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have higher income and higher financial needs, banks will We would be having many such seeds of ideas around, but
have ample scope in Retail Banking. unless they are nurtured with timely inputs in the form of
credit, infrastructure and enabling policies, these seeds
In view of the above and the Government initiative for in- would remain unfructified.
novation and start ups to reignite the slowing economy ,
banking would be encouraged to provide loans in order to An enabling environment which encourages and nurtures
support small businesses. It would be important for the such initiatives not only helps in realization of entrepreneur-
banks to keep track of emerging trends and be prepared ial dreams but also, more importantly , provides employ-
not only to negotiate through the imminent challenges, but ment to many others, encourages other entrepreneurs to
simultaneously be ready to latch on to the opportunities dream big and in the process, benefits the economy with
that present themselves. improved productivity, higher employment and enhanced
competitiveness.
Constraints in Small size advances:
"If you give a man a fish,you feed him for a day. If you fi-
Small businesses are much more sensitive to swings in nance a man for activity / business , you feed him for a
the economy and have fewer assets to collateralize the lifetime."
loan.
The year bygone was full of challenges on the Domestic and
The informational opacity of small businesses adds to Global fronts. The business confidence in the market was
the riskiness of small business lending. Many small busi- low. During these testing times the way we approach the
nesses lack detailed balance sheets, use sparse tax problem is what makes the difference. With changing times,
return and keep inadequate income statements. there was a conscious change in direction of credit from
corporate to conventional sectors of the economy viz. Re-
Small enterprises in many instances, revolve around a tail, Agriculture and MSMEs.
single entrepreneur - key man - and lack good succes-
sion planning which discourages creditors to lend to Dr. Urjit R. Patel, Deputy Governor, Reserve Bank of India,
such enterprises. in his speech during Business Standard Best B-School Project
Awards at Mumbai , has stated that "……a much larger
But it is these lower rupee loans that are most important number of small business loans will be encouraged rather
to startups and small businesses that are critical to accel- than an overriding emphasis on very large loans per se……".
erate the economic development of the country.
Let us continue to focus on enhancing our capabilities to
While it is commonly believed that small business lending is capitalize on the growth opportunities arising from the In-
risky, the study by Texas A & M University, U.S., reveals that dian economy and its international linkages.
small business lending can play a positive role in terms of
contributing to bank profitability and failure risk reduction.
Conclusions: Let us setup the roadmap for growth combined with im-
provement in asset quality so that Quality and Profitability
"Small is Still Beautiful and Competitive." proceed hand in hand.
Microsoft which is a software giant today, started off as a Let us be a catalyst for change that benefits present and
small business, as a dream developed by a young student future generations.
with the help of family and friends. Our own Infosys is an-
other example. Some of the small entrepreneurs could grow Let us focus on sustainability as an integral part of our ac-
into large corporate and potential MNCs in future. tivities - in our core business and beyond.
To quote the words of Shri K.C. Chakrabarty,former Deputy Thus, we believe in being responsible to all our stake hold-
Governor of RBI, "….the MSMEs of yesterday are the Large ers, society and the environment. T
Corporates of today and could be MNCs of tomorrow…"
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