MBA-Nayak Ppt 1

Submitted by:-Krishna gupta

Pushpa kumariSameeksha chouhan

Seema dongre

contentOrigin n introductionReasonsAbout the committeeRecommendation7 action planPlayers AdvantagesDisadvantages

ORIGIN & INTRODUCTIONNayak Committee set up by the Reserve Bank

of India in December 1991 (Report came in September 1992).

overall industrial production, exports and employment and also recognising the need to give fillip to this sector.

It dealt with aspects of adequacy and timeliness of credit to small and medium scale industries.

Small scale sector: w/c 8.1%.Small & Tiny industries of Villege: w/c 2.7%.

REASONSSSI sector was not getting adequate support

from the banking system.To examine whether any revision is required

in the present RBI guidelines for the rehabilitation of sick SSI unit.

To examine the adequacy of institutional credit for term finance to SSI sector.

To refinance arrangement by SIDBI/NABARD etc

ABOUT COMMITTEEBanks have been advised to give preference

to village industries, tiny industries and other small scale units in that order, while meeting the credit requirements of small scale sector.

Timely disposal of loan applications and setting up of specialised bank branches for MSME loaning in areas of higher MSME concentration. This norm is applicable to units with annual turnover up to Rs. 5 crores.

COUNTI…A single financing agency meets both the

requirement of the working capital and term credit for small scale unit.

Accordingly, Nayak Committee recommended that the MSME sector should obtain minimum 20% of its annual projected turnover by way of working capital.

RECOMMENDATIONcredit requirements of village industries, tiny

industries and other SSI units having aggregate fund-based working capital credit limits upto Rs. 50 lac

banks should carry out special studies on an annual basis on as large a sample or branches , specifically, to ascertain the position regarding the Implementation of its guidelines

Problems faced by the SSI sector in regard to bank finance, to a large extent could be solved by the branch level.

COUNTI…Where the working capital cycle is shorter than

3 months, the working capital required would be less than 25% of the projected turnover.

In case of seasonal industries the distinction between the peak and non-peak level of turnover has to be considered instead of annual turnover.

RBI decided, 40 out of the 85 districts referred to above to take care of both the term loan and working capital requirements for all new SSI.

SEVEN POINT ACTION PLANGovt. of India in budget for 1995-96 announced a 7 point action plan as under:

Time bound action for setting up specialised SSI

branches in 85 identified districts of high small industry density.

Adequate delegation of powers at the branch and regional level.

Banks to conduct sample surveys of their performing SSI accounts to find out whether they are getting adequate credit.

COUNTI…Steps to be taken to see that as far as possible

composite loans (covering both term loans and working capital) are sanctioned to SSI entrepreneurs.

Regular meetings by banks at Zonal and Regional levels with SSI entrepreneurs.

Need to sensitize bank managers and reorient them regarding working of the SSI sector.

Simplification of procedural formalities by banks for SSI entrepreneurs.

PLAYERS OF THE COMMITTEECommercial banks.State financial corporation(SFC).Industrial development bank of India(IDBI).Small industries development bank of

india(SIDBI).National bank for agriculture and rural

development (NABARD)

COUNTI…Other financing agencies-RRBCOOPERATIVE BANK

Other financial institutions-National small industries corporation ltd.

(NSIC)state small industries development

corporation.(SSIDC)

ADVANTAGESEconomic development of country.Remove the poverty.Increase employment opportunities.Development of small scale industries.Mobilize rural and semi urban recourses.Increase the total export of the country.

DISADVANTAGESInadequacies in infrastructure and

technology.Low bargaining strength. lack of managerial and financial skills.Weak capital base.