Mapping Financial Gaps in the Tourism Cluster of Srinagar

Transcription

Mapping Financial Gaps in the
Tourism Cluster of SrinagarUdhampur
Study Report
March 2014
MAPPING FINANCIAL GAPS IN THE TOURISM CLUSTER OF SRINAGARUDHAMPUR
Submitted to:
International Consultancy & Coordination (ICC), SIDBI
Study Report by:
Grant Thornton
Acknowledging inputs from:
Jammu and Kashmir Bank, J&K
State Bank of India, Jammu
Kashmir Hotel & Restaurant Association (KHARA), Kashmir
Chamber of Commerce & Industry, Jammu
The Kashmir Chamber of Commerce & Industry, Kashmir
J&K State Financial Corporation, J&K
Travel Agents Society of Kashmir, Kashmir
Small Industries Development Bank of India, Jammu
© Grant Thornton India LLP. All rights reserved.
Member firm of Grant Thornton International Ltd
Offices in Bengaluru, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi and Pune
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MAPPING FINANCIAL GAPS IN THE TOURISM CLUSTER OF SRINAGARUDHAMPUR
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Contents
Page
List of Tables
4
List of Abbreviations
5
Executive Summary
6
Chapter 1: Introduction
9
1.1.
Context of the Assignment
9
1.2.
Need for the Mapping Exercise
9
1.3.
Objective and Scope of the Assignment
9
1.4.
Approach and Methodology
10
1.5.
Cluster Profile
11
Chapter 2: Cluster Financial Gap Analysis
13
2.1.
Overview
13
2.2.
Supply of Credit to MSEs
15
2.3.
Demand for Credit by MSEs
21
2.4.
Recommended Products and Delivery Channels
25
2.5.
Description of some Products and Delivery Mechanisms
26
Chapter 3: Findings, Recommendations, Action Intervention Options/Plan
28
3.1.
Road Ahead
28
3.2.
Main Findings
28
3.3.
Recommendations and Action/Intervention Plan
29
Annexure 1: Location Map
31
Annexure 2: Questionnaire–Service Sector
32
Annexure 3: Review of Approach & Methodology
35
Annexure 4: List of firms, and public and private BDS providers interacted with over the study40
Annexure 5: Format of the Discussion Format vis-à-vis FIs/NBFCs
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Annexure 6: Format of the Discussion Format vis-à-vis BMOs and other service providers
44
Annexure 7: Participants of Stakeholder Consultation organised for mapping financial gaps in the
tourism cluster of Srinagar-Udhampur
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© Grant Thornton India LLP. All rights reserved.
Member firm of Grant Thornton International Ltd
Offices in Bengaluru, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi and Pune
STUDY REPORT MAPPING FINANCIAL GAPS IN THE TOURISM CLUSTER OF SRINAGARUDHAMPUR
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List of Tables
Table 1 Summary tabulation of the credit supply and minimum demand and related gaps ......................... 8
Table 2 Different services offered in J&K region .............................................................................................. 14
Table 3 Unit Profile................................................................................................................................................. 14
Table 4 Lending Activities of all Commercial Banks in J&K........................................................................... 15
Table 5 Lending activities in Srinagar................................................................................................................... 16
Table 6 Lending activities in Udhampur.............................................................................................................. 16
Table 7 Composition of MSE and Non MSE Advances .................................................................................. 17
Table 8 Composition of MSE and Non-MSE Advances for Srinagar ........................................................... 17
Table 9 Composition of MSE Advances for Udhampur .................................................................................. 18
Table 10 MSE lending in J&K .............................................................................................................................. 18
Table 11 MSE lending in Srinagar ........................................................................................................................ 19
Table 12 MSE lending in Udhampur ................................................................................................................... 19
Table 13 Perception of time for loan processing ............................................................................................... 20
Table 14 Nature of collateral requirements ......................................................................................................... 20
Table 15 Equity contribution for Loan Disbursement ..................................................................................... 21
Table 16 Credit Mix ................................................................................................................................................ 22
Table 17 Source of Finance ................................................................................................................................... 22
Table 18 Financial needs ........................................................................................................................................ 23
Table 19 Estimated Credit Gap in the cluster .................................................................................................... 23
Table 20 Credit Demand for Financial Products (Basis investment in P&M) .............................................. 24
Table 21 Credit demand for Financial Products by Sample firms................................................................... 24
Table 22 Credit demand for Financial Products (Product Parameters) ......................................................... 24
Table 23 Intervention plan..................................................................................................................................... 29
List of Abbreviations
S. No
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
Abbreviation
BMO
CFC
CGTMSE
CII
CLCSS
DIC
GIZ
ISI
ISO
ITI
J&K
KfW
KHARA
MCGF
MSME-DI
NSIC
R&D
SIDBI
SIDBI-FDP
SIDCO
SPV
SWOT
TASK
WCTL
Full Form
Business Member Organizations
Common Facility Centre
Credit Guarantee Fund Trust for Micro Small Enterprise
Confederation of Indian Industry
Credit Linked Capital Subsidy Scheme
District Industries Centre
Deutsche Gesellschaft for Techhnische Zusammenarbeit
Indian statistical Institute
International Standards Organisation
Industrial Training Institute
Jammu and Kashmir
Kreditanstalt for Wiederaufbau
Kashmir Hotel & Restaurant Association
Mutual Credit Guarantee Fund Scheme
Micro Small and Medium Enterprise Development institute
National Small Industries Corporation
Research and development
Small Industries Development Bank of India
SIDBI Finance and Development Project
Small Industries Development Corporation
Special Purpose Vehicle
Strengths-Weaknesses- Opportunities-Threats
Travel Agents of Kashmir
Woking Capital Term Loan
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Executive Summary
The World Bank’s parent project, the “Multi–Donor and Multi–Activity” Micro, Small and Medium
Enterprises Financing and Development Project (MSME–FDP) for MSME financing and development
implemented through SIDBI and supported by international partners–The World Bank, DFID, KfW
and the GIZ has aimed to study and facilitate enhanced finance and other BDS to MSMEs. In this
context, studies have been undertaken in several locations to develop a suitable methodology framework
for estimating credit gaps in any industry cluster across India, to map the credit demand and supply
status, measure the credit gap and reasons for the current status in select financial products, develop
alternate delivery modes and institutional mechanism for implementation in the clusters. Such exercise
has been undertaken earlier in several clusters where SIDBI has been active under the MSME–Financing
and Development projects (FDP).
The MSME sector in India has emerged as the engine of economic growth by contributing significantly
towards industrial production (45%), exports (40%) and employment generated (110 million)–the
second largest source of employment after agriculture. Nevertheless, the growth of the sector is
perceived to be far below potential. Apparently, only a small percentage of credit requirement of micro
and small enterprises are met from institutional finance. This indicates that a vast segment of MSMEs in
the country still remain excluded from formal financial institutions. Basically, non-availability of
institutional credit is an important constraint in the potential growth of the MSME sector. It is in this
context that SIDBI has decided to intervene in 30 more clusters in India including those covered earlier
under the BDS programme under the MSME Financing and Development Projects.
In this regard, Grant Thornton India LLP had been commissioned to undertake the present study which
undertook a credit mapping of the tourism cluster of Srinagar-Udhampur to identify issues hindering
availability of adequate and timely institutional credit to MSMEs through formal channels. The study
report highlights the gap in credit supply and demand in identified clusters and the impact of the same
on industrial growth and competitiveness. The study report also presents information on current status,
desired situation and appropriate actionable measures to achieve the desired situation with reference to
lending to the MSME sector by lending institutions in the cluster, so that it facilitates enhanced access to
finance for MSMEs. The study also identifies key issues which require policy advocacy, along with its
context, rationale and possible impact. Notably, many BDS market development interventions have
been already undertaken in the region under the aegis of the SIDBI-FDP earlier.
The Cluster Profile
Tourism is an important sector of Indian economy and contributes substantially in the country’s foreign
exchange earnings (FEEs). Foreign exchange earnings from tourism, in rupee terms, during 2011, were
Rs.77591 Crore, with a growth of 19.6%. During 2011, foreign tourist arrivals in India were 6.29 million,
with a growth rate of 8.9% over 2010. In this perspective, tourism is the most vibrant tertiary activity
and a multi-billion dollar industry in Jammu and Kashmir. Hotels (and house boats, guest houses etc.),
tour operators travel agencies, transport service providers serve as important stakeholders.
Jammu and Kashmir is one of the popular tourist destinations in Asia. The delighting lakes, hill stations
and landscape make J&K a beautiful tourist destination. Historical monuments, forts and places of
religious importance etc. add to the grandeur of the state. Jammu and Kashmir, especially Kashmir
valley and Srinagar offers various categories of tourism. These include adventure tourism, water rafting,
skiing, religious tourism, etc. Tourism industry in Jammu and Kashmir and Srinagar and Katra,
particularly, is still evidently hampered by several problems like: Poor road connectivity and
transportation facilities and lack of basic hygienic amenities at halting points; Poor maintenance of
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heritage sites and Issues regarding security and harassment; and lack of supportive infrastructure roads,
communication gaps, etc.
Pilgrimage tourism to the Vaishno Devi Shrine constitutes an important component of total tourism in
Jammu and Kashmir and has contributed effectively to the growth and development of the place. Every
year around 7 million pilgrims visit the shrine which is influencing the socio-economic environment of
the region and Katra town. Many stakeholders in the region are dependent on the tourism viz. the hotel
industry, transport industry, various commercial establishments including all types of shops operating at
Katra, pithoos (porters) and ponywallas. Katra, a small but vibrant town, situated around 50 kilometers
from Jammu (in Udhampur district) serves as the base camp for the journey to the shrine.
The quality of tourist infrastructure is dependent on transportation quality, hotel service quality,
restaurant quality, tourist guide quality, security and safety and friendliness of the people from the
viewpoint of tourists visiting the place. The importance of credit in financing development plans of
related stakeholders in Srinagar and Katra cannot be overemphasized.
Apparently, there are several interventions that need be made in the context of financial products and
services. Jammu and Kashmir has grown at a sustained rate of almost 6% during the recent past, which
is unfortunately below the national average. Contribution of the services sector is less than 50% in the
state’s economy, which needs to be increased by encouraging investment in tourism sector. The banking
sector also needs to be geared up a credit deposit rate of banks is below the national average.
Infrastructure is lagging in much of the state and needs to be developed on priority basis to facilitate
socio-economic development. Road density is among the lowest in the country and railways too have a
negligible presence in the state.
In J&K the Department of tourism serves as the nodal agency for promoting tourism. Support to the
industry is in terms of incentives, promotion and marketing of tourist destinations etc. Nevertheless, as
highlighted, the promising tourism sector has not been receiving the attention deserved from the FIs to
the extent desired.
Supply of Credit
With regard to the supply of credit to the cluster, the volume estimated is about Rs. 350 crore out of
which Rs. 315 crore or 90 % is term credit and Rs. 35 crore or 10 % is working capital loan. Priority
sector advances in the districts of Srinagar and Udhampur is as per prescribed lending. The Lead players
in priority sector lending activity are private sector banks like the J&K Bank in 2012-13.
The proportion of MSE advances in the total sector lending indicates the industry development focus in
the particular district. Apparently, the MSE sector received only Rs.41 crore or about 5% of the priority
sector advances in the district in Srinagar, while the Udhampur sector received over Rs.132 crore or
above 80% of priority sector advances in 2012-13.
Of the credit to the MSE sector, most of it is provided by the J&K Bank. SBI is apparently keen on
increasing its exposure in the sector.
With regard to the time taken for processing various loan applications, respondents are of the view that
while non-institutional sources facilitate disbursement in less than 2 weeks’ time, private sector banks
takes barely 2–4 weeks usually. Apparently, public sector banks have limited exposure to industry. The
rate of interest levied by non-formal sources is from 40% to 60% while the same for commercial banks
range from 12% to 16%. Also, typical lending practices of formal institutions are asset based and
collateral requirements are often 150% or more.
The margin requirements for loans vary from 20 to 33 percent in many cases based on the extent of
collateral that is offered by enterprises. This is particularly in the case of hotels, guest houses etc. and not
in case of credit to tour and transport operators for procurement of vehicles. Hence, while the Nayak
committee norm of 20% of working capital gap is taken as the norm for estimation, the effective
requirement by FIs is often more.
In the sample surveyed, about 40% of respondents were small enterprises, 40% were micro and 20%
were medium-sized enterprises.
The major demand for credit by units is for term loan or expansion by hoteliers and tour operators.
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SME’s (particularly hotels, guest house and houseboats) also require credit for offering accommodation
on credit basis to large corporate clients. Apparently the WC – TL mix in terms of credit use and
demand is between 10–20 % for working capital in most cases and only between 80–90 % for term loan.
A part of requirement of many micro-sized units is sourced from non-institutional sources. It is only the
SME hotel and tour operator/ transporter segment, which is relatively well networked with private
sector banks and receives bulk of credit.
Demand of Credit
In terms of potential credit needs, there is evidently limited financing of many MSE units in the cluster.
Even this is at a high rate of interest by private sector banks. Tour operators and transporters and
house-boats typically require TL of between Rs.10-30 lakh for expansion/renovation. Hotels and guest
houses require between Rs.50 lakh-200 lakh for expansion and renovation/modernisation. There is
apparently scope for development of new financial products in the cluster. Industry associations also feel
that private banks currently offer very costly and standardised products and new avenues for credit
delivery can be explored for enterprises in the cluster. For instance, there is need for working capital
credit instruments regardless of the specific nature of instrument to be oriented towards meeting the
ballooning credit requirements by virtue of demand side peaks. This could enable SME’s to tide over the
lean sector and optimally exploit the peak season. BMO let instruments in terms of facilitating an
instrument of pre – sanctioned loans is also possible particularly for BMOs tour operators/transport.
There is a significant credit gap for MSE’s in the cluster. There is credit demand both for working
capital as well as term capital but demand is significantly more for term capital.
A summary tabulation of the credit supply and minimum demand and related gaps is presented below:
Table 1 Summary tabulation of the credit supply and minimum demand and related gaps
Credit Supply
Rs.385.00
crore
Credit Demand
Rs.1677.00
crore
Total Gap
Rs.1292.00
crore
Product and Delivery Channels
The recommended products and delivery channels may be considered in terms of: CGTMSE instrument
linkages (preferably WCTL option where feasible) with CLCSS, where feasible); Bills discounting
instrument (basic and with receivables linked bridge financing); Pre-approved loan scheme. These
instruments may be delivered directly to individual enterprise. The pre-approved loan financing
instrument may be delivered through BMOs of cluster firms.
Envisaged Impacts
An implementing agency may be identified to help implement the envisaged instruments as part of a 3
year project. The envisaged impact of the intervention are: Facilitate access to adequate WCTL credit to
at least 80 MSME hoteliers as to increase capacity utilisation and profitability; At least 60 MSEs to serve
access to institutional credit and insure profitability and capacity initialisation; About 80 MSEs in tour
and transport service to be facilitated with operation of the instrument of convenience; About 60 MSEs
to secure access.
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Chapter 1: Introduction
1.1.
Context of the Assignment
The World Bank’s parent project, the “ Multi – Donor and Multi – Activity” Micro, Small and Medium
Enterprises Financing and Development Project (MSME – FDP) for MSME financing and development
implemented through SIDBI and supported by international partners – The World Bank, DFID, KFW
and the GIZ has aimed to study to facilitate enhanced finance and other BDS to MSMEs. In this
context, studies have been undertaken in several locations to develop a suitable methodology framework
for estimating credit gaps in any industry cluster across India, to map the credit demand and supply
status, measure the credit gap and reasons for the current status in select financial products, alternate
delivery modes and institutional mechanism for implementation in the clusters. The dynamic D & B,
India has undertaken such exercise in several clusters where SIDBI has been active under the MSME –
FDP.
The MSME sector in India has emerged as the engine of economic growth by contributing significantly
towards industrial production (45%), exports (40%) and employment generated (110 million) – the
second largest source of employment after agriculture. Nevertheless, the growth of the sector is
perceived to be far below potential. Different studies have pointed out that only a small percentage of
credit requirement of micro and small enterprises are met from institutional finance. This indicates that a
vast segment of MSMEs in the country still remain excluded from formal financial institutions. Basically,
non-availability of institutional credit is an important constraint in the potential growth of the MSME
sector. It is in this context that SIDBI has decided to intervene in 30 more clusters in India including
those covered earlier under the BDS programme under the MSME Financing and Development
Projects.
In this regard, Grant Thornton India LLP has been commissioned to undertake the present study of
credit mapping of the tourism clusters of the J&K (Srinagar-Katra) to identify issues hindering
highlights the gap in credit supply and demand in identified clusters and the impact of the same on
industrial growth and competitiveness. The study report presents specific information on current status,
desired situation and appropriate actionable measures to achieve the desired situation with reference to
lending to the MSME sector by lending institutions in the cluster, so that it facilitates enhanced access to
finance for MSMEs. The study also identifies key issues which need policy advocacy, along with its
context, rationale and possible impact.
1.2.
Need for the Mapping Exercise
The issue of availability of adequate credit and ensuring its inclusiveness has been addressed by a
number of committees including the PMs Task Force for MSMEs. Evidently, banks should adopt
alternate and innovative mode of credit delivery, such as for example, a cluster – specific approach to
achieve lower transaction and monitoring costs through reduction in costs of data, standardisation and
reduction of documentation, identification of common risk elements and their mitigation, better interfirm comparison, improved outreach, better monitoring and design of cluster specific
products/instruments/interventions as targets are well developed and groups recognized. There is,
therefore, need for cluster specific study in this context.
1.3.
Objective and Scope of the Assignment
In this context, the study presents a credit mapping of select MSME clusters to identify issues hindering
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also highlights the gap in credit supply and demand in the identified clusters and impact of the same on
industrial growth and competitiveness. The study has compiled and present information on current
status, desired situation and appropriate actionable measures to achieve the desired situation with
reference to lending to the MSME sector by the lending institutions in the cluster, so that it facilitates
enhanced access to finance for MSMEs. The agency also identified key issues which need policy
advocacy, along with its context, rationale and its possible impact.
The scope of work will basically encompass:



Survey design and resource planning
Sample survey in identified clusters
Data analysis and presentation
The survey captured information for analysis on and presentation of the following:




Assessment of credit gap: Documenting demand and supply side issues in current credit
disbursements:
o Services provided by various FI/NBFCs etc. (such as adequacy of services with
emphasis on volume, timely provisions, interest rate/processing and other costs,
application and approval process, seasonality etc.)
o Key Bottlenecks (such as procedure, awareness, decision making delays etc.) for access
to finance from various FIs/NBFCs
Assess institutional mechanism for credit delivery in the cluster and also suggest measures to
improve the same
Estimation of the credit gap in the cluster through studying current demand and supply in the
cluster and impact of the same in industrial growth and competitiveness of cluster firms
Document suggestions in terms of:
o Refinement required in existing products and proceeding to meet the genuine credit
needs of cluster firms
o Recommendations to enhance the flow of credit to the cluster
o Specify an action plan for implementation of the recommendations
Sample Survey



At least 50 MSMEs representing the MSME segment are studied deploying a questionnaire
schedule (especially of cluster specific enterprises typologies like hotels, lodges and guest
houses, travel agencies/tour operators, transport service providers – bus/car services etc).
Major hotel owners which are constructing/ already set up their 4-5 star hotels in the region
were studied.
At least 3-4 major FI/NBFCs were studied deploying a discussion format (this includes the
JKSFC, SBI, J&K Bank etc.)
2-3 BMOs/other institutions in the cluster were studied deploying a discussion format
(Kashmir, Hotels and Restaurants Association, The Kashmir Chamber of Commerce &
Industry, Travel Agents society of Kashmir, Chamber of Commerce & industry, Jammu etc)
Data Analysis and Presentation


1.4.
Data is analysed and interpreted to prepare reports covering the objectives.
Presentation of key findings to SIDBI management/stakeholders as required by SIDBI
Approach and Methodology
The achievement of the deliverables under the assignment requires a multi – prolonged approach
involving different stakeholders representing private sector enterprise, BMOs/other institutions in the
cluster and FIs/NBFCs. This includes institutions such as JK Tourism, both Jammu and Srinagar office
etc. and BMOs like hotel owner associations, transport associations etc. While undertaking the
assignment, the following approach (in line with deliverables and time lines) is adopted:
A. Inception Report
The assignment involved preparation and submission of an inception report explaining the proposed
methodology (please see Annexures for review of methodology & envisaged methodology vis-à-vis
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credit demand and supply on a macro cluster level) and resource planning. The inception report will also
draw upon similar such studies undertaken under the aegis of SIDBI and GIZ by dynamic institutions
such as the D&B. The methodology & report will comprise a questionnaire schedule to conduct a
sample survey report amongst about 50 MSMEs in the cluster. It also included a detailing of discussion
formats to be adopted while undertaking primary research amongst FIs/MSMEs and BMOs/other
institutions.
B. Study Report
The methodology evolved is expected to enable a relatively reliable and accurate estimate regarding
credit gap assessment and means to redress them. The methodology and questionnaire developed has
been discussed with SIDBI prior to finding credit gap estimates, so that uniformity of approach may be
ensured. Basically, this stage involved preparation and submission of a study report. The study report
preparation involved both primary and secondary research.
Primary Research: The study involved primary study through use of a questionnaire - schedule to
conduct a sample survey amongst MSME stakeholders of different typologies (micro, small and medium
and cluster specific enterprise typologies indicated above in section 1.3). Co-ordination with the agency
identified for mapping non-financial gaps will be ensured to the extent feasible.
It also involved primary study of BMOs, BDS providers, DIC, MSME-DI, State Industrial Development
Corporation through means of a discussion format. As also, with FI/NBFCs etc. through means of yet
another customized format.
Secondary Research: The study utilized the MSME census 2006-07 data, information available with
respective SLBCs, district level Credit plan, related research reports (including study reports, prepared by
other agencies, data from industry associations, reports of previous interventions carried out by other
agencies earlier, District Industrial profiles prepared by the MSME-DI/DIC etc. Macro-data on credit
supply is estimated from data secured from the lead bank in the district.
The study report also included slab wise segmentation of surveyed MSMEs by turnover for different
sub-categories (such as turnover up to Rs.25.00 Lakh, up to Rs.1.00 Crore, up to Rs.5.00 Crore).
Similarly, credit demand estimates for different kinds of financial products is also presented slab wise.
The credit demand slabs could be up to Rs.15 Lakh, Rs.15 – 50 Lakh, Rs.50 – Rs.2.00 Crore and above
Rs.2.00 Crore under two broad categories of products – working capital and term loan.
Information on large manufacturing and service sector enterprises will be provided. Possible ways of
synergizing cluster stakeholders, particularly with various schemes operated by the Government is also
listed.
C. Presentation for SIDBI/ Stakeholders
A presentation was made to SIDBI top management/stakeholders as per SIDBIs requirement.
1.5.
Cluster Profile
Tourism is an important sector of Indian economy and contributes substantially in the country’s foreign
exchange earnings (FEEs). Foreign exchange earnings from tourism, in rupee terms, during 2011, were
Rs.77591 Crore, with a growth of 19.6%. During 2011, foreign tourist arrivals in India were 6.29 million,
with a growth rate of 8.9% over 2010. In this perspective, tourism is the most vibrant tertiary activity
and a multi-billion dollar industry in Jammu and Kashmir. Tourism is a vehicle for developing the state’s
economy. Hotels, travel agencies, transport service providers serve as important stakeholders.
Jammu and Kashmir is one of the popular tourist destinations in Asia. The delighting lakes, hill stations
and landscape make J&K a beautiful tourist destination. Historical monuments, forts and places of
religious importance etc. add to the grandeur of the state. Jammu and Kashmir, especially Kashmir
valley and Srinagar offers various categories of tourism. These include adventure tourism, water rafting,
skiing, religious tourism, etc. Additionally, J&K is also likely to become a major hub for medical tourism
if timely steps are taken by the government authorities to exploit this opportunity as well. The state’s
leisure tourism potential is also well recognized. However, the number of destinations developed has
remained practically static for the past few decades. Some potential tourist circuits are the Mughal Road
circuit which will require development of heritage sites along the road, Katra-Patnitop circuit and
development of Srinagar city as a destination. There is a strong case for exploring this in a PPP mode for
the locations. The other strategy that can give quick returns is to attract religious tourists of Jammu to
12
visit Jammu city and Katra and also visit Srinagar for leisure tourism. The former apparently requires
development of recreational activities within Jammu like investment in water sports, creation of
shopping malls, cultural festivals, craft melas and exhibitions as potential tourist magnets. The latter also
requires faster connectivity which in the case of Srinagar can be through Luxury Volvo bus services.
Tourism industry in Jammu and Kashmir and Srinagar and Katra, particularly, is still evidently hampered
by several problems like:






Poor road connectivity and transportation facilities
Lack of basic hygienic amenities at halting points
Poor maintenance of heritage sites
Issues regarding security and harassment
Inadequate capacity
Lack of supportive infrastructure- bad roads, improper health and hygiene, communication
gaps, etc.
Pilgrimage Tourism to Vaishno Devi Shrine constitutes an important component of total tourism in
Jammu and Kashmir and has contributed effectively to the growth and development of the place. Every
year around 7 million pilgrims visit the Shrine which is influencing the socio-economic environment of
the region and Katra town. Many stakeholders in the region are dependent on the tourism viz. the hotel
industry, transport industry, various commercial establishments including all types of shops operating at
Katra, Pithoos (porters) and Ponywallas. Katra, a small but vibrant town, situated around 50 kilometres
from Jammu (the winter capital of the State of Jammu & Kashmir), serves as the base camp for the
journey to the Shrine.
Some important stakeholders in the tourism segment in Katra include:





Shrine Board Accommodation consisting of Rooms & Dormitories.
Private Hotels, lodges, dharmashalas, guest houses
JKTDC Hotels consisting of rooms & dormitories
Tour operators
Transport service providers
Increased inflow of pilgrims in Katra for the holy darshan has raised demand on transport services.
Pilgrims coming from various parts of the country and arriving at Jammu recourse to road transport to
reach at the base camp, Katra due to non-availability of rail transport between twin cities. i.e. Jammu
and Katra. The preferred means of road transportation are buses, mini buses, taxies and sometimes a
chartered helicopter from Jammu. Pithoos render labour services to the pilgrims by carrying their
luggage during the journey to the Shrine and back. The Ponywallas, with the help of ponies cater to
pilgrims by carrying them along the difficult Trikuta hills to reach the Bhawan of Mata Vaishno Devi.
The quality of tourist infrastructure is dependent on transportation quality, hotel service quality,
restaurant quality, tourist guide quality, security and safety and friendliness of the people from the
viewpoint of tourists visiting the place. The importance of credit in financing development plans of
related stakeholders in Srinagar and Katra cannot be overemphasized.
13
Chapter 2: Cluster Financial Gap Analysis
2.1. Overview
Srinagar region receives approximately 13 lakh tourists every year. Out of which, it has been estimated
that around 25% are for Amarnath Yatra, another 15% for local workmanship and rest 60% for leisure
travel. In peak season there is requirement of perhaps 1 lakh rooms, however, the availability is
approximately 40,000 in the region. Thus, a short fall of more than 100% rooms in the region. It has
been estimated that the tourism sector is growing with a growth rate of 18-20% in the region.
While on the other side, Jammu region receives more than Rs.1.25 crore of tourists every year, out of
which 93 lakh is for Vaishno Devi Yatra in Katra and rest at other places. As compared to Srinagar, the
visit of tourists for Udhampur is for a short span of time and the average spending is also less. There is
an availability of around 30,000 rooms in the region and is increasing. As the stay is only for a day and
two, and spending on hotels is less, the quality of 4 star/ 5 star hotels and facilities provided are also
limited. The Katra region falls in Udhampur district of the state.
The hotel industry in the region is characterized by micro-sized guest houses to star rated hotels. The
industry is broadly having a broad positive outlook and even premium hotels like the Taj group and
“Skyline” (establishing a hotel with the Radisson group) is in an investment and expansion mode in
Srinagar and Jammu Region. “Skyline” is in fact an upcoming hotel at a project cost of about Rs.50
crore. The project promoters are hopeful of securing a loan from banks such as J&K bank @12-13%
interest and repayment in a 9 year period. Apparently, hotels are operating at occupancy levels of at least
60-70 %per annum in the region. Some larger players like the Taj group at Srinagar are even paying 15%
as the rate of interest for their working capital needs. With regard to tour operators and transport service
providers, some units provide integrated services while others offer either tour operation services or
offer only transport services. Hoteliers are of the opinion that less than 5-8% of tourists are of
premium-class who may prefer to stay at rooms with average tariff rates of even Rs.10,000 per day. The
tourist cluster stakeholders at Srinagar and Katra are supported by a range of BMOs, largely involved in
advocacy work. Apparently, the J&K bank is the leading institutional financer to tourism cluster
stakeholders. The State Bank of India is of the opinion that it’s out standings in Srinagar is about Rs40
crore and in Katra is about Rs.10 crore to the tour operator/transport segment. Consultation with the
SBI (lead bank at Udhampur) indicates that the bank is positive vis-à-vis the tourism sector and may
consider loans up to even 10 years with a moratorium of about 2 years and interest rates of even 13
years of hotel industry stakeholders as a dedicated instrument. Large hotels in the region have about 88100 rooms while smaller guests houses have a handful of rooms to offer. Other than the facts that the
cluster firms in the region offer relatively higher rates of interest to bankers, ballooning requirements are
not met with through conventional instrument. Apparently, tourist season peaks during the summer
months, that is, 15 April – 15 July every year.
The BMOs in the region are apparently open to take the lead to evolve financial instruments for
industry. Some of these BMOs include the Travel Agents of Kashmir (TASK), KHARA etc.
Apparently, the intrinsic risk of operation in a sporadically militancy affected region has dissuade many
stakeholders from going in for institutional credit. For instance, an office bearer of the TASK, a
dynamic BMO operates an enterprise Earth Explorers with a turnover of over Rs.4 crore per annum,
but, is yet to approach a FI for credit.
The tourism cluster in J&K is naturally evolved and instrumental in overall development of the region.
The cluster of tourism broadly covers three categories of services provided by stakeholders – hotel
14
services, tour services (which includes reservation of tickets, arranging of transport vehicles, booking of
hotels etc.) and transport service providers (with a fleet of cars and buses). The exhibit below lists the
different services offered in the cluster.
Table 2 Different services offered in J&K region
Different services offered in the J&K region
Hotel
Tour Services
Hotel Accommodation.
Booking of hotel tickets, bus,
Accommodation are of various
and train and flight tickets.
types including 5 star, 4 star to 1
star hotels, guest houses,
Tour providers many also
houseboats etc.
arrange a full range of services
from adventure tourism,
pilgrimage tourism and leisure
tourism
Transport Services
Transport services have a
fleet of small cars, large cars,
buses etc.
The majority of hotel units are micro or small sized in nature with investment in plant and machinery of
less than Rs.2 crore. There are many players entering the hotel sector with a parcel of land and along
with own investment. In most cases, entrepreneurs themselves take care of business functions; however,
they appoint managers for day to day operations. Local managers, particularly, have the responsibility of
taking care of operations related to hotels, houseboats, etc. While in the case of tour operators, the
promoters themselves are involved in day to day operations and management of the unit.
The exhibit following summarizes the cluster profile:
Table 3 Unit Profile
Unit Type
Number of Units and
Turnover
Investment in
Building per Unit
(In Rs. lakh)
Hotels
(including all
types of
hotels,
guesthouses,
houseboats,
Dharamshalas
etc.)
1680 (in Srinagar region
including 1000
houseboats, 300 Hotels,
250 Guesthouses and
Home Accommodation)
About 100 lakh1
 Hotels: 200
lakh
 Guesthouses :
60 lakh
 Home
Accommodati
on: 30 lakh
 House Boats :
30 lakh
Tour and
Transport
Providers
2500 service providers
(in Srinagar region)
Total in
Srinagar and
Udhampur
About 4000 crore
2000 Crores for Srinagar
2000 crore for Katra
(Turnover is specific to the
Hotel, Restaurants, and
related activities)
About 8000 crore
Total in J&K
1
About 300 Hotels and
Guesthouses including
Dharamshalas (in
Udhampur region)
About 1000 (in
Udhampur region)
About 1 lakh
 Tour
Operator: 1
lakh
 Transport
Agent : 1 lakh
Investment in
Plant &
Machinery per
Unit (In Rs. lakh)
About 20 lakh
 Hotels: 30 lakh
 Guesthouses :
13 lakh
 Home
Accommodati
on: 5 lakhs
 House Boats :
5 lakh
Investment
in Fixed
Assets
(In Rs. lakh)
About 120
lakh
About 3 lakh
 Tour
Operator: Nil
 Transport
Agent : 3 lakh
About 4 lakh
Based on the consultation with Hotel, Tours and Travel Associations, J&K Tourism Dept;
15
The estimates of “Investment (in Fixed Capital)” and Turnover have been prepared on the basis of
primary and secondary study along with the inputs from hotel associations’ tour operators, Vaishno
Devi Shrine Board, Tourism Department, etc.
Raw Material and consumables
The hotel industry does not have any large requirement as raw material or consumables due to its nature
of services. However, many units stock seasonally available material like fruits, vegetables, etc. for a few
weeks at the least. The consumables requirement of the tour operating industry is also not of the nature
requiring storing for a period of time, hence, working capital requirements are not very high.
Manpower
Cluster firms employ local as well as migrant labour from other states like Bihar, Uttar Pradesh, and
Chhattisgarh etc.
2.2. Supply of Credit to MSEs
Estimate of Outstanding Credit to MSEs in the Tourism Cluster
The credit supply to the tourism sector in Srinagar and Udhampur regions cluster is estimated to be
about Rs. 350 Crore out of which Rs. 315 crore or 90 % is term credit and Rs. 35 crore or 10 % is
working capital loan. With regard to J&K as a whole, about Rs.550 crore is lending to the tourism
sector. This is based on consultation with bankers. Apparently, business operations in the sector are
more term loan and fixed asset than working capital intensive. Also, apparently, bankers adopt a
conservative approach towards financing.
It has been estimated that around Rs.450 crore is lending to the tourism sector by Jammu and Kashmir
Bank while about Rs.50 crore is that of the State Bank of India. It is also estimated that around 5-10%
share is of J&K State Financial Corporation. Rest of the market for loans is shared by other banks like
the HDFC, etc.
The steps for computation of total credit are detailed in annexures. The data obtained through the above
methodology was further validated against the data through primary study.
The RBI Lead Bank Scheme management is implemented by Jammu and Kashmir Bank as the lead
bank in Srinagar and SBI in Udahmpur. According to information obtained from the lead banks, an
aggregate of about Rs.600 crore was disbursed as advances under various forms of advances to multiple
beneficiary groups like Hotel Sector (including House Boat segment), Tours and Travel, and Transport
Operators etc. The following exhibit depicts the banking flow of credit in the Srinagar and Udhampur
Districts in 2012-13. It is evident that priority sector advances in J&K as a whole is Rs.4407.84 crore2
and non-priority sector advances stand at only Rs.3264.28 crores and is therefore as per prescribed
lending norms. The lead players in priority sector lending are J&K Bank followed by SBI and the
HDFC.
Bank wise target and achievement
Table 4 Lending Activities of all Commercial Banks in J&K3
Lending Activities of all Commercial Banks in J&K(in Rs. crore)
Name of the FI
Total Priority Sector
Performance (31.12.2013)
PUBLIC SECTOR
SBI
PNB
Sub Total
PRIVATE (INDIAN) /
FOREIGN BANKS
J&K Bank
Other Private Banks
2
3
Achievement till 31st December, 2013
Values in crore
Non Priority Sector
Performance
(31.12.2013)
416
136.44
552.44
260.24
54.05
314.29
2937.37
380.55
2317.07
409.46
16
Lending Activities of all Commercial Banks in J&K(in Rs. crore)
Name of the FI
Sub Total
OTHERS
Coop Bank
RRBs
Other FIs
Sub Total
Total
Non Priority Sector
Performance
Performance (31.12.2013)
(31.12.2013)
3317.92
2726.53
181.32
354.64
1.52
537.48
4407.84
69.81
153.31
0.34
223.46
3264.28
Source: Agenda SLBC, 92nd Meeting, December, 2013
In the context of Srinagar district in 2012-13 priority sector advances stood at Rs.794 crore and nonpriority sector advances at Rs.640 crore. The lead players in priority sector advances are the J&K Bank
and SBI.
Table 5 Lending activities in Srinagar
Lending Activities of all Commercial Banks (in crore) in Srinagar
Name of the FI
Non Priority Sector
Performance (2012-13)
PUBLIC SECTOR
SBI
64.39
84
PNB
47.42
60
Others
66
81.74
Sub Total
177.81
225.74
PRIVATE (INDIAN) /
FOREIGN BANKS
J&K Bank
550.04
320
Other Private Banks
16.87
24
Sub Total
566.91
344
OTHERS
Coop Bank
18.93
20
RRBs
5.46
6
Other FIs
24.96
44.26
Sub Total
49.35
70.26
Total
794.07
640
In the context of Udhampur district in 2012-13 priority sector advances stood at Rs.164.87 crore and
non-priority sector advances at Rs.76.7 crore. The lead players in priority sector advances are the J&K
Bank and SBI.
Table 6 Lending activities in Udhampur
Lending Activities of all Commercial Banks (in Crores) in Udhampur
Name of the FI
Non Priority Sector
PUBLIC SECTOR
SBI
17.66
32.15
PNB
4.72
1.84
Others
11.43
5.87
Sub Total
33.82
39.87
PRIVATE (INDIAN)/ FOREIGN
BANKS
J&K Bank
112.11
29.18
Other Private Banks
6.72
5.62
Sub Total
118.84
34.81
OTHERS
17
Lending Activities of all Commercial Banks (in Crores) in Udhampur
Name of the FI
Non Priority Sector
Coop Bank
9.42
0.88
RRBs
2.39
1.18
Other FIs (NBFCs, MFIs, SFC etc.)
0.38
Sub Total
12.20
2.07
Total
76.7
164.87
MSE Advances
The proportion of state advances in total priority sector lending indicates the development focus of the
particular. The MSE sector has received around Rs.1572.26 crore which is around 20% of the total
credit disbursement in the state. This is also around 35% of the total priority sector advances. Thus,
reasonable proportion of credit is provided to industries and the MSE Sector. The following is the
composition of MSE Advances in the context of leading banks in the state.
Table 7 Composition of MSE and Non MSE Advances
Composition of MSE and non-MSE Advances for J&K
Name of the FI
MSE Advances (in crore)
% to advances
PUBLIC SECTOR BANKS
SBI
230.74
15%
PNB
48.96
3%
Others
Nil
Nil
Sub Total
279.7
PRIVATE (INDIAN) / FOREIGN
BANKS
J&K Bank
834.78
53%
HDFC
137.28
9%
Sub Total
972.06
OTHERS
JK Grameen Bank
80.3
5%
RRB’s
60.04
4%
Other Sources
180.16
11%
Sub Total
320.5
Total
1572.26
100%
(Source: As per details in Annual Credit Plan under Priority and Non Priority Sector and SLBC Meeting
Agenda-92– position as of 31st December, 2013)
The proportion of Srinagar advances in total priority sector lending indicates the development focus of
many FIs. The MSE sector has received around Rs.41 crore which is around 2.60 % of the total MSE
disbursement in the state. Also, it is barely 5.16% of priority sector advances in the district. However,
this estimate ignore medium and large scale unit and credit related disbursements which are even to the
tune of even Rs.50 crore per loanee account (as in the case of Taj). Thus, a degree of credit is provided
for Srinagar industries. The following is the composition of MSE Advances in the district of Srinagar of
the top few banks
Table 8 Composition of MSE and Non-MSE Advances for Srinagar
Composition of MSE and non-MSE Advances in Srinagar
Name of the FI
SME Advances (in crore)
% to advances
PUBLIC SECTOR BANKS
SBI
5.75
PNB
4.1
Others
7.84
Sub Total
17.69
PRIVATE (INDIAN)/
FOREIGN BANKS
14%
10%
19%
Composition of MSE and non-MSE Advances in Srinagar
Name of the FI
SME Advances (in crore)
J&K Bank
Others Bank
Sub Total
OTHERS
JK Grameen Bank
RRB’s
Other Sources
Sub Total
Total
18
% to advances
20.1
2.8
22.9
49%
7%
0.41
0
0
0.41
41
1%
1%
100%
The proportion of Srinagar advances in the total priority sector lending indicates the relatively low
development focus of the particular. The MSE sector has received around Rs. 132 crore which is around
9 % of the total MSE disbursement in the state. Also, it is about over 80% of priority sector advances in
the district. Thus, a degree of credit is provided for Srinagar industries and the MSE Sector. The
following is the composition of MSE Advances in the state of the top few banks.
Table 9 Composition of MSE Advances for Udhampur
Composition of MSE and non-MSE Advances for Udhampur
Name of the FI
MSE Advances (in crore)
% to advances
PUBLIC SECTOR BANKS
SBI
45.77
PNB
0.98
Others
31.51
Sub Total
78.26
PRIVATE (INDIAN) /
FOREIGN BANKS
J&K Bank
32.56
Others Bank
2.04
Sub Total
34.60
OTHERS
Cooperative Banks
13.26
RRB’s
3.20
Other FIs
2.81
Sub Total
19.28
Total
132.16
35%
1%
24%
25%
2%
10%
2%
1%
100%
On interactions with various banking bodies, it is estimated that around 70-80% of the total credit in the
Udhampur and Srinagar district is available for the Tourism Cluster, while major lending is directed
towards other sectors.
Performance of Banks
In terms of performance of various bank groups, in the state, it is seen that of the approximate
Rs.1572.26 crore of credit to the MSE sector, around 18% of it is provided by public sector banks.
Around 62% of credit is provided by private sector banks, especially J&K bank. As can be seen from the
figures, major market share in lending is captured by such lenders since they seem to be better inclined
towards financing industry in the region.
Table 10 MSE lending in J&K
MSE Lending of Major Bank categories in J&K
Bank Category
Amount of Lending (in crore) Amount of Lending (relative %)
Public Sector Banks
279.70
18%
Private Sector Banks
972.07
62%
Other Banks
320.50
20%
The Jammu and Kashmir Bank is the lead bank in the state. In terms of aggregate credit disbursements
to the MSE sector; J&K Bank leads the overall MSE lending activity. The aggregate disbursement of
19
J&K Bank accounts for around 53% of the total MSE targeted credit disbursements of the region.
In terms of aggregate credit disbursements, the above specified Public Sector Banks contribute to
around 18 % of the aggregate credit disbursements in Jammu and Kashmir. Private sector banks
account for 62% of credit disbursements to the MSE sector in the region.
Jammu and Kashmir Bank, State Bank of India, PNB and HDFC are major banks operating in the
region.
Table 11 MSE lending in Srinagar
MSE Lending of Major Bank categories in Srinagar
Bank Category
Amount of Lending (in crore)
Amount of Lending (relative %)
Public Sector Banks
17.69
43%
22.90
56%
Other Banks
0.41
1%
The Jammu and Kashmir Bank is the lead bank in the Srinagar region while State Bank of India (SBI) is
the lead bank in the districts of Jammu and Udhampur however, in terms of aggregate credit
disbursements to the MSE sector. J&K Bank leads the overall MSE lending activity. The aggregate
disbursements of J&K Bank account for around 49% of the total MSE credit disbursements in the
region of Srinagar.
In terms of aggregate credit disbursements, the above specified Public Sector Banks contribute to only
around 43% of aggregate credit disbursements in Srinagar. Private sector banks account for 56% of
credit disbursements to the MSE sector in the region.
Jammu and Kashmir Bank is the major bank operating in the cluster.
In terms of performance of various bank groups, in the district of Srinagar, it is seen that of the
approximate Rs. 41 crore of credit to the MSE sector, around 43% of it is provided by public sector
banks. Around 56% of credit is provided by private sector banks. As can be seen from the figures, major
market share in lending is captured by such lenders since they seem to offer better services and faster
turnaround time.
Table 12 MSE lending in Udhampur
MSE Lending of Major Bank categories in the Cluster of Udhampur
Bank Category
Amount of Lending (in Cr)
Amount of Lending (relative %)
Public Sector Banks
78.26
60%
34.60
27%
Other Banks
19.28
23%
The State Bank of India (SBI) is the lead bank in the district of Jammu and Udhampur however, in
terms of aggregate credit disbursements to the MSE sector; J&K Bank leads the overall MSE lending
activity. Over consultations, it is apparent that The State Bank of India has low interest rate in the
sector with a dedicated instrument. The aggregate disbursements of J&K Bank account for around 25%
of the total MSE credit disbursements in the region.
In terms of aggregate credit disbursements, the above indicated Public Sector Banks contribute to
around 60 % of the aggregate credit disbursements in Udhampur. The private sector banks account for
27% of the credit disbursements to the MSE sector in the region.
Jammu and Kashmir Bank and State Bank of India, Punjab National Bank, HDFC are the major banks
operating in the cluster vis-à-vis MSE and industry financing.
About 50 hotels and tour and transport operators were interviewed on the overall perception of their
association with various institutional and non-institutional sources w.r.t extent of loan secured, time
required for loan disbursement and collateral and other requirements etc. The following exhibit depicts
perception among respondents on time taken for loan processing and disbursement by various financial
sources.
20
Table 13 Perception of time for loan processing
Perception of time taken for loan processing and disbursement
Time
<2 weeks
2-4 weeks
4-6 weeks
6-9 weeks
>9 weeks
Lenders
WC
TL
-
-
-
-
-
-
-
-
Instruments
WC
Public sector Banks
J&K State Financial
Corporation
Private/Indian/Foreign
Banks
Other Institutional Sources
(MFIs)/NBFCs etc.
Non-Institutional Sources
TL
20%
20%
-
-
30%
30%
-
-
-
-
WC
TL
WC
TL
WC
TL
30%
30%
50%
50%
20%
20%
50%
50%
50%
50%
-
-
50%
50%
20%
20%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
But for a small number of respondents who have availed of assistance from public sector banks, most
have availed loans from private banks, especially J&K Bank. Most micro units operate without loans
or/and with a few have taken loans primarily for vehicles from SBI and other NBFCs. The role of MFIs
is also limited in both Srinagar and Udhampur. Apparently, private sector banks are preferred to be
faster with processing time of less than a month.
The following exhibit considers the nature of collateral requirements across various financial sources.
Table 14 Nature of collateral requirements
Exhibit 22: Nature of collateral requirements
Collateral Requirement
No
collateral
required
Charge
to be
created
on
fixed
assets
Charge
to be
created
on
current
assets
Corporate
guarantee
Personal
guarantee
Third
party
guarantee
30%
70%
100%
-
100%
-
30%
70%
100%
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
Lenders
Public sector
Banks/RRBs
Co-operative Banks
Private/Indian/Foreign
Banks
Other Institutional
Sources (MFIs)
Non Institutional
Sources
The majority of respondents in the cluster have been asked for a charge to be created in fixed assets; this
is particularly in the case of hotel segment. A significant number of units in tour operating and transport
segment have however benefitted from collateral free loans with vehicles being offered as primary
security.
There is virtually no outstanding vis-à-vis the tourism sector.
A relatively large proportion was also asked for corporate and even personal guarantees.
21
2.3. Demand for Credit by MSEs
Estimate of Credit Demand by MSEs in the Cluster
There are two methods followed to arrive at Total Credit Demand at cluster level, as mentioned in the
methodology section. The methods involved are:
a. Working Capital Demand -Turnover Based Approach (Basis – Nayak Committee Guidelines)
b. Term Capital Demand – (Basis – Growth in Fixed Capital).
However, the absence of N/C data as per ASI, extrapolation of cluster sample study data is considered.
Below are the highlights of the credit demand estimates in the cluster:

Total number of Micro and Small units in the cluster (Srinagar and Udhampur) is around 5500
in numbers.

The turnover for the tourism cluster of J&K(Srinagar and Udhampur, particularly) cluster is
pegged at 4000 crore during 2012-13 from the survey at cluster level (based on consultation )

The turnover is estimated to rise by an annual average growth rate of 10% (primary survey of
unit and consultation estimate) to 4400 crore in the year 2013-14

Working Capital Requirement (Basis-Nayak Committee Guidelines) is estimated to be Rs.1200
crore (in 2012-13) and Rs.1320 crore (in 2013-14).

Term Credit Requirement is estimated to be Rs.357.00 crore

Total Credit Demand is thus obtained from above [(Rs.1320.00 crore) + (Rs.357.00 crore)] and
is Rs.1677.00 crore
Credit appraisal processes followed by different banks vary in terms of time taken for appraisal.
However, most of the banks including the lead bank have indicated that for appraisal of working capital
loan requirements, the Nayak Committee Recommendations are being followed. This ratio though has
varied. The average margin requirement is therefore decided as per the prescribed Nayak Committee
Norm of 20% of working capital gap. However, margin received is higher in cases where adequate
collateral is not offered particularly in the case of stake holders in the hotel industry. The following
exhibit presents the equity contribution indicated by a sample of 50 enterprises.
Table 15 Equity contribution for Loan Disbursement
Equity contribution for Loan Disbursements Across Financial Institutions in tourism cluster
Equity Requirement
10% or Less
11-25%
>25%
Enterprise Typology
Micro Enterprise
Small Enterprise
Medium Enterprise
-
20%
30%
100%
80%
70%
For micro and small enterprises, particularly, the demand for higher margin contribution is from the
bankers’ side. The major reason as, indicated, is that micro enterprises are not able to provide adequate
collateral. Also, since major service offered by units are subject to seasonal variations around the year.
There are not many long term contracts between enterprises and their clients. However, some medium
enterprises have longer term contracts with corporate and other clients. This is particularly with respect
to hotels and corporates or tour operators. Hence, it is easier for medium enterprises to obtain loans at
lower margins.
In Srinagar and Udhampur, collateral and typical asset based lending practice with high requirement of
150% of loan value is invariably required mandatory for the hotel segment. Also, by their very nature of
operations, the demand by the tourism sector is more for term loan than working capital loan. There is,
therefore, smaller demand for working capital loans. Unlike other banks, J&K bank which has speedy
loan disbursements also attract entrepreneurs to greater degree.
22
Business Member Organizations (BMOs) like the Hotels and Restaurants Association, Tours and Travel
Agent Association, Chamber of Commerce and Industry and support institutions are of the opinion that
cluster firms in Srinagar and Udhampur are virtually not aware of various financial products such as the
CGTMSE or bills discounting (particularly, vis-`a-vis corporate clients) and do not use such products.
The credit-offering need of entrepreneurs who avail outside finance is majorly financed from formal
sources. Also, limited requirement of working capital facility and major requirement of term loan makes
most credit seekers ask for only term loan financing from banks. As indicated, banks are virtually
dependent only on asset based financing with regard to the hotel segment and stringent on
documentation needs. They are more flexible for vehicle related loans.
The following exhibit show the composition of credit among the 50 respondents interviewed in the
survey. The respondents are of micro, small and medium typologies. Major demand is for term loan.
The cost of debtors (like hotels or tour operators) which may be significant in some cases is met with
from own funds.
The following exhibit show the composition of credit among the 50 respondents interviewed in the
survey. While 40% of the total respondents were small enterprises, 40% were micro, and 20% were
medium sized enterprises. The major demand is for term loans. The proportion of advances in total
priority sector lending indicates the development focus of the particular region. The MSE sector has
received around Rs.1572 crore which is around 20% of the total credit disbursement in the state. This is
also around 35% of the total priority sector advances. Thus, reasonable proportion of credit is provided
to the industries and the MSE Sector in the context of state. In linkage, the proportion is very low and
notably in Jammu it is extremely high. The following is the composition of MSE Advances in the state
of the top few banks.
Table 16 Credit Mix
Credit Mix
Nature of Credit requirement
Enterprise Typology
Working Capital Loan
Micro Enterprise
Small Enterprise
Medium Enterprise
Term Loan
5%
10%
10%
95%
90%
90%
The following exhibit shows composition of working capital and terms loans for the sample respondents
by sources of finance, separately for Micro, Small and Medium enterprises. Units largely use own funds
for financing working capital requirements. Private Banks are a significant source of term loan for micro
and small and medium units.
Table 17 Source of Finance
Sources of Finance (Amount in Rs. lakh)
Financial Instrument
Micro Sized
Units
Lenders
Public Sector Banks/RRBs
Private Indian/Foreign
Banks
Non-Institutional Sources
Other Institutional Sources
WC
TL
WC
TL
WC
TL
WC
TL
25%
25%
75%
75%
-
Small Sized
Units
-
Medium Sized
Units
10%
10%
90%
90%
-
10%
10%
90%
90%
-
Most medium enterprises have access to credit from public and private sector banks. In fact, some of
the respondents in the Kashmir region have informed that they have set up the whole unit themselves
and not taken the loan as their religion does not allow the same
There are large hotels coming up in the region including 4 Star and 5 Star category hotels like
“Radisson” etc. Such stakeholders have also shown their interest in sifting from present private bankers
23
who charge 15% or long term loans. Majority of units have charge on fixed assets for availing the term
loan. Considering the investment in P&M are low as compared to cost of building majority of hotels fall
under MSME investment. The typical operating cycle allows them to adjust receivables and payables in
such a way that working capital needs are met.
These firms avail term loans on a regular basis for the purpose of expansion and setting up new facility,
land, building, P&M, and other loans such as car loans. J&K Bank is a preferred source for such loans
mainly because of lower interest rate and faster disbursement.
The exhibit following indicates the potential needs of sample enterprises in terms of working capital and
term loan in the short run.
Table 18 Financial needs
Credit Mix
Nature of Credit requirement
Enterprise Typology
Working Capital Loan
Micro Enterprise
Small Enterprise
Medium Enterprise
Term Loan
10%
-
90%
-
There is an opportunity for development of new financial products in the cluster. However, their
concentration shall be on lower that is reasonable interest rates. Potential is also emerging for financing
tours and travel agents, shikara associations, and adventure tourism. Industry associations also feel that
banks currently offer very standardized products and new avenues for credit delivery can be explored for
enterprises in the cluster. For instance, there is a requirement for an instrument that could meet
ballooning credit requirements by virtue of demand circumstances.
Credit Gap in the MSE Segment
For the current study, Grant Thornton India considered the credit supply data of only scheduled
commercial banks that form the major source of credit supply. The table below contains the estimated
Credit Gap in the cluster on the basis of the two methods.
Table 19 Estimated Credit Gap in the cluster
Credit Supply
Rs.385.00
crore
Credit Demand
Rs.1677.00
crore
Total Gap
Rs.1292.00
crore
Summary of Credit Gap Assessment
Srinagar and Udhampur (Katra) is a hub for tourism and caters to more than 700 hotels, lodges etc.
Most foreign tourist who visit the region primarily pay in Indian Rupees. There is also a credit gap visa`-vis MSEs in the region. Nevertheless, new financial products are required. Additionally, there is credit
demand for reasonable interest rates both for working capital and term capital. Also, term loan demand
is significantly more than working capital demand. The following may be summarized as major reasons
for the same:

The cluster firms like hotels require large investment funds. For construction of activities etc.

There is relatively limited requirement of funds for stocking inputs etc.
MSEs in the region need to be catered for their credit needs in a timely and appropriate fashion, and apt
instrument need be evolved in this context.
Specific Credit Demand from Sample Firms
A slab wise segregation of surveyed MSMEs by turnover is presented below.
24
Table 20 Credit Demand for Financial Products (Basis investment in P&M)
Slab-wise segregation of surveyed MSEs
Turnover (2012-13)
Investment in plant and Up-to
Rs.25 –100 lakh
Rs.25 Lakh
machinery
Up to Rs.10 lakh
Rs.10 lakh -200 lakh
Rs.200 lakh – 500 lakh
Above Rs.500 lakh
-
Rs.100– 500 lakh
40%
-
>Rs.500 lakh
40%
-
20%
Most units have turnover in the range of Rs.1 crore to Rs.5 crore and a smaller proportion between
Rs.25 lakh to Rs.100 lakh.
The credit demand estimates for financial products by sample firms are presented below:
Table 21 Credit demand for Financial Products by Sample firms
Credit demand for Financial Products by Sample firms
Credit demand
Up to
Rs.15– 50
Enterprise
Instruments Rs.15
lakh
lakh
Typology
Micro-sized
WC
enterprise
TC
50%
50%
Small-sized
WC
enterprise
TC
Medium-sized
WC
enterprise
TC
-
Rs.50 – 200 lakh
>Rs.200 lakh
80%
-
20%
10%
90%
Most of the banks take the collateral on the “charge on fixed assets”.
Many cluster firms are willing to offer necessary collateral too for assistance by way of adequate credit.
With regards to basic parameters of products, units would prefer products with the following terms: The
preferred rate of interest and the maximum rate of interest MSEs are willing to pay is between 9% to
14%. The preference vis-à-vis ideal period for sanctioning of loans after having submitted all documents
is 30 days. Most units have necessary collateral to offer way of land. Preference by way of loan
repayment period is between 8-10 years. Units are willing to offer a minimum promoters contribution of
15-20 % for units. They would prefer seasonal and ballooning repayment options. The following
tabulation elaborates:
Table 22 Credit demand for Financial Products (Product Parameters)
Credit demand for Financial Products by Sample firms
Instrument
WC
Product parameters
Preferred interest rate for new loan (%)
Maximum Interest rate
Ideal period of sanction of loan
(after submission of all documents)
Collateral available
Repayment Period
Minimum promoters contribution for loan
Seasonal ballooning repayment schedule
Others
TC
9 – 11%
11 – 12%
9 – 11%
12 – 14%
1 month
1 month
Land – 80%
No Collateral – 20%
15 – 20%
Yes - 100%
-
Land – 80%
No Collateral – 20%
8 – 10 years
15 – 20%
Yes - 100%
-
Assistance by way of credit is expected to enable many sample firms even double turnover and PAT
growth rates. There are about 5-6 units who are large like the “Lalit Hotel”, “Khyber Himalayan resort
and spa” etc. Their annual turnovers are in the range of each Rs.100 crore each. A BDS market
development project may be initiated by the services of an implementing agency to twin firms more with
state govt. schemes and provide other BDS services. In addition the action/intervention plan indicated
25
presented in this study report could also contribute towards evolution of instruments and catalyse
necessary twinning to reduce financial gaps availing the services of an IA also.
2.4.
Recommended Products and Delivery Channels
Requirement of Capital
The tourism segment in the region is not well served for their credit needs. Units do suffer from a
significant credit gap. There is a large unmet term capital demand to. The typical capital requirements are
as follows:

Credit offer (bills receivables from corporates and tour operators to hotels)

Expansion of capacity.
Notably, there are well established players such as The Taj (under management control). But even these
units have limited access to competitive credit from FIs. For instance, as indicated, the Taj is availing of
credit from the J&K Bank at 15% for term loan and 16.5% for working capital, which is relatively high
by typical industry standards.
Working of Current Government Schemes
The state government offers several schemes of assistance to industry:
Capital Outright Investment Subsidy: The State Government grants 30% Capital Outright
Investment Subsidy on fixed assets including cost of land for new tourism units. This subsidy is also
available for expansion of the existing units However; subsidy on both accounts is restricted to an upper
ceiling of Rs.30.00 lakh and is available at the time of commissioning of a unit in specific areas. If a new
unit invests Rs.25.00 crore of more in fixed assets including cost of land in any area of the state, it will
be treated as a prestigious unit and a capital outright investment subsidy of Rs.100.00 lakh is given to it
at the time of commissioning. The following items shall qualify for capital outright investment subsidy:
Cost of land and its development, civil works including sanitary fittings, plumbing and internal
electrification, modern kitchen equipment and refrigeration units, sewage disposal system, air
conditioning and central heating units, geysers and boilers and Sewage treatment equipment. Any unit
which avails of incentives under capital out-right investment subsidy is debarred from selling/lessoning
the property or the unit for a period of 5 years from the date of commissioning. In case of an existing
hotel-unit which intends to expand its capacity, the unit is bound to increase its capacity by at least 1/3
of its existing bed strength. The expanded capacity should conform at least to the existing standard of
the hotel.
Project Report- the cost of preparation of the project for tourism projects in specified areas are
reimbursed in full.
Stamp Duty- In the case of new projects in specified areas are exempted from the payment of stamp
duty up to Rs.50,000 for a period of five years.
Insurance of Projects- It is mandatory for an entrepreneur to have a new tourism unit insured
comprehensively for which he will be eligible for a subsidy shall be paid by the director tourism to the
insurance company directly.
Training of Personnel in Tourism Industry-In order to assist entrepreneurs in upgrading the skill of
personnel engaged by them in running their tourism units and travel agencies etc. , registered/approved
by the Tourism Department the following incentives are admissible: The expenditure on training of
managers and other executives shall be reimbursed to the extent of 50% of actual cost subject to the
condition that such training courses are conducted by reputed training institution within the Country
with the prior approval ofgovernment. The expenditure on the training of new travel agents and guides
is reimbursed in full subject to the condition that such training within the county is with the prior
approval of the government and the candidates has been selected by the Tourism department.
Diesel Generating sets- 75% of the actual cost of non-polluting, noise free diesel generating sets with a
ceiling of Rs.4.00 lakh is reimbursed after its successful installation.
Paying Guest House: A subsidy up to 40% of total cost of the project is provided to those provided to
house owners for conversion of their private houses into paying guest houses subject to the ceiling of
Rs.2.00 lakh in each case.
26
Awareness of the CGTMSE scheme is negligible and benefits of this scheme have not reached the units
(but for rare exceptions). The presence of many micro units has led to a credit gap in the cluster and if
micro firms avail of the scheme, a credit gap may be corrected. Lead banks along with SIDBI need to
promote this scheme extensively through BMOs. The products that need be made widely available in
the cluster particularly for hoteliers and some tour operators and include general working/term capital
loan. Bills discounting credit instrument of 60-90 days need to be more aggressively promoted
particularly for the benefit of the stakeholders in the hotel segment. Post-Dated Cheques may be used to
make the bills discounting product more effective.
2.5.
Description of some Products and Delivery Mechanisms
Credit Guarantee Trust Scheme for Micro & Small Enterprises (CGTMSE)
There is need to facilitate enhanced delivery of CGTMSE instruments in the cluster. The Credit
Guarantee Fund Trust Scheme (term loan and working capital loan both) for Small Industries was
introduced by the Government (Ministry of Small Scale Industries) in May 2000 with the objective of
making available credit to small scale industrial units, particularly micro units (with investment in plant
and machinery less than Rs.25 lakh) for loans up to Rs.25 lakh without collateral/ third party guarantees.
The scheme is being operated through the Credit Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE) set up jointly by the Government of India and the Small Industries
Development Bank of India (SIDBI).
MSEs in the cluster are open to avail this scheme despite higher borrowing cost (one time charge of
1.5% of the borrowed amount and yearly charge of 0.75%). However, apparently banks are reluctant to
lend under this scheme as MSEs are operating in seasonal manner and repayment risk becomes high also
due to inexperience in handling such products earlier.
Bills Discounting
According to a survey for the 20 years perspective plan for J&K, average tourist stay in the state varies
from 3 days to 1 week, depending on their purpose of visiting. According to the local population, the
average stay of tourists in J&K is of 5 days and during this period, tourists prefer Katra and Srinagar
followed by Jammu, Gulmarg and Sonmarg etc. Ladakh is apparently preferred by foreign tourists. Of
the total tourist visits in India in 2010 (7580.7 lakh), 1.32% visited J&K of the 1.32% tourists, 99% were
domestic tourists. Apparently, domestic tourists’ inflow is high during June-July and Oct-March (20 year
perspective plan, J&K).
The current bills discounting facility is availed by some inadequate medium/bigger units. Financial
institutions do offer this product in the cluster. On discussion with stakeholders in the cluster,
apparently there is frequent delay in payment (> 90 days) by many corporate customers and tour
operators and this makes bills discounting an inadequate means of financing in some cases.
A major problem associated with some MSEs (like tour operators) in the cluster is the lack of fixed asset
collateral. This is a major hurdle for units to procure working capital loan, which is the major
requirement in the cluster. Affordable and economically viable working capital financing is the need of
the hour in the cluster. Loan products need to be structured to match the payments to the borrower’s
cash flow cycle and address specific credit needs that exist in the cluster. Also, financial institutions need
to have a greater focus on providing credit based on cash flow rather than based on collaterals, and also
create a mechanism to evaluate the economic viability of a project. Further, to propel the growth of the
cluster, MSEs need to be encouraged to take up larger volume of booking from corporates, which they
are unable to do currently due to lack of working capital financing.
Receivables linked Bridge Financing
The major beneficiary of bills discounting facility could be hotels and their corporate/ tour operating
clients. Using post-dated cheques (by debtors) has been in practice for implementing bills discounting
facility in many countries but it does not seem to be feasible in the current scenario where large
corporate clients dictate terms to hotels.
The possible areas that can be addressed using existing bills discounting facility are:

Flexibility from the current 90 days period for repayment by debtor could be extended to 120 days
to suit the requirements of many cluster firms.

27
Receivables bills may also be clubbed with bridge financing, where funding can be extended with
bills as collateral to enable units to take further client bookings and not suffer from the delayed
payment from debtors (corporate and tour operating clients).
Bridge financing is used to maintain liquidity in the scenario of anticipated cash inflows. This can be
seen as temporary loan that shall map the receivables cycle to future demand to facilitate continuous
operation of MSEs.
Pre-approved Collateral-free Equipment Finance Scheme
MSEs like tour operators and transporters are often faced with situations when certain equipment needs
to acquire urgently, either because the supplier is offering a discount or because the acquisition is
required to cater to a large client. Moreover, these enterprises need to acquire a number of small-value
spares and equipment that aggregate to significant value through the year. Applying for loans to make
these purchases is difficult and time-consuming with limited certainty of sanction. Hence, unsecured
loans are sourced at high cost of capital.
In order to overcome this challenge, under the MSME-FDP, SIDBI along with FSIA (a pro-active
industry association in the Faridabad Auto Components and Engineering cluster) designed a special
scheme. Under the scheme, a collateral-free line of credit up to Rs.50 lakh is sanctioned to enterprises
who can avail this facility any time during the year, either in full or in parts, for purchasing equipment.
Disbursals are typically made within three days on a pre-approved loan. The cluster association is
responsible for processing of application, undertaking appraisal and recommending limits as per
prescribed norms and providing it to SIDBI, as well as verifying pro-forma invoices, ensuring margin
payment, etc. Similarly, SIDBI currently has a credit delivery arrangement with the Gujarat State Plastic
Manufacturers Association (GSPMA) for meeting the capital expenditure requirements of member
MSME plastic manufacturing units. It is recommended that banks and financial institutions can
approach industry associations to proceed with a MoU that will enable a FSIA-SIDBI type of
arrangement. SIDBI, Jammu may also consider this option with the Travel Agents Society of Kashmir.
28
Chapter 3: Findings, Recommendations, Action
Intervention Options/Plan
3.1.
Road Ahead
Apparently, there are several interventions that need to be made in the context of financial products and
services. Jammu and Kashmir has grown at a sustained rate of almost 6% during the recent past, which
is unfortunately below the national average. Contribution of the services sector is less than 50% in the
state’s economy, which needs to be increased by encouraging investment in tourism sector. The banking
sector also needs to be geared up the credit deposit rate of banks is below the national average.
Infrastructure is lagging in much of the state and needs to be developed on priority basis to facilitate
socio-economic development. Road density is among the lowest in the country and railways too have a
negligible presence in the state.
The Ministry of Tourism is the nodal agency for the formulation of national policies and programmes.
In J&K the Department of tourism serves as the nodal agency. The core responsibilities of the
department include planning and execution of schemes for development and up gradation and
improvement of tourism infrastructure in the state. Support to the industry is in terms of incentives,
promotion and marketing of tourist destinations etc. For administrative purposes, the department has
further divided the state into regions of Jammu, Kashmir and Ladakh. Apart from this, the state
government has also established 19 tourist development authorities at places with good tourism
potential. Nevertheless, as highlighted, the promising tourism sector has not been receiving the attention
deserved from the FIs to the extent desired.
3.2.
Main Findings
With regard to the supply of credit to the cluster, the volume estimated at about Rs. 350 Crore out of
which Rs. 315 crore or 90 % is term credit and Rs. 35 crore or 10 % is working capital loan.
Priority sector advances in the districts of Srinagar and Udhampur is as per prescribed lending. The Lead
players in priority sector lending activity are private sector banks like the J&K Bank in 2012-13.
MSE advances: The proportion of MSE advances in the total sector lending indicates the industry
development focus in the particular district. Apparently, the MSE sector received only Rs.41 crore or
about 5% of the priority sector advances in the district in Srinagar, while the Udhampur sector received
over Rs.132 crore or above 80% of priority sector advances in 2012-13.
Performance of banks: Of the credit to the MSE sector most of it is provided by the J&K Bank. SBI is
apparently keen on increasing its exposure in the sector. .
With regard to the time taken for processing various loan applications, respondents are of the view that
while non-institutional sources facilitate disbursement in less than 2 weeks’ time, private sector takes
barely 2 – 4 weeks usually. Apparently, public sector banks have limited exposure to industry. The rate
of interest levied by non-formal sources is higher to the range 30-40% while for commercial banks it
ranges from 12% to 16%. Also, typical lending practices of formal institutions are asset based and
collateral requirements are often 150% or more.
Margin Requirements: The margin requirements for loans vary from 20 to 33 percent in many cases
based on the extent of collateral that is offered by enterprises. Hence, while the Nayak committee norm
of 20% of working capital gap is taken as the norm for estimation, the effective requirement by FIs is
often more.
29
In the Sample surveyed, about 40% of respondents were small enterprises, 40% were micro and 20%
were medium-sized enterprises.
Demand of Credit: The major demand for credit by units is for term ban or expansion by hoteliers and
tour operators.
SME’s also require credit for offering accommodation on credit basis to large corporate clients.
Apparently the WC – TL mix in terms of credit use and demand is between 10 – 20 % for working
capital in most cases and only between 80 – 90 % for term loan.
Sources of Credit: A part of requirements of micro-sized units is sourced from non-institutional sources.
It is only the SME hotel and tour operator/ transporter segment, which is relatively well networked with
private sector banks and receives bulk of credit.
Potential Credit needs: There is evidently limited financing of many MSE units in the cluster. Even this
is at a high rate of interest by private sector banks. Tour operators and transporters and house-bots
typically require TL between Rs.10-30 lakh for expansion/renovation. Hotels and guest houses require
between Rs.50 lakh-200 lakh for expansion and renovation/modernisation. There is apparently scope
for development of new financial products in the cluster. Industry associations also feel that private
banks currently offer very costly and standardized products and new avenues for credit delivery can be
explored for enterprises in the cluster. For instance, there is need for working capital credit instruments
regardless of the specific nature of instrument to be oriented towards meeting the ballooning credit
requirements by virtue of demand side peaks. This could enable SME’s to tide over the lean sector and
optimally exploit the peak season. BMO let instruments in terms of facilitating an instrument of pre –
sanctioned loans is also possible.
There is a significant credit gap for MSE’s in the cluster. There is credit demand both for working
capital as well as term capital but demand is significantly more for term capital.
There is more credit requirement for term capital needs than working capital needs.
3.3.
Recommendations and Action/Intervention Plan
The recommended products and delivery channels may be considered in terms of:
-
CGTMSE instrument linkages
Bills discounting instrument (basic and with receivables linked bridge financing).
Pre-sanctioned loan product
WCTL
The following Table summarises the recommended intervention plan:
Table 23 Intervention plan
Instrument
delivered
through/to
Individual
Enterprises
led
initiatives
Associated
Institutions
Limitation
Intervention/Instrument
Inadequate
access to
adequate
working capital
for hoteliers or
competitive
Propagating of bills
discounting, WCTL option
(accommodating
ballooning requirements)
IA (in
association
with BMOs
and lead bank
J&K bank ,
SBI, other FIs)
Inadequate
linkages with
non-asset based
financing
instruments or
MSE hoteliers
as well as tour
operators and
transporters etc.
Propagation of CGTMSE
scheme or TL+WC
IA (in
association
with BMOs
and lead bank
J&K bank ,
SBI, other FIs)
SMEs
Facilitate access to
adequate WCT credit
to at least 80 MSME
hoteliers as to
increase capacity
utilisation and
profitability
At least 60 MSEs to
serve access to
institutional credit
and insure
profitability and
capacity initialisation.
Instruments
delivered
through
BMOs or
SPVs
Policy
Initiatives
Unforeseen
demand spurts
in some
seasons/months
Limited
confidence in
bankers in
financing
industry in the
region
Establishment of Scheme
for pre-approved loan
Directive with targets to
be specified by DLBCs as
to enable CGTMSE
linkages firms in the
cluster
IA (in
association
with BMOs for
tour operators
and
transporters
and lead bank,
J&K bank, SBI,
other FIs)
IA (in
association
with BMOs for
tour operators )
30
About 80 MSEs in
tour and transport
service to be
facilitated with
operation of the
instrument of
convenience.
About 60 MSEs to
secure access.
An implementing agency could be identified which could enable and catalyze implementation of the
indicative action plan to redress financial gaps in the cluster over a time frame of 3 years. The action
plan for reducing credit gaps may be pursued in close co-ordination with that of a BDS market
facilitating/market development related agency. The cluster firms have received support by a range of
Government schemes nevertheless credit gaps remain of serious concern
Annexure 1: Location Map
31
32
Annexure 2: Questionnaire–Service Sector
A) RESPONDENT DETAILS
1.
Name of Enterprise
2. Address of Enterprise
3. Name of Respondent
4. Designation
5. Year of establishment /
registration
6. End Product/Service
Provided
7. Have you ever applied for a loan before?
a)
Yes, loan availed
d)
Did not have any loan requirement, hence not
b)
Yes, but did not succeed
applied
c)
Yes, but the terms offered were note)
Not applied because of other reasons (Please
acceptable
specify)
8. Gross Investment in Equipment (Excluding Furniture & Fixtures)
(Note to FRA - Original cost of Equipment determines MSME status, hence we
should be careful not to accept written down value of equipment investment)
a)
upto Rs. 10 lakhs
d)
Rs. 2 Cr to Rs. 5 Cr
b)
Rs. 10 lakhs to Rs. 1 Cr
e)
Above Rs. 5 Cr
c)
Rs. 1 Cr to Rs. 2 Cr
(Note To FRA – In case the respondent chooses option (e) in the previous question, terminate the interview)
9.
Form of organization
Sole Proprietorship
d)
Private limited company
Partnership
e)
Public limited company
Limited liability
f)
Other, please specify
partnership
___________________________
10. Are you an Income tax payee?
Yes
No
11. Profile of Customers (Please specify the % break up of value between the below
categories.)
a)
Providing solutions directly to the
market (through a product/service)
c)
Doing outsourced work for a Non-IT
b)
Developing custom applications/
company
doing outsourced work for a large
d)
Other, please specify ____________
IT Company
B) CREDIT GAP ASSESSMENT
12. Please share the total sales in value over the last 3 years.
a)
b)
c)
2012-13
2011-12
2010-11
100%
100%
100%
33
Total Sales (INR, lakhs)
- Domestic Sales
(%)
- Export Sales (%)
Total
Profit After Tax (%)
13. Please share the current ratio and debt-equity ratio for the last three years.
2012-13
2011-12
2010-11
Current Ratio (Current asset/current
liability)
Debt-Equity ratio
14. Please share the total investments in equipment (excluding furniture & fixtures) for
your unit (in INR lakhs) ___________
(Note to FRA - Original cost of Equipment determines MSME status, hence we
should be careful not to accept written down value of equipment investment)
15. What are the average payment terms with your suppliers?
% share of total
Additional Cost for Credit
purchase value
Period (%)
a) On Advance
b) On Delivery/Against
LC
c) On Credit up to 30 days
d) On Credit 31-60 days
e) On Credit 61-90 days
f) On Credit of more than
90 days
16. What are the average payment terms for your customers?
% share of total sales
Cash Discount (%)
value
a) On Advance
b) On Delivery/Against
LC
c) On Credit up to 30 days
d) On Credit 31-60 days
e) On Credit 61-90 days
f) On Credit of more than
90 days
17. For what all purposes do you need a loan?
i.
ii.
iii.
iv.
v.
34
Labour Payment
Training Expenses
a) Working Capital
Rentals
Related
Marketing Expenses
Any other, please
specify________________________
i.
Investment in Equipments
b) Capacity
ii.
Investment in Construction of Own Office
Expansion /
Premises
New Project
iii.
Any other, please
Related
specify________________________
i.
Additional temporary Labour for short interval
ii.
Additional equipments on rent for specific
c) Specific need for
period
a special project/
iii.
For applying for certifications
purpose
iv.
Any other, please
specify________________________
18. Please provide the overall estimate of funding availed for each of the 2 financing needs
listed the last time you took a loan. Please indicate the various sources form which
funding was availed, the amount of funding availed from the source and the relevant
interest rate.
Working
Term
Capital Loan
Loan
Total investment and working capital requirement during
your last project expansion/new project set up/new
contract, etc. (INR, Lakhs)
Amount applied for bank funding (INR, Lakhs)
Amount actually sanctioned by the bank (INR, Lakhs)
Source of borrowing
Interest
Interest
Amount
Amount
rate
rate
- SIDBI
- Public Sector Banks/ Regional Rural
Banks
- Cooperative Banks
- Private Indian / Foreign Banks
- State Financial Corporation
- NABARD
- NBFCs
- Micro Finance Institutions
- Other Formal Sources
Please Specify:__________
- Market Borrowing (Private money
lenders)
- Suppliers
- Informal Sources (includes Friends /
Family, Customers)
Total
100%
100%
19. Were you able to service your loans timely? (Yes/No)
20. What is the cost of borrowing from informal channels of finance? (__________)
35
Annexure 3: Review of Approach &
Methodology
In terms of methodology review:
Credit gap: A credit gap may be viewed in terms of unmet credit requirements of MSEs above the
available access to credit from formal institutional sources of finance,. The non-availers of formal
financial services amongst MSEs are either involuntarily excluded or wilfully exclude themselves from
the formal credit market due to their access to own funds funds/”unsecured” from family and friends
at competitive terms. Amongst those who wilfully exclude themselves from are those who currently
deploy informal sources of funds or have inadequate information on formal financial options.
Credit Demand Estimation: The demand for the credit arising from both capital requirements as well as
long term investment requirements has been estimated by D&B in the credit mapping exercise earlier in
other clusters under the aegis of SIDBI. The estimated method for working capital credit requirements
broadly follows the method outlined in the Nayak Committee Report (1991).While the committee
stressed on strong quantitative methods for working capital, the use of the ‘Forecasted Sales Approach’
25% of the forecasted sales for the enterprises could be considered as requirement for working capital.
It was recommended that working capital credit could be as much as 80% of the estimated working
capital requirements. Working capital credit demand for MSME clusters under the studies has been
estimated by applying the Nayak Committee norms to the cluster turnover estimated on the basis of the
cluster survey. Term Credit requirements’ had been estimated by applying fixed asset growth forecasts to
cluster survey.
A different approach was proposed in the National Commission for Enterprises in the Unorganised
Sector (NCEUS) under the chairmanship of Dr. Arjun K Sengupta. Under this method, the average
credit needs of the unorganised units to obtain the Total credit Demand. Average credit need was
multiplied by the total number of estimated unorganised units are considered to obtain the Total Credit
Demand. While the commission’s method was most effective for estimating credit requirements of the
unorganised enterprises (mostly micro proprietary units), extrapolated estimates of credit requirements
are prone to outliners in the sample surveyed. Estimates from detailed diagnostic studies on the clusters
and a detailed survey among a limited but representative sample enabled D&B India and SIDBI to rely
on the ‘Forecasted turnover Approach’ for estimating WC requirement’s and the forecasted asset growth
for estimated term requirements, separately.
Credit Supply estimation: Apparently, Scheduled Commercial banks (SCBs) account for much of
institutional lending to MSMEs (at least in industrial as against artisan clusters) and NBFCs, Cooperative banks, SFCs and other FIs/ MFIs play a minor role. The estimation of SCBs has therefore
been considered along with that of dominant cooperative banks, SFCs and SIDBI (where available). The
proportion of cluster turnover to state turnover in the same industry is first computed. Thereafter, the
ratio is applied to the outstanding lending by SCBs in the state to that particular industry, to arrive at the
credit supply estimate to a specific MSME cluster. In addition, lead bank data and aggregated district
level supply data on outstanding total advances, priority sector advances and MSE advances was
considered and matched with credit supply outstanding for a cluster computed.
36
Sources of credit demand as per earlier studies: Credit demand sources have been considered in terms of
nature of raw material procurement and asset conversion cycle, sub-contracting arrangements,
manpower-related expenses, technology up gradation and compliance with quality and environmental
norms. To elaborate, the need for raw material procurement in large quantities at discrete intervals and
the longer asset conversion cycles give rise to a significant need for working capital among MSMEs.
With regard to sub contracted infrastructure at some clusters, credit cycles of greater than 30 days and
absence of discipline among large buyers in meeting payment deadlines typically lead to working capital
shortages among MSMEs. So also, in some clusters deploying labor intensive technologies and to meet
payments of highly skilled technical consultants, manpower related working capital needs are constantly
rising. In addition, apparently, there are credit demand needs to meet tax payment deadlines, pay
specialized BDS providers etc.
Recommended products and delivery mechanism: Financing raw material procurement (effectively) by
consortia/SPVs/ implementing agencies as to enable firms to benefit from bulk/cash procurement is
the recommended option (as is being undertaken by BIDASS in Trichy and many cluster associations in
Kerala and Tamil Nadu in engineering and printing clusters). Factoring (or reverse factoring) is a critical
option in sub contraction based cluster operation. FIs could extend working capital finance on an ongoing basis against invoices raised by their clients on their buyers. Basically, factoring is a method in
which the factor (FI offerings the service), obtain control over the sales budget of the client. In effect,
the entire receivables management may be taken over by the FI and disclosed to the client’s customers
(buyers). The offerings of “a factor” are obviously more than just a discounting of individual bills by a
bank. As opposed to cash credit, under “Factoring”, there is a scope for flexibility as to quantum of
potential funding. Another option is a pre-approved collateral free equipment finance scheme to
facilitate procurement of equipment urgently (to comply with some norms, or discount offered by the
equipment seller etc.). Such options have been evolved by SIDBI under the MSE-FDP in Faridabad
with the Faridabad Small Industries Association (FSIA) and the GSPMA. The concerned BMOs are
involved in processing applications and recommending lending limits to member firms. Yet another
option is up-scaling micro finance disbursement limits by MFIs (with loan ticket size of Rs.50,000 –
Rs.2, 00,000 or more). Another means is a Purchase Order Financing (POI) where firms can borrow
against purchase orders placed by credit worthy customers. Hence, firms could receive funds earlier than
if they had to wait for the buyers to pay on the invoice and even sooner than if the invoice is discounted.
Also, the option of offering WCTL facility to MSMEs (as credit limit set by FIs in some cluster sectors
is hardly adequate to meet credit period required by customers of cluster firms). Further, factors
inhibiting bills discounting in a cluster is inadequate payment discipline by customers cluster products.
Customers also do not agree to issue post-dated cheques. Hence, Receivables Linked Bridge Financing
may be may be offered for working capital needs. Bridge financing is used to maintain liquidity in the
scenario of anticipated cash inflows. This could be a temporary loan mapping the sales receivables cycle
to future order procurement to facilitate continuous operation of MSEs. Banks may finance firms on
procurement of new orders, based on the bills issued by them for executed orders. Simultaneously, the
bank/FI may be repaid out of payment received by the MSE from an earlier transaction.
Drawing from this basic review of methodological options and recommendations till date, in the context
of the present study, definitions and methodology may be summarised and detailed as under:
 A credit gap is considered as an unmet credit requirement of MSMEs over and above available
access from formal institutional sources.
 Estimation of credit gap requires estimation of demand and supply of credit and breaking the same
into working capital and term loan needs.
 Credit demand estimation may consider credit for activities like meeting: consumables procurement,
labour costs, rent and utility costs, repairs and maintenance, technology up gradation and expansion
costs etc. In this regard, working capital requirements may be considered in terms of amount of
time (and related funds) required to source some inputs and release cash from customers. The input
stocking period, where hotels stocking and credit offered to guests/clients period may be
considered. Term credit is required typically for upgrading/ expansion/ renovation of fixed assets.
The Nayak committee norm – suggesting use of forecasted sales approach of 25% of forecasted sales
for enterprises would be required as (minimum) working capital requirement and bank credit for
working capital considered at 80% of this requirement.
37
In summary, for macro level estimates, the study will deploy the following methodology for estimation
of demand for credit by the cluster:
1. Working capital credit: The turnover of enterprises of different typologies of sample 50
enterprises in the cluster will be extrapolated to the “population” based on data-extrapolation from
sample, and field interaction with stakeholders/previous DSRs (estimates extrapolated also on the
basis of expert opinion from BMOs/ institutional representatives on cluster growth rates). Nayak
committee norms (20% of the projected turnover as working capital funding requirement) will be
considered, including ballooning requirements.
2. Term loan credit: The sample survey data on “investments in plant and machinery” and “other
fixed assets” and estimates of growth on data extrapolation from sample was considered and field
consultations with stakeholders (estimates extrapolated also on incorporating expert opinion from
BMOs/ institutional representatives on investment and growth rates). ASI data on fixed assets and
growth is not available in the case of tourism sector.
Note: It is also conceded nevertheless that ASI data need not reflect true cluster level scenario nor may
ASI data due to variations in cluster performance vis-a-vis state level or national scenario and also typical
misrepresentation/under reporting in the case of reported data, may affect scope for meaningful
extrapolation.
The estimate from direct consultation varied from RBI ratios with respect to proportion of TL in
advances. To elaborate, in J&K data on state level industry advances as per RBI data is about Rs
92,438.60 crore. State level industry turnover is about Rs. 5,77,794.30 crore. The ratio works to about 16
per cent. However, field level consultations with the lead bank and industry stakeholders indicate a
cluster turnover of about Rs. 4000 crore and cluster level credit advances of about Rs. 350 crore or
barely 8.75 percent. Hence, the study considered this is a more appropriate estimate. Also, the RBI ratio
(on SE related loans) of TL to total advances for J&K stood at about 71% while field level consultation
with the lead bank, other bankers and hotel and tour, travel industry stakeholders indicated a proportion
of about 90 percent as TL as against 20 percent as working capital. Hence, the estimate from
consultation was considered.
In summary, the study estimates obtained over the present study are as follows:
Table 1: Credit Supply Estimation
Details
1. State Industry Advances (2012-13):
2. State Industry Turnover (2012-13)
Cluster Sample Turnover of units (Source: Primary Survey of
3.
Units)
Number of Units and the Mix (Source: Diagnostic Study Report
4. for the cluster and consultation with Hotels and Tour/ Travel
Association, Directorate of Tourism etc)
5.
Cluster Turnover (Srinagar and Udhampur) – Limited to
Lodging and Boarding
6. Proportion of Cluster Turnover to State Industry Turnover
7. Cluster Level Credit Supply, (2012-13)
Refer to the Reference Table
Rs 92,438.60 crore
Rs 5,77,794.30
Rs 120 crore
including 1000 houseboats, 300
Hotels, 250 Guesthouses and
Home Accommodation);
Dharamshalas (in Udhampur
region); About 2500 Tour and
travel operators in Srinagar and
1000 in Udhampur ;
Rs 4000 crore
Rs. 4000 crore/ Rs 5,77,794.30
crore = 0.006
Rs 350 crore (in consultation
with lead banks and FIs)
38
Table 1: Credit Supply Estimation
Details
District Level Advances – Term Loan Advance (Small
Enterprise - SE) to Total Advance to SE
8.
State Level Advances – Term Loan Advance to Medium
Enterprises
Working Capital Supply is
Term Loan Supply
Table 2: Credit Demand Estimation
Details
Sample of units in the cluster (Source: Primary Survey of Units)
Number of Units (Source: DIC / Diagnostic Study Report for
the cluster)
90% (consultation with lead
bank and other FIs)
NA
Rs. 35.00 crore
Rs. 315 crore
20 Micro Units, 20 Small Units
and 10 Medium Units
Home Accommodation)
region)
Working
Capital
Demand
Cluster Sample Turnover of units (Source: Primary Survey of
Units)
Cluster Turnover - Limited to Lodging and Boarding
Cluster Growth Rate (Source: Ministry of Tourism 2009-12, and
Primary Survey of Units)
Cluster Turnover (2013-14)
Nayak Committee Guidelines for WC Loan + Ballooning
requirement
Working Capital Funding Requirements (2012-13, 2013-14)
Cluster Sample Investments in Fixed Assets of 50 units (Source:
Primary Survey of Units)
Number of Units (Source: DIC / Diagnostic Study Report for
the cluster)
Term
Loan
Demand
About 2500 Tour and travel
operators in Srinagar and 1000
in Udhampur
Rs. 120 crore
Rs. 4000.00 crore
10%
Rs. 4400.00 crore
20% + 10% for ballooning
requirements
Rs. 1200.00 crore,
Rs. 1320.00 crore
Rs. 157 crore
Home Accommodation)
region)
Cluster Total Investments in Fixed Assets of all units in the
cluster
About 2500 Tour and travel
operators in Srinagar and 1000
in Udhampur
Rs. 2550 crore
Table 2: Credit Demand Estimation
Details
Average growth rate of fixed capital
(Annual Survey of Industries not available, hence consultation/
tourism growth based data)
Cluster Total Investments in Fixed Assets of all units in the
cluster - (2013-14)
Growth in Fixed Capital
Bank Finance
Incremental Term Credit Funding Requirement - (2013-14)
Table 3: Supply-Demand Gap
1.
Total working capital supply (Ref. Year: 2012-13,
Reference Year +1)
2.
Total Term Loan supply (Ref. Year: 2012-13,
Reference Year +1)
3.
Total working capital funding requirement Ref. Year: 2012-13,
Reference Year +1)
4.
Total incremental term loan credit funding requirement
Reference Year +1 (Reference year : 2012-13)
5.
Total Working Capital Gap (Reference Year +1)
6.
Total Term Loan Gap (Reference Year +1)
39
20%
Rs. 3060 crore
Rs. 510 crore
@70%
Rs. 357.00 crore
Rs. 35.00 crore
Rs.38.50 crore
Rs. 315.00 crore
Rs.346.50 crore
Rs. 1200.00 crore
Rs.1320.00 crore
Rs. 357.00 crore
Rs. 1281.50 crore
Rs. 10.50 crore
40
Annexure 4: List of firms, and public and
private BDS providers interacted with over the
study
1. Hotels
Sl. No. Hotels
Point of contact (individual/representative)
JAMMU REGION (including KATRA)
1. Karon Hotels
Bhupesh Gupta – Ph. No.:09419196512
2. Hotel Premier’s
Ph. No.:+91 191 2549960
3. Hotel Asia
H.S. Anand – Ph. No.:9419187777
4. Hotel Jewel
Mr. Kuldeep – Ph. No.:9419181761
5. Hotel Jammu International
Mr. Ravi Mahajan – Ph. No.:9419143648
6. Hotel Premier
Mr. Gandotra
7. Hotel Moti Mahal
S Santokh Singh – Ph. No.:2480813
8. Hotel Modern (Shakuntla)
Mr. Romesh Mahajan - Ph. No.:9419184500
9. Hotel Swagat
Mr. Harish Aggarwal – Ph. No.:9419192925
10. Hotel Samrat
Mr. Raman Gupta – Ph. No.:9419184845
11. Hotel Vivek
Mr. V.K. Gupta – Ph. No.:9419143601
12. Hotel Vardhan
Mr. Abhishek Gupta – Ph. No.:9419193009
13. Hotel New India Pride
Mr. Inderjeet Khajuria – Ph. No.:9419189541
14. Hotel Jhelem Resorts
Mr. Mushtak Chaiya – 2470082
15. Hotel Sunshine
Shehnawaz - Ph. No.:09419525736,
Irfan - Ph. No.:09419094742
16. Hotel Skyline
Mr. Gupta – Ph. No.:09419196512
17. KC Hotels, Katra
Mr Amit Shekhar, Ph No 9419184772
18. Durga Hotel
Mr Abhay 0191 232437
19. White Hotels
Mr Vivek Sharma 09906077350
20. BVPK Private Limited
Mr Bhawani 9419183070
KASHMIR
1. Akbar Hotel and Zaffar
Mr Zaffar Ph. No.:09868183046
Houseboats
2. Hotel Shaneel Residency
Adil Khan Secretary General - Ph. No.:09906589934
3. Hotel Al Zahoor Inn
Zahoor Ahmed – Ph. No.:09858323376
4. Comrade Inn Pvt. Ltd.
Sajid Farooq Shah - Ph. No.: 9419494949
5. Akbar Residency Hotel
Mr Mohd. Iqbal Thrambu - Ph. No.: 9906809998
6. Al-Hamzah Hotel
Mr Irfan – Ph.No:9906602291
7. Alif-Laila Hotel
Ph.No: 9419016209, 9906253136
8. Arif Guest House
Mr Sheikh Ph No 9797197859
9. Boulevard Hotel
Ph.No:0194-24677052
10. Broadway Hotel
Mr. Lala Tirath Ram Amla Ph.No:0194-2459001
11. Hotel Mumtaz
Mr. Mushtaq Chai Ph.No:9419181786 (President)
12. Cecil Hotel
Ph.No:0194-2462221, 9419013874
13. Grand Mumtaz Hotel
Mr. Mushtaq Ahmad Chaya Ph.No:0194-2452548, 2452538,
14. Grand Osheen Hotel
15. Gulshan Palace Hotel &
Restaurant
16. Heevan Hotel & Restaurant
17. Heevan Resorts Hotel
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
Kingfisher Guest House
Jhelum Resort
Jehangir Hotel & Restaurant
Kabir Hotel
Jedha Guesthouse
Sangam Guesthouse, Dalgate
Mumtaz Tower Hotel
Nedou’s (Taj Group) Hotel
President Hotel
Saifco Group (Promoters of
Hotel Taj)
Riyaz Guesthouse
Shabir Guest House
Poshwan Hotel
Arif Guest House
2. Tour Operators
Sl. No. Tour and Transport
Operators
1. Earth Explorers Travel &
Tours
2. Sea and Sky
3. Kashmir Express Tours
4. Rajdhani Travekls
5. Fly High Tour and Travels
6. Eco Freindz Tours and
Travels
7. Shaan Tour and Travels
8. Sunny Tours and Travels
9. Shri Ex Dant Travels
41
2450281
Ph.No:0194- 2484746, 2450437, 9419009466, 9419001764
Ph.No:9018747426, 9469552955
Mr. Mushtaq Ahmad Burza Ph.No:0194-2476233,
9419007662, 9906460886
Mr. Mushtaq Ahmad Burza Ph.No:0194-2463892, 2464105,
2464100
Mr Shahid Ph No 94190013058
Mr Habibi Ullah Mob 9419181786
Ph.No:0194-2471830-31
Ph.No:0194-2500343, 2471942, 9419019968
Ph No 09906649456
Mob: 09419750352
Ph.No:0194-2480737, 9419014276, 9419002707
Fax: 0194- 2472142, 9419004551
Mr Abdul Ph.No:9419000813, 9419058680, 9906725415
Mr Altaf – 9906665333
Mr Riyaz, Mob: 9419055612
Mr Shabir Mob:09906895620
Mr Altaf Mob: 9906931141
Mr Sheikh Mob: 09797197859
Hamid Narwari - Ph.No:+91 94690 34728
Gulzar Ahmed – Ph.No:09419088929
Sajeed Masjeed – Ph No 09906444434
JC Verma – Ph No 09906015573
Ajab Mir – Ph No 9906430186
M. S Khan – Ph No 9086826151
Majid Fida, Ph No – 9419078170
Sunny, Ph No 09419009966
Gurdeep, Ph No 990609418
3. Public (government) service providers and support institutions
S.N.
Institution (Name of
institution)
1. J &K Tourism Dept., Director Soujanya Sharma – Ph.No:94191 97648
Tourism, Jammu
2. Deputy Director Tourism,
Mr Mir: NA
Srinagar
Mr Naseer Ahmed - Ph.No:8802916430
3. Deputy Director Tourism,
Mr Surendar - Ph.No:09419764917
Jammu
4. Private (non-government) service providers / BMO’s
S.N.
Institution/provider
1. The Kashmir Chamber of
President, Sheikh Ashiq Ahmad – Ph.No:9419009643
Commerce & Industry
2. Travel Agents society of
President, Arther Yameen – Ph.No:01942459568
Kashmir
S.N.
Institution/provider
3. Kashmir Hotel & Restaurant
Association (KHARA)
4. Association of Domestic Tour
Operators of India
5. Special Tourist Taxi
Association
6. Special Tourist Taxi
Association, Jammu Province
Tourist Taxi Operators
Federation
7. Chamber of Commerce &
industry, Jammu
8. Chamber of Commerce &
industry, Jammu
9. Shikara Association
10. Hoteliers Club Association
5. Financial institutions
S. No.
Financial Institution
1. J & K Bank
2. State Bank of India
3. SIDBI, Srinagar
4. J & K State Financial
Corporation
5. Lead District Manager, Srinagar
6. Lead District Manager,
Udhampur
7. NBFC, Religare
42
Secretary General, Adil Khan - Ph.No:09906589934
President, Hamid Narwari – Ph.No:09419006526
President, Ph.No:9469550309
Inderjeet Sharma - Ph.No:9419141213
President, Arun Gupta – Ph.No:9018992277
Secretary General Mr YV Sharma – Ph.No:01912472266
Member, Mehraaj – Ph.No:09697004161
President, Mushtaq Chai – Ph No: 09419181786
AVP, Khurshid Ahmad Fazili - Ph.No:+919419007516
M Muzzafar - Ph.No:+919906567094
DGM, Pradip Ray - Ph.No: +91 9419244422
Mr. Anuj Jain, AGM - Ph.No:+91 9419101789
Dy Manager, N.A Bhat – Ph.No:9419011366
Executive Manager, Nissar Ahmad – Ph.No:09419006109
Chief. Manager, Satish Mahajan– Ph.No:09419105341
Mr. Mohit Gupta, 9582218813
43
Annexure 5: Format of the Discussion Format
vis-à-vis FIs/NBFCs
1. What is the extent of your advances to cluster firms (in Rs.)?
2. What is the default rate in dues?
3. What is the break-up of advances to firms in the cluster (to micro, small, medium firms)? Do
elaborate in terms of indicative number of units and quantum of funds and requirement (that is
term loan and working capital requirements).
4. For what purpose the loans are typically availed (for raw material/consumables purchase, payment
of wages for increasing production/capacity utilisation in terms of working capital, for technology
upgrading, for expansion in terms of fixed assets, any other please specify)
5. What are the typical peak & lowest rates at which working capital and term loan are offered? What is
the related moratorium & repayment period?
6. What has been the number & quantum of loan offered to cluster firms with CGTMSE cover (if
MLI)?
7. How long do you take to process & disburse credit once all documents required from potential
clients are submitted?
8.
What are the different schemes/ subsidies of the government on the basis of which you have
offered assistance to cluster firms? To what extent and to how many firms?
9.
Have you offered innovative/dedicated scheme/instrument to cluster firm? Why/Why not?
10. Would you like to offer your views on a more appropriate financial
products/instruments/mechanism for financing cluster firms? (WCTL facility, Purchase Order
Financing, Factoring, Receivables Linked Bridge Financing by FIs/NBFCs, topping up of limits
offered by MFIs, BMOs serving as financial intermediaries etc.)
11. What is estimate of the total supply of credit by FIs/NBFCs to cluster firms? Typically, for what
purpose are loans availed for.
12. What is your estimate of demand for credit by firms? What is the unmet gap & options to redress
this gap?
44
Annexure 6: Format of the Discussion Format
vis-à-vis BMOs and other service providers
1. Which segment of cluster firms to you represent/typically cater to? Do you believe that they are
receiving credit or financial support from the formal financial sector as required?
2. Do you provide or facilitate related BDS? How? To what extent every year?
3. What do you think are the most important constraint in access to appropriate credit from institutes?
4. What are the typical sources of finance for cluster firms?
5. Which financial institutes/NBFCs do you think has been most pro-active in catering to the credit
needs of the firms in the cluster? Why?
6. What do you think is the ideal WC/TL financing instrument (in terms of collateral, interest rate,
moratorium period, repayment period parameters) for cluster firms?
7. Could BMOs serve as financial intermediaries to facilitate/improve the credit delivery process?
How? (Through evolving SPVs to operate “raw material/consumables banks”, to operate an
“MCGFS” like option, to serve matching guarantee to loans provided under CGTMSE cover).
45
Annexure 7: Participants of Stakeholder
Consultation organised for mapping financial
gaps in the tourism cluster of SrinagarUdhampur
The following persons participated in the meeting:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Mr. Sheikh Ashiq Ahmad, The Kashmir Chamber of Commerce & Industry
Mr. Arther Yameen, Travel Agents society of Kashmir
Mr. Adil Khan, Kashmir Hotel & Restaurant Association (KHARA)
Mr. Hamid Narwari, Association of Domestic Tour Operators of India
Mr. Inderjeet Sharma, Special Tourist Taxi Association, Jammu Province Tourist Taxi Operators
Federation
Mr. Arun Gupta,Chamber of Commerce & industry, Jammu
Mr Y.V. Sharma, Chamber of Commerce & industry, Jammu
Mr.R. Mushtaq Chai, Hoteliers Club Association
Mr. Mehraaj, Shikara Association
© 2014 Grant Thornton India LLP. All rights reserved.
References to Grant Thornton are to Grant Thornton International Ltd
(Grant Thornton International) or its member firms. Grant Thornton
International and the member firms are not a worldwide partnership.
Services are delivered independently by the member firms.
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Mapping Financial Gaps in the Tourism Cluster of Srinagar

Transcription

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