State Bank of India and Small Scale Industries

Development of small scale industry and small business is another important aim of the State Bank of India. Before analyzing the facilities offered by the Bank, one should understand the meaning of small scale industry.

In small scale industry the following categories of business units are included, (a) Small Scale Industry

Industrial units, engaged in manufacturing, processing, preservation, repairing, or service operations with original investments in plant and machinery not exceeding Rs.3.00 crore are classified as Small Scale Industries. This limit was earlier restricted to Rs.60.00 lakh and was raised to Rs.3.00 crore in the Union Budget for 1997-98.

The limit of investments in plant and machinery shall also be Rs.3.00 crore even if the industrial unit undertakes to export annual production. Similarly this limit is applicable to ancillary units and there is no separate limit for this sector from January 1998.

Tiny Sector

Small scale industrial units with investment in plant and machinery up to Rs.25 lakh are classified as Tm Sector Industries.

Industry related service / business enterprises having investments up to Rs.25 lakh in fixed assets excluding land and building are eligible to be classified as Small Scale Service and Business Enterprises. These limits were raised from January 1998.

Small Business

(i) Any business established mainly for the purpose of providing any service other than professional services.

(ii) Original cost price of the equipment used for the purpose of business should not exceed Rs. 10 lakh.

(iii) Working capital limits granted to such an enterprise should not exceed Rs. 5 lakh

(iv) The aggregate of term loan and working capital limits should not exceed Rs. 10 lakh.

The SBI offers assistance to all these types of units. The SBI has reoriented its policies and adapt flexible approach to serve this important sector of the economy. In 1956 the bank initiated a ' Pilot Scheme ' for the provision of co-ordinate finance to small industries.

In the light of its experience the scheme was extended to all the branches with effect from 1st January 1959. The scheme has been simplified from time to time to overcome various pracĀ­tical difficulties and make it more broad-based with the objective of helping small units in all possible ways.

The function of SBI on this aspect can be understood with following figures as on 31 March, 1998:

It should be remembered that all commercial banks are lending to help developing SSI Sector. This is one important segment of priority sector. Hence, what is applicable to SBI under SSI is also relevant to all Commercial Banks. The SBI is also opening specialized branches to service the SSI sector alone.