Shriram City Union Finance Limited - Karvy

women and all loans to the North Eastern Region of India). As on 31st December 2010, there were 115 eligiblelending institutions registered as MLIs of the Trust comprising 27 Public Sector Banks, 17 Private Sector Banks, 61Regional Rural Banks (RRBs), 2 foreign banks and 8 other Institutions. Cumulatively 476,452 proposals have beenapproved for guarantee cover for a total sanctioned loan amount of ` 20,109.36 crore.In spite of various initiatives taken by the Government of India, banks and financial institutions, MSMEs facecertain challenges. These problems relate to the issue of collaterals, cost of loans, delay in receivables, obsoletetechnology, marketing, etc. The MSME sector is still under banked to a large extent and barring certain publicfinancial institutions and public sector banks, lending in this sector has traditionally been addressed by theunorganized players in most regions in India.Outstanding Bank Credit to Micro and Small EnterprisesAs on lastreportingFriday ofMarch77AllScheduledCommercialBanksPercentage ofMSE Creditto Net BankCreditPublic SectorBanksPrivateSector BanksForeignBanks1 2 3 4 5 62005 67,800 8,592 6,907 83,498 8.82006 82,434 10,421 8,430 1,01,285 7.5(21.6) (21.3) (22.1) (21.3)2007 1,02,550 13,136 11,637 1,27,323 7.2(24.4) (26.1) (38.0) (25.7)2008 1,51,137 46,912 15,489 2,13,538 11.6(47.7) (257.1) (33.1) (67.7)2009 1,91,408 46,656 18,063 2,56,127 11.3(26.6) 0.0 (16.6) (19.9)2010 2,78,398 64,534 21,080 3,64,012 13.4(Provisional) (45.4) (38.3) (16.7) (42.1)Source: Reserve Bank of India.Note:1. Figure in parentheses indicates year-on-year growth.2. The high growth witnessed during 2008 is on account of re-classification of MSEs as per MSMED Act, 2006.Firstly, the investment limit of small (manufacturing) was raised from `1 crore to `5 crore and small (services)was added to include enterprises with investment limit between `1 0 lakh to `2 crore. Secondly, the coverage ofservice enterprises was broadened to include small road and water transport operators, small business,professional and self-employed and all other service enterprises as per definition provided under MSMED Act,2006.3. Vide circular RPC.CO.Plan.C.24/04.09.01/2009-10 dated September 18, 2009, retail trade (credit limit notexceeding `20 lakh) has also been included under the ambit of MSE Sector.Role of NBFCs in the MSME finance sectorFunding through banks requires extensive documentation; funding through unorganized sources is expensive. NBFCloans provide ideal mid way between bank lending and unorganized sector. The growth drivers for NBFCs engagedin MSME finance can be summarized as follows:• Swift Loan Processing due to minimal documentation and flexibility of disbursement process;• Customized repayment schedules, based on customer requirement at a lower interest rate than informalsources• Huge untapped market and the lack of adequate penetration by banks• Extensive network of branches which leads to better customer service