possibly an off-shoot of CIBIL to rate enterprises such that the same is acceptable to most or all banks and financial institutions in India. One standardized format of documentation should be created comprising of the best practices from all banks such that compliance of which is suitable to all. This is more like the Schengen visa that is applicable for all EU nations which allows the holder to move freely from one country to another without requiring multiple visas. The aim of the lenders should be to ease the lending process for SMEs alongwith ensuring that the loan is safe. Even the backbone of the economy needs positive health and support for well-being.

All material collected and referenced from various websites; have been duly mentioned in the relevant sections with the retrieval date.
Any inadvertent slip-ups are highly regretted and are purely unintentional. The views are solely that of the author as an individual.
(Updated on 10.03.2011)

Data Management in SMEs

Technology news in SMEWorld Dec 2010 Issue

A common doctrine of life is that everything that takes birth goes through its cycle of activities and then dies allowing others to take its place. In Hindu mythology, “God” is in the form of Brahma, Vishnu and Shiva. All three of them have specific function as a creator, preserver and destroyer. The importance of each is equal for maintaining a balance in nature.
A similar analogy can be drawn in our everyday business life where data and information (either in hard copy or soft copy format) have to undergo the cycle of creation, maintenance and destruction. It is not a choice but a “must”; a necessity.

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IT is everywhere: Embracing ICT is imperative for MSMEs

Cover Story of SMEWorld Nov 2010 Issue
Do you recall the last time you have used a post card, inland letter or aerogram? Sent or received an urgent message by telegram. Probably 95% of the readers might not even remember. The erstwhile ubiquitous red postboxes have become obsolete and long forgotten.

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Indian Power Sector: The Need for Demand and Supply Convergence

Globally power is one of the major catalysts for economic development and for strengthening the infrastructure, besides being a basic human need. India’s installed capacity was around 100,000 MW by the 9th Five Year Plan (FYP) (end of 2003). Power deficit was at 7-9% and peak deficit1 at 15-18%. India’s per capita power consumption was 704 kWh in 2007-08, which was much below the world average of around 2600 kWh (2005). The Power Ministry aims to provide 1000 kWh for the per capita consumption by 2012. A dismal 43% of the population has access to power. The main challenge is to reduce the demand and supply gap of power.

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