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Before we get into the reforms and policies being established by the government to help deal with the liquidity crunch, let’s briefly discuss what got them there- the IL&FS crisis of 2018. During August 2018, Infrastructure Leasing and Financial Services defaulted in the repayment of their obligations to SIDBI. At the time, no one suspected that the NBFC/HFC industry, with an asset book of 28.4 lakh crore, would take the hit. As time progressed, people started to draw an unjust comparison between the two. This resulted in the distress of India’s capital market and the subsequent current liquidity crunch for NBFCs.
To prevent the downfall of the credit market in the country, RBI and the government have created a few temporary reform policies to pull NBFCs out of crisis mode and back on the track of growth:
- Union budget 2019-20- To dissuade the unduly risk-averse, the government will provide a one-time six months partial credit guarantee to PSBs for the first loss to the extent of 10% to support a total investment of 1 lakh crore in financially stable NBFCs. NBFCs in India have significantly contributed to boosting consumer demand and capital formation, and the default of a few shouldn’t affect all.
- Increased Exposure limit- As of 1 April 2019, the guidelines on large exposure framework has been revised to allow the flow of credit to priority sectors. The central bank increased the exposure limit to one NBFC to the extent of 20% from 15% of the Tier-1 capital of a bank, and under specific circumstances, this limit may be raised to 25%. The agriculture and MSME sectors contribute significantly to the economic growth of the country and NBFCs that lend to them can borrow up to 10 lakhs and 20 lakhs, respectively.
- Infused Capital into PSBs- The government will infuse a capital of Rs 70,000 crore into public sector banks as a measure to relieve liquidity stress and foster the flow of credit. Addressing the liquidity crunch along with the other policies put in place will reassure banks investing in the assets of highly rated NBFC. Additionally, the government is also encouraging banks to borrow from NBFCs and has allowed NBFCs, in turn, access to Aadhaar-authenticated KYCs to simplify the credit process.
The economic growth of our nation depends to a great extent on the credit lent by NBFCs, justifying the numerous initiatives being taken by the government to ease the crisis. However, the views on whether these reforms will actually help improve the situation are divided. Although these initiatives have forced a perspective shift for banks from neutral or averse, to accommodating, there’s yet a long way to go to revert the damage done.
Some NBFCs like Capri Global have progressed in the steady march towards growth while others have permanently closed their doors. On the bright side, the fear of the liquidity crisis escalating to a solvency issue hasn’t happened. If one thing is certain, it’s that NBFC have, are and will remain an essential part of the economy and we’ll have to wait and see what their future holds.
While a few NBFCs exhibited robust growth, most disruptive and conservative NBFCs weren’t left unscathed by the current downtime. And though the government has created reforms and policies to get NBFCs back on track, the road ahead is neither short or smooth, making it important to strengthen their risk management frameworks.
Risk management impacts and NBFCs potential to attract raise funds from primary markets in the short-run and enlist on the stock exchange further down the line. Financial institutions can no longer afford to sit back and wait for yet another disaster to strike but must proactively identify and mitigate both internal and external risks. An ASSOCHAM report that was released shortly after the liquidity crisis of 2018, identified the key risks faced by NBFCs and the risk management techniques to manage liquidity and avoid insolvency:
Credit risk- A Credit Risk for Indian Corporates report in 2015, found that though the average default risk of Indian organizations has improved since 2008, their risks have also remained higher than for those of other Asian, US and European firms. The management of credit risk involves setting up standards and policies for operating procedures that are reviewed on a regular basis. To mitigate this risk, NBFCs a robust system of credit line management for various transactions including over-withdrawals, loan approvals, account inactivity, etc are necessary. These measures must also be audited internally to ensure that the company stays on track.
Vendor risk- The vendor risk management market size is expected to grow from USD 3.29 Billion in 2017 to USD 6.50 Billion by 2022. Outsourcing activities such as data entry, documentation, and field verification to third-party vendors, leaves them open to a plethora of risks. In order to minimize their exposure, the vendors they deal with must be carefully selected through an unbiased system that solely considers the service providers operating model and qualification to meet their needs. These services must also be supervised and audited to ensure quality, with penalties for the failure of meeting service levels.
Compliance reviews- The recent influx caused by the NBFC crisis and regulations set for NBFCs has made conducting compliance review compulsory. The companies should create a comprehensive framework that ensures it adheres to the guidelines set at all times.
Quality control- Apart from the above risk management techniques, quality controls must also be carried out to ensure that the functions of non-banking financial institutions are in line with the standardized stipulated processes.
Information and data integrity- Financial institutions have access to a significant volume of confidential customer data which needs to be secured against leaks. Data breaches of any kind could affect the finances of customers and in turn the reputation of the NBFC. Cybersecurity is key to maintaining the integrity of the data and the company.
They often say lightning never strikes the same spot twice, but the IL&FS crisis seemed to have sent the NBFC sector into a downward spiral with no foreseeable end. What started out as a default by one company, resulted in a domino effect that adversely affected the NBFC sector and in turn a decline in the growth of GDP. If effective risk management models and risk management processes are put into play in the NBFC sector inadequacies can be detected and rectified before it escalates into a crisis.
As one such NBFC, Capri Global assesses the risks posed and have counter measures in play to overcome them. We firmly believe that traditional financing needs to be reoriented for the informal sector, while we leverage technology to foster an air of trust and transparency that helps us serve customers better.
Our field-based credit assessment with robust risk controls enables us to evaluate risks and ensure adherence to stringent standards of governance and regulatory requirements. Our branch network let us take a relationship-driven approach with each customer at a local level. This helps us arrive at an optimal home finance requirement, speed up disbursal and ensure regular and disciplined collections.
Even as a developing nation, economic growth, and opportunities across the major cities are now well on their way towards being saturated. And, what happens when the fastest growing cities in India aren’t developing as fast anymore? No. This doesn’t mean the end of development or progress but rather a chance to go beyond Tier 1 and into Tier 2 and Tier 3 cities that have the potential to make a real difference. Future-ready businesses have not failed to see and seize this opportunity.
It’s time to shift focus from the 300 million that are already aware, to the 500 million that have been ignored all these years. India has the second-largest number of internet users with the numbers reaching a staggering 563 million. Retail, IT and housing finance organizations are among the pioneers to capture these untapped markets.
Why MSMEs are turning to Tier 3 and Tier 3 cities
The MSME sector contributes to over 45% of the industrial output and 40% of the country’s exports. The entrance of these players in these under-served markets will back the urbanization of rural India. Here’s why the sector has shifted their focus to these cities:
- Lower land cost and rent charged- Investment necessary to set up shop in a smaller city is generally significantly less, when compared to metros. There’s more land and rental space available at a lower cost.
- Availability of talent- Gone are the days when the cream of the crop needed to leave their home towns in search of better education, better jobs or a better life. Today, thanks to the connectivity that technology has brought in, millennials have started returning to their home-towns upon completion of their formal education. Talent is presently easily available in these cities with lower salary slabs.
- Widen customer base- Many MSMEs address problems that are geographically agnostic. Entering these markets serves as a way to create networks, feel the pulse of the cities and produce goods and solutions that meet their needs.
Loans- The Foundation for Growth
MSMEs today contribute to over 25% of the country’s GDP and this number is only set to rise. They create an abundance of opportunities for growth and employment in the nation but need the funds to do so. Loans help these organization meet their capital and day-to-day expenses. Banks are presently able to meet only 40-70% of the MSME sectors financial requirements that account for $55 bn in the present.
So where should they turn to bridge this gap?
NBFCs are the answer. Non-banking financial institution in India are an optimal source for MSME loans because they have tailored offers for the sector with certain allowances that make them a more flexible, viable option. The terms of interest and repayment NBFCs offer are also personalized to serve the underserved and ensure the flow of credit in the economy.
In the long- run the progress of a nation depends on the well-being of the whole and not just a few parts. For India to continue on the path towards being a developed nation, organizations must go beyond the big cities and execute change across the country.
How Capri Global is Capitalizing these markets
As a leading NBFC in India with a focus on urban development, Capri Global Capital hopes to lend over Rs 7,000 crore by providing home loans and MSME loans in these smaller cities. The company sees the need to create a network of branches across and plans to expand its operations from 84 to 232 branches in the next five years.
Although the liquidity crisis of 2018 sent the NBFC sector into a bit of a slump, Capri Global managed to achieve a growth of 45% and has confidence that the books this year will also reflect a similar level of progress. During an interview with ET Now, Rajesh Sharma, Managing Director of the firm addressed the fact that each city is different, and an understanding of these variations is what will give them an edge in Tier 2 and Tier 3 markets.
Why Should You Invest In A Non-Banking Financial Company?
“Money is a terrible master, but an excellent servant” -P. T. Barnum
While it is undeniable that money makes the world go round, it’s what you do with it that truly makes a difference. Money management is a tricky business because portfolios differ from person to person, based on the resources available, options they have access to and knowledge of, and their willingness to take a risk.
In a utopic world, doubling your principle with little to no risk would be the obvious choice. However, the reality is that greater the risk, greater the reward. While playing it safe guarantees a fixed return, a little risk can go a long way. Creating a comprehensive portfolio is all about knowing the investment opportunities in India and finding a balance that works for you.
Post the IL&FS crisis, liquidity woes have made NBFCs a credit risk, but not for all. Before you completely write off non-banking financial companies in India, it’s important to take into consideration the institutions’ credit rating, assets and liabilities, the buzz about it and its overall stability. Let’s take a look at some of the reasons you should invest in an NBFC today:
- Contribute towards the wealth of the nation- In the past, non-banking financial institutions have performed better than banks and will resume to do so once the storm blows over. They grant access to financial services to the rural, weaker, and underserved segments of the economy including MSMEs that contribute to over 29% of India’s GDP. They have been instrumental in enabling economic development through capital formation and subsequent GDP growth. Although they aren’t the most popular choice currently, they will continue to serve as a relevant part of the economy in the years ahead.
- Fall in stock prices- The liquidity crisis in 2018 resulted in the dip of the stock prices of most NBCFs, making them available at a lower cost. As with equities, investing in an NBFC takes a little knowledge and skill because picking the right company is as important as the time you buy it. This is but a temporary set-back that gives investors the golden opportunity to purchase shares at a low price. Although the credit risk involved has risen, investors continue to cautiously invest in them and expect positive returns.
- Budget 2019- According to the Union Budget of 2019-20, the government will provide a one-time partial credit guarantee to public sector banks to buy high-rated pooled assets of financially sound NBFCs. The inability of a few has not just reflected on but affected the financially sound NBFCs and resulted in an unjustified risk aversion to them. The Union Budget of 2019 established this provision to give investors the assurance that their money is safe non-banking financial companies the opportunity to win back their credibility.
- Risk-Return relationship- When we speak of the inverse relationship between risk and return, we are referring to risk that is calculated, not blind. The risk you take shouldn’t outweigh the potential returns that you stand to gain. NBFCs have become an important part of the economy and have proved their performance in the past. The government has upfronted 70,000 cr to banks as capital support and has allowed NBFC to use KYC from banks to speed up the loan process. This backing research about the company prior to the investment will act as the safety net for your investment. Upfront liquidity support of Rs 70,000cr to banks will benefit NBFCs This not only makes an it a calculated risk but an avenue for substantial returns. The market might be in a slump in the present but that just presents an opportunity for growth for at least the next 15-20 years.
- FinTech shaping the landscape- Banks aren’t the only financial institutions in India that are leveraging tech for growth. Today, it’s digitalization that underpins an NBFCs ability to personalize their offerings and meet the specific need of a larger audience. Data and artificial intelligence are also being used by both NBFCs and their investors to assess the market and stability, respectively. Emerging technology has given NBFCs increased visibility into the journey of the customer and their own processes, enabling improved accuracy and the elimination of manual errors.
All things considered, NBFCs continue to be a great investment option in India that should be part of your portfolio. It is important to assess the financial liquidity of the company you’re investing in and understand their scope of growth. The transparency granted by NBFCs to investors also adds to their credibility.
As an upcoming, diversified NBFC, Capri Global has created the optimal mix of borrowing and lending and are leveraging automation to improve productivity, while also controlling costs. With presence across high-growth segments such as MSME, Construction Finance, Affordable Housing, and Indirect Lending and 1,800 employees across 88 location, the organization hopes to create a solid social impact through the facilitation of flexible and intuitive loan products.
What is an MSME Loan and How to Get It?
Micro, Small and Medium enterprises might seem trivial, but their contribution to the GDP of our country proves otherwise. A study by SIDBI found that MSMEs contributed to 29% of India’s GDP in 2017 with a vision of increasing it 50% in the next 5 years. And the availability of funds and access to credit is central to making this dream a reality.
MSME loans are loans offered by banks and NBFCs if a candidate meets the eligibility criteria. They are loans customized to meet the specific needs of startups and MSME loans for new businesses looking to expand. The loan duration and interest rates differ from lender to lender, based on the principal amount borrowed and credibility of the borrower.
Every other day, we receive cold calls from banks asking if we’d like to take a loan and we politely decline. MSMEs on the other hand, don’t have it so easy. Even today, 40% of the funds lent to them are through informal sources, that often charge hefty interest rates, making payment a cumbersome burden resulting in default payments and consequently a lower credit score. Although the government and its initiatives have gone a long way, getting a loan continues to be quite the challenge. Some of the hurdles in their paths include:
- Inadequate Data- Lack of information results in lack of action. Formal credit ratings and lack of data used for risk assessment often forestall the loan process. Lenders, as a result, are unable to asses the MSMEs’ financial standing and ability to repay the debt.
- Security Collateral- More often than not, small organization lack the collateral and assets that can be leveraged while taking out a loan.
- Regulatory Restrictions- Compliance to regulations set by the government with regards to the eligibility also inhibits the flow of credit into the hands of MSMEs.Documentation- Most formal sources of credit involve long processes and the need for a number of documents of proof, forcing small enterprises to turn to informal sources.
- Documentation- Most formal sources of credit involve long processes and the need for a number of documents of proof, forcing small enterprises to turn to informal sources.
- Time- During the initial phases of starting up a business, most of the profits earned need to go back into the business to sustain or grow their business. While an SME might take a longer time to pay back a debt, this doesn’t necessarily make them defaulters.
Now that we understand the challenges faced by MSMEs, it comes as no surprise that they are an underserved market. They need a source of credit that is willing to give them a little leeway with regards to documentation, time, interest, etc. So, how do you get an MSME loan when it seems like everything just gets in the way?
See an opportunity, grab it. And, that’s just what NBFCs did to tap into the MSME loan market. Let’s take a look at how non-banking financial companies have simplified the lives of and loans for MSMEs:
There’s data in everything and where there’s data there’s insight. Insights that enable differentiated credit underwriting. NBFCs leverage both formal and informal sources of data to assess the credibility of the borrower and decide if the risk should be accepted. They take into account cash flows, debt history, industry risks, and other aspects that might factor into the repayment of the loan to gauge their MSME loan eligibility.
Regardless of which industry you’re talking about, a one-size-fits-all approach doesn’t work anymore. NBFCs grant MSMEs the flexibility and funds they need to meet their needs. This flexibility extends into the principal amount borrowed, cost of each instalment, total duration of the loan and the option to choose between a fixed or floating interest rate.
In the past, the turn around time from the application of the loan to the actual disbursement of the amount took a significant amount of time. Delays in meeting the immediate needs of an MSME could be the difference between its progress or closure. NBFCs have cut short the turn-around time and presently take between 7-15 days to process loans, once all the other requirements are fulfilled.
In the digital era where convenience is at the core, processes need to be streamlined to the click of a button. FinTech has come a long way in simplifying transactions, not just for banks but for NBFCs, as well. Whether the MSME is in search of information, wants to check their eligibility, apply for the loan or even make a payment, it’s all possible right at their fingertips.
MSMEs present an additional lending potential of $70 billion, and NBFCs are quickly becoming the go-to source for these loans. Capri Global is one such NBFC that’s identified the gap between the finances need by and granted to this segment and offers loans up to Rs. 50 lakhs as the first step to bridging it. To empower MSMEs to expand their businesses and reach their potential.
Rebalancing India's Economy
As history dictates, women globally,have faced an uphill battle on an uneven playing field to earn the right to be treated as equal citizens, both legally and socially. In India, discrimination and marginalisation is evident even in political and economic involvement, access to education and decision-making positions. While the feminist movement has made great strides, struggle is still prevalent today. In 2019, the hindrance for women to thrive in the workplace is certainly not the lack of qualification or ability. Everyday sexism, lack of transparency, gender wage gap and sexual harassment is the tip of the ice berg.
It was Melinda Gates who said, ‘When we invest in women, we invest in the people who invest in everyone else.’ In order for India’s economy to progress, we need to create an empowering environment that promotes women at all levels to reshape the conversation, change the dynamic and make sure that their voices are heard. In a deeply patriarchal society, one may ask the question, ‘Why is there a need for equal female representation in the workplace?’ The answer lies in the statistics.
The current female population in India is 48.4%. From this, the labour force participation rate for Indian women is a meagre 28.5%. This means that there are 235 million missing workers. An unbalanced ratio that certainly puts India (the second largest economy in the world) at a developmental disadvantage. We have made humble progress in closing the gender gap in the last decade, rising from the rank of 98th to 87th in the World Economic Forum’s Gender Gap Report. It aggregates a range of indicators from health and education to economic and political participation. If we were to rebalance and equalize our workforce, the IMF estimates, that India would be 27% richer, effectively turning into a developed nation. This unrealized contribution of women is one unfortunate reason why 60% of India is still in poverty.
The Working Woman
Oxford Dictionary defines success as ‘the accomplishment of an aim or purpose’. Who/What defines this yardstick to measure success in the workplace is open to interpretation. Is it the amount of zeroes in a salary? Or the field of authority in one’s possession? Or even the capacity to balance a personal and professional life? Our conversation with various female employees at Capri holding different positions, having had unique experiences in the world of Finance, revealed that there is a shared link. The appreciation for being accountable for the decisions made by them i.e. the ambition and monetary independence earned through the role of a working woman. ‘In the next 5 years, I see myself as the head of the Administration Department. I want to become stronger within my own identity and achieve all the goals I set for myself’ says Charu.
We have all heard the saying, ‘All work and no play makes Jack a dull boy (or Jill a dull girl!)’. Maintaining a work-life balance is essential for productivity, holistic living and mental health. For women employed in typically male dominated industries, finding this balance can be an idealistic fantasy. Extended office hours, pressure to work harder than male counter parts for equal recognition and the challenge against remaining in a subordinate position to prioritize household responsibilities can be the dominant deterrents. ‘A routine work day makes me feel that 24 hours is not adequate. Time passes so fleetingly; it is hard to grasp the speed of the passing days. It’s only home to office and office to my home’ says Priyanka.
Employers are required to provide 26 weeks of paid maternity leave, while they are not obligated to provide paternity leave. This creates the stigma of a ‘motherhood penalty’ for working women. Additionally, this influences hirers to prefer men over women to reduce the burden of the added wage. Along with this, Indian mothers are expected to shoulder the burden of domestic duties. By creating flexible work hours, childcare benefits, on-site day care facilities to be utilized by both parents would promote equality, reduce stress, and promote an efficient employment approach and lifestyle. This also enables an inclusive and women-friendly work environment.
The Concern for Safety in the Workplace
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act was enacted in 2013 by the Indian Government. It covers all women, irrespective of their age or employment status and protects them against sexual harassment at all workplaces both in public and in private sector, whether organized or unorganized. At the time of employment, women should be made aware of their rights and how to apply them. A secure human resources department, having transparent procedures in place and a ‘prevention is better than the cure’ mentality already fixes a lot of problems.
Small steps for change
The Ministry of Women and Child Development has invested over Rs.300 crores in the past 15 years to empower rural women. The initial underprivileged women gain access to skills, markets and business development services. As a result, they have experienced greater food security, better access to finance, and higher incomes that benefit themselves and their families. Last year, Prime minister, Narendra Modi launched the Amma Scooter Scheme - the All India Anna Dravida Munnetra Kazhagam Government’s flagship programme – in Chennai. In this initiative, the state government offers a Rs 25,000 subsidy for women to buy two-wheelers for an easy and safe commute to work. Women are able to secure positions at the village council level and are being included in decision making alongside men in rural parts of India.
“IN THE FUTURE, THERE WILL BE NO FEMALE LEADERS. THERE WILL JUST BE LEADERS.” — SHERYL SANDBERG
Capri in the Face of Financial Crisis
A decade ago, a kirana store owner could not even consider approaching the bank for a loan. If a poorly educated woman wished to start her own boutique, she was better off reaching out to her relatives than getting sucked into the time-consuming process of borrowing from a bank that would eventually deem her creditworthiness to be nil. Today, the scenario is very different. NBFC’s have played a critical role in the financial inclusive growth of India. It is considered to be a ‘consumer finance revolution’ due to its swift processing and the substantial reduction in time taken for credit decisions. Their biggest contribution to the economy has been their role as financiers to the unorganised sector as well as to individuals without adequate collaterals to mortgage. It is undeniable that traditional banking still holds dominance in many ways but NBFCs have formed a new, parallel system that has the ability to accomplish things other financial institutions are unable to.
In 2018, the financial markets faced an extremely turbulent time when one of the biggest financial services NBFC defaulted on meeting its repayment obligations. The underlying issue was that IL&FS was using short-term instruments like Commercial Papers ( CPs) and Non-Convertible Debentures (NCDs) to meet its long-term funds requirement. They were defaulting on payments to their creditors because of Asset-Liability mismatch (ALM). Due to this cycle of borrowing funds from the market for a shorter tenure but lending for longer as well as being overleveraged resulted in market disruption.
Although IL&FS should not be compared to the rest of the NBFC sector, the event fuelled loss of confidence from creditors such as banks, corporates, insurance companies and mutual funds.
There were sharp losses in NBFC stocks, higher funding costs and massive pressure on margins. Business investors and leaders subsequently shied away from lending resulting in liquidity crisis slowing down economic growth at large. NBFC’s were abided by stringent rules from the RBI that further restricted funding. Moreover, 1500 NBFC registrations were cancelled by RBI as it stepped up supervision.
Capri’s management of the situation
While NBFCs, especially the ones catering to the urban and rural poor faced setbacks, Capri with AA rating in the industry faced this difficult time pragmatically. With financial liquidity in backup, Capri continued lending on strict merit and selective basis . It has always followed strict monitoring policies which prevented delinquency. While regulators required capital adequacy (CAR) is 15%, Capri was standing tall at 40%. The capital cover was way over 1300 crores, which ensured smooth functioning of its business. “The rich discipline of the management rules followed during this time fortified further lending provisions to its esteemed clientele,” Surender Sangar – Head of Construction Finance, Capri Global.
The underlying problem for the crisis was poorly managed ALM. However, Capri enjoyed comfortable liquidity position in the crisis as its ALM is supported by sufficient capital (CAR), long term funding and no dependency on short term funding instruments such as CP.
Capri enjoys the vision of very agile business leaders that have prepared the organisation to stay ahead of the curve. “It is the combination of our sound lending policies, vigilant monitoring, prudent and experienced top management that helped us remain unaffected by this crisis.” added Surender.
“Every 5 years, NBFCs phase through some sort of growth pangs... This happens when NBFCs take an aggressive growth path. NBFCs slow down during times of stress; and when a sense of normalcy returns, they start doing brisk business. The current stress is just a minor blip. There are higher opportunities (for NBFCs) for at least 15 - 20 more years,” Umesh Revankar, MD-CEO of Shriram Transport Finance Company.
Currently the market is very vulnerable, still reeling in the aftermath of the default. The cost of borrowing has increased substantially. The guidelines from RBI are tight and unforgiving. While the liquidity squeeze is not a new issue, it has affected the growth and margins for many players. Slowly but steadily the markets are reaching a stage of financial agreeability but it is still very delicate and demands support from the borrowers. By increasing interest rates temporarily, it can reach a stage of higher discipline and survival of the fittest according to Surender.
A day in the Life of a Salesman
“IN THE END, IT’S ALL ABOUT THE CONNECT. ALWAYS, THE CONNECT”
–Amar (Head Of Sales At Capri Global)
It’s been two fruitful months of getting to know Dikshaji Patel. She has been a source of inspiration for me. I remember the day, 14th December 2018 when I first approached her for a loan from Capri to help her expand her business of hand woven, dainty ladies’ bags. This time has been a struggle for both of us in a way- Me as a salesman and she as an MSME entrepreneur. This relationship has become more than just a sales deal for me. I genuinely want her loan to be sanctioned and I want her to succeed.
This time spent negotiating with her revealed our vulnerabilities to each other. At first reserved and guarded, during the course of our meetings, she and I have built connect over time.
That time she said, “I don’t know how my business will work Amar. Will this loan really help me?” And I assured her with the deepest conviction that it would. When she said, “I am just a sales deal for you right?” And I said, “You were at first, now you’re a friend and I’ll make sure to lend you the money in the most seamless way possible. Trust me.”
I recall her narrating the hard work that has gone into creating a life for herself in the past five years since her divorce and her perseverance to gain a loyal list of 200 clients who swear by her unique designs of bags.
The hard work of late night design ideation, the endless cups of tea to fuel her vigour, the dilemma to sell bags on credit and her fearless attitude to create her niche in a competitive market of ladies’ bags. I think of that pure innocence, after seeing my pre-occupied face on one of those meetings with her, with which she said, “What worries the great Salesman?” And I candidly told her, “I have to meet my sales target for the month. But don’t worry, I won’t pressurize you.” She just smiled so warmly that at that moment I wished the best in the world for her.
The travel in the 9:45 am rush hour local totally wakes me from my reverie as I push my way out the train. I plead the cabbie to reach me work in 10 minutes and he does! I almost forget to punch in when our receptionist calls me back to do the needful.
Anita calls out calmly, “Amar, please punch in” but sternly and compels me to obey. I run into the conference room where the morning meeting with the rest of the sales team is already in progress. I excuse myself with the usual “sorry” face to my annoyed boss and join the meeting. We discuss each of our prospects for the day, our targets for the month and again we zoom out the office to close the impending deals.
An established presence in over 10 states and more counting, Capri is serious business and I can really see myself growing here. As head of sales, with my ground work done and cold calls made, I reach out to my sources to give me more leads as I reach Dikshaji’s building. Repeating to myself my elevator pitch on why procuring a loan from Capri will help her further expand her business. I nervously ring the bell and she promptly answers the door with a determined smile.
I enter the door and she invites me to sit on the sofa in the living room. She offers me some tea and I accept gladly. I recite my pitch with quiet confidence and she stills seems unconvinced.
Then I break into a logical analysis, relying on my sales skills and explain to her the very vivid benefits of taking a loan from us. For a good 15 minutes, she is quietly contemplating her options. Feeling like I have lost out on her, I thank her for her time and start walking out unsteadily. Just when I am ready to enter the lift, she calls me. She says, “Amar, I think I will take the loan from Capri.”
I turn around jubilant with joy, trying to hide my emotions but failing badly at that. She smiles and tells me to login her details into our sales files and asks me the date of loan sanction.
I explain her loan sanction process and leave with a promise that I will get back with ready documents for her to sign to process the loan further in another 2-3 days.
I jump with joy in the lift and head to office with a winning expression to clock in again and file Dikshaji’s papers. I inform my boss about the conversion and he happily slaps me on the back beckoning me to continue doing great work!
I return home to a waiting wife and tell her the good news and she says, “There’s dal and rice for dinner.” I get back to reality and ask her to bring it for me. I eat stress free and go to bed with a satisfied soul waiting for the promise of the dawn of another day to close another deal.
I realized one thing that day, salesmanship is all about building relationships with customers. It’s about understanding their needs and delivering the right product that complies with their requirements. The nervousness of approaching a prospective client, the uncertainty of their unconvinced attitudes, the adrenaline rush of seeing them turn into customers and the joy of meeting my monthly targets beckons me to sweet dreams.
Enabling a Culture of genuine responsibility
What CSR means at Capri Global
When we initiate our CSR activities, there’s always an intention to touch lives and make a difference in the society for its betterment and progress by enveloping a sizable population into our shelter of care that harvests seeds of a sustainable development.
It is our endeavour to reduce the gap between the privileged and the distressed target communities of our nation so that our social environment can be a stage of stability in the face of piercing financial distinction in a global backdrop.
Fostering relationships of mentorship with our adoptees gives us the juncture to induct conscious traces of economic independence and human empowerment. It is our privilege to improve their standard of living and become the structure to designs of lost canvases in a mural of hanging lives somewhere close to God.
Here are some excerpts from an exclusive interview with Capri Global CSR Representative – Neeta Joshi
“We have transformed close to 5000 journeys sinceour CSR inception in 2014,” says Neeta with a fervent expression, revealing pure passion for her work she does at Capri.
The idea to achieve socio-economic welfare for our society comes from a strategic point of focus that is to establish an apparatus of remittance to the willing who want to fight their circumstances and improve their lifestyles.
Our various programs like Capri Education Initiative, Capri Skilling and Livelihood and Capri Health and Nutrition program are targeted towards future leaders of our nation who tread past their difficulties and dare to dream for Zen fulfilment that comes from overcoming their own roadblocks by accepting our assistance and sailing through their sinking boats into our harbour of limitless possibilities for them.
We have invested a total of 3crores 40 lakhs in CSRcontributions to date that will include building a concrete infrastructure for education and sanitation facilities in tribal villages of Maharashtra and presenting scholarship opportunities for higher education for the deserved, skilling the unskilled and nutrition to malnourished in the coming years.
She says, “We closely monitor the progress of our programs with timely visits to the sites we adopt. It doesn’t end there; in close association with the government we make sure our adoptees receive the right atmosphere to ripen enough to face the world and its challenges in future.”
Neeta adds, “Our CSR is more than vested interests of philanthropy.” We make the change so that the change itself can nestle the smooth movement in nurturing their needs.
How does Capri measure the success of their CSR actions?
When we see them push towards improvement and become resourceful and responsible for their own economic acceleration; it is with independence and confidence is when we know we have made a qualitative impact on their subconscious freedom. Neeta says, “Businesses have a moral duty towards embedding social accountability in their corporate ethos.” By becoming the crutches of the crippled, businesses can medicate the survival of the impoverished.
We strongly affirm that our nation’s socio-economic framework can be fostered with greater conscious efforts by businesses willing to revolutionize the disjunct landscape of our society.
Neeta ends with a compassionate smile and phrase that may stroke a vision of every capable human doing their part in setting milestones for lifting the indigents of India, “While revelling in your success, contribute your bit to those whose wheels you can be in driving them to change their future prospects.”
West Meets East
“THERE IS NOTHING NEW ABOUT POVERTY. WHAT IS NEW, HOWEVER, IS THAT WE HAVE THE RESOURCES TO GET RID OF IT.”
-MARTIN LUTHER KING JR.
‘Financial inclusion’ has been one of the more popular socio-economic growth concepts in India. The term has been defined as providing financial services to the low-income group who are unable to access these through mainstream institutions. While there have been extensive initiatives taken by both public and private sector organisations for ‘banking the unbanked’, the north-eastern region of our country has not received the same degree of attention and investment compared to the rest of it. How can we hope to achieve economic liberation while excluding more than 50million of our people?
Exclusion = Denied Opportunities
Decision-makers sitting in big metropolitan cities are geographically too distant and culturally unaware of the situation in the far east. Ignorance further leads to assumptions based on misinformed or outdated information, creating mistrust and uncertainty. NER (north-east region) receives extremely limited interest from public and private financial institutions. Unemployment is rather widespread because of lack of income avenues. It’s no surprise this region falls far behind in socio-economic indicators compared to the rest of the country. Although there has been an increase in grant support from the government, does this imply they are solely responsible to bring economic enhancement?
Inclusive growth begins at the end of your comfort zone
An opportunity presented itself for us at Capri to explore this uncharted territory. Crossing over 3000kms, we reached a hilly city named Kohima in Nagaland. For the first time in our company’s history, we took a chance and leaped forward to take on a partnership that served more than just our business interest. Looking back at the reasons for our existence, we were reminded of our core value: inclusive growth. This was our chance to take risks and pave the way for other public and private institutions to join us and help achieve this common goal.
Insights we’d like to share from our experience:
Everything we had heard about Nagaland was far from reality. We found it to be safer than many ‘known’ states in India. People are extremely kind, hospitable and welcoming. Having visited multiple districts and villages, this remained consistent throughout.
The region lacks entrepreneurism. People are highly dependent on agriculture and government jobs for wages. However, we got to witness a wave of change in their mindset. Our development partner Entrepreneur’s Associates is the driving force behind this. Therefore, opportunities for financial intermediaries to help mould this region’s economy through entrepreneurship, guidance and strategic partnerships is limitless.
Mechanical exercises of frivolous assumptions of work processes will take over the human instinct of justifying real success. Will there, then, prevail the shield of human considerations in business transactions, those that compel the seamless progress of instinctive human ingenuity?
The banking potential is enormous but remains untapped. Due to inadequate outreach from mainstream institutions, NBFCs have a huge role to play in financial empowerment and development in this overlooked region.
NER is endowed with abundant natural resources in terms of forests, biological diversity, hydroelectricity, highly fertile and organic farmlands. However, it is far behind in infrastructure, connectivity and communication. This has proven to be a significant constraint for the region as they are unable to capture economic value of this natural wealth.
This region occupies strategic importance for trade. It shares international boundaries with Bangladesh, Bhutan, China, Myanmar and Nepal which is a whole new avenue to increase productivity and employment.
Financial Inclusion goes beyond accessing banking services. It is geared towards helping people improve their income, quality of life and social well-being as a whole. Although working in NER comes with its own challenges, we are positive that our joint effort with our local partner, Entrepreneur's Associates, will create ripples of long-lasting sustainable change.
Banking The Unbanked
The unguarded territory
As of 2018, there are 46 million MSMEs (Micro, small and medium enterprises) in India. They belong to the low-income groups of our society for which there is no formal credit system being offered by the banks. However, this sector contributes to 38% of the total GDP and offers 106 million jobs nationwide.
Despite the lauded efforts of the Government’s Mudra scheme, a substantial part of this low-income group population fail to fulfil their business aspirations due to lack of paperwork and adequate collaterals to meet the standards of bank borrowing.
So what should be done by key contributors to the global economy? Should we let them continue to fend for themselves and fail to expand their businesses? Or should there be financial inclusion for them so they can become a part of the nation’s vision of economic prosperity.?
Protagonists of growth
Estimates of the Ministry of MSMEs say that almost 40% of the overall manufacturing exports come from this segment. However, its potential is often untapped by business leaders and banks as they don’t want to invest in them due to credit risk associated with this group.
Expedient financial impetus to micro and small businesses are, in fact, reconstructing the social and economic fabric of our nation. According to sources from the Governemnt, “MSMEs are the backbone of the nation.” Despite the volatility they face in the eco space, they accord for 47% of income generation in the nation. That is more than the services and industries’ contribution which offer 17% and 26% respectively.
Wheels of fortune
Capri Global, an NBFC that began operations in 2009 is the hope driver of this sector. Since their inception in 2011, they started lending to MSME’s in 2013 and have lent to more than 9000 small scale businesses to date. with over 3900 businesses alone last year. According to Capri, “We have seen a rippling effect of economic growth from regional, national to global levels by timely consumption of financial help to the MSMEs.”
A slice of progress
One such example of timely credit is of Prashant Shinde, a hostel owner in MP who wanted to expand his business by renovating the hostel for better facilities to boarders. “It’s very disappointing to get rejected outright by banks for loans because of failure of credit proof trade for money. “
Capri sanctioned a 1.2 million loan to Prashant so he could make the changes to his hostel and also invest a part of the loan in his cable services. Capri nurtured and supported Prashant’s dream and he is now running his business successfully and in turn, contributing to the nation’s GDP.
We, at Capri are committed to recognizing milestone setting efforts by the MSME sector of India by rendering timely delivery of financial aid for them to achieve their business targets and grow exponentially. It is our endeavor to empower the understated but thriving skill based manufacturing industry, enabling livelihoods to make a difference in the growth story of our nation.
Why it’s crucial to use Artificial Intelligence to our Advantage
Your workplace is your second home and your colleagues are next to kin. That’s because we spend a very large part of our lives in office. We all face our deepest emotions during work hours.
The joy of accomplishing targets and getting that needed paid vacation, the promiscuity of grumbling about your boss to your favourite friend in office when he complaints about your work, the happiness of celebrating your birthday with your colleagues and taking that quick break with your office mates after work to just relax and ease out.
Office is like a mirage of so many lives mixing together in a palette of perfectly mixed colours that grace the tapestry of the one of a kind mosaic - An illustration of small pieces of lives brought together to complete the story of a united vision of accomplishing that business target.
But, well you know what’s the point? We are soon going to be replaced by minions of technology sans any emotional shield. Sad, there won’t be any heart touching stories to recall in silent moments of precious nostalgia of helping someone or making a difference in someone’s life, the sheer fabric of humanity will falsify.
Mechanical exercises of frivolous assumptions of work processes will take over the human instinct of justifying real success. Will there, then, prevail the shield of human considerations in business transactions, those that compel the seamless progress of instinctive human ingenuity?
Remember the times you ran short of enough cash at your dear convenience store , on those odd days to pay for your groceries? Well, there was the life saver of a cashier who considered your predicament of running out of little change or cash to pay at the counter. If you were short of 5 /10 bucks here and there; he would still let you take your stuff from the shop on the promise that you would pay him the next day.
Snapping back to 2019, customers are downloading apps to pay for groceries at Amazon Go where Artificial intelligence has replaced the everyday Santa of a cashier in the US. In this case, if you’re short of cash you just have to drop the groceries back in the store. No matter if you go hungry on that rainy day. There’s no “pyaarelal”, anymore to your rescue.
According to statistics, 61% businesses globally have adopted AI to replace manual jobs.
You know they say necessity is the mother of all inventions. You think, was there a need to replace the cashier at all? Yes sure, it made for great innovation for the brand for it to rank first in the industry, among its competition. But it has throttled the sheer constitution of humanity!
Even if Amazon thought that AI is a long term investment, it didn’t take into account that a life time of the cashier’s salary would be cheaper than investing in a heartless AI. Forget the lives he touched that made the brand synonymous among its loyal customers like you.
Here are some compelling excerpts from a thought provoking interview with VP of HR- Divya Sutar at Capri Global that dispels myths of technology advances. “We use technology to ease our employees struggle with certain business complexities. But we definitely don’t allow it to replace us.”– Divya Sutar. We have to understand that technology should be our slave and not the other way round. Otherwise, at the speed at which AI is replacing human jobs there will come a point in “technology advancement” that it will replace the race of humans completely.
“This I think is the biggest challenge of HR in a global scenario today – AI, slowly but steadily replacing human jobs,” says Divya. It’s now replacing mundane taskmasters in the name of a seamless business work flow but tomorrow it may replace you. Think about it.
Think of the movie Predators where the giant robot wipes out the entire human race! And yes, even the most powerful will seize to exist in its clutches. Is it not our responsibility to protect our cubs, our planet of humans as one of the extra- terrestrials in the universe? Is it not time to defend our kingdom? Do we want to be taken over by robots that are then so advanced that they will be programmed to create more robots and destroy the beauty of mortality altogether?
“If technology makes life easy, use it but don’t be ignorant enough to abuse it. That’s why there is a pressing need to educate even the most educated about the side effects of AI adventures to protect our species in the face of a technology first insurgency,” says Divya Sutar.
“Use technology that will help bring out the best predictive analysis for humans to continue to take the final call using their god given instincts to rule the rooster,” adds Divya.
Like we established – There’s always somebody above you. Let that be the experienced CEO at work or father of the family. Let there be emotions. Let there be human considerations. Let us be ruled by love for our fellow companions on this planet earth.
“Let us continue to flourish in being the smartest of living beings in this cosmos. Let the world continue to celebrate instinctive communication that no AI can ever be programmed with,” Divya ends on a possessive note.
1. Vision – While a business may be launched on a small scale, but if it is backed by the foresight of the entrepreneur who has a vision of growth, it can scale new heights. Starting a business is just a beginning for an entrepreneur who is on his way to pursue a much bigger dream.
The success of a business largely depends on the entrepreneur who started it. It is his thoughts and actions that will have a major impact on the success of the venture. Here are a few qualities that an entrepreneur should have for making a business successful.
2. Open to learning – A successful entrepreneur is one who has an insatiable desire to learn new things and implement the same in the business. He will never resist or avoid learning anything new that can add value to the business.
3. Balanced risk appetite – While the old school of thought might lean towards the conservative methods of doing business, a new age entrepreneur can become successful if he develops an appetite of taking calculated risks. This, however, does not mean that a businessman should take risks without putting a well calculated thought.
4. Confidence - Confidence is a very positive quality in a successful entrepreneur who starts up a business with a well-drawn plan that he is confident of. Confidence however is a result of a good research, analysis and self-assessment. While confidence can be a very good quality in an entrepreneur, over-confidence might turn out to be a disaster.
5. The art of moving on – Learning from the mistakes and moving on without dwelling in the past too much is an important quality that an entrepreneur must have. He should take the mistakes and wrong decisions by his stride and ensure that the same are not repeated in the future and at the same time should not hold himself back and panic, but instead should quickly move on and tread on the new improved paths
Effective communication with clients can prove to be a vital factor in shaping up your business. Remember, the relationship with the client doesn’t end with a business transaction. For future retention of the client, it is imperative for a business to ensure that the client is satisfied by the products and services provided by the business.
Having staff dedicated to client servicing can add a lot of value to the way your business functions. For instance, once the goods are delivered to the client, getting his feedback on the condition of the goods, time taken for delivery and whether the packaging was good enough for downloading the goods can prove crucial for necessary changes you would want to make in your business.
If the feedback is negative, you should take a serious note of it and find ways to improve the process. At the same time, be courteous enough with your client and appreciate him for sharing his feedback with you. As a follow up, when the goods are delivered next time to him with the modifications, take his views again. Remember, no one would give you negative feedback just like that. If the client is satisfied with the changes, he would not only appreciate the same but also share his views about your business to other people building up your reputation.
Say for example, if you are in the business of tiffin services, client feedback will turn out to be the most crucial factor in shaping up your business. If you call up your clients at regular intervals and ask them whether they need any change like less spicy food or cooking with lesser oil or any other suggestions they want to make, that feedback will impact your business drastically.
As an entrepreneur in the MSME sector, it is imperative for you to keep a periodic check on whether your business is compliant with the mandatory licenses and permissions necessary for your business. Having these permissions and licenses issued by various regulatory bodies in the state can ensure a smooth functioning of your business without any sudden hiccups or disruptions.
Remember, there are multiple stakeholders from the government and civic bodies that issue licenses related to various businesses. While some of the licenses and permits for all the businesses may be common, a few licenses would be different for every line of business. For instance, an equipment manufacturing unit would not require a Food and Drug (FDA) license, but a business manufacturing chemicals or food products would need that license.
Also, one must be updated with the periodic announcements, launches by the government. Say for example, after GST was rolled out it became mandatory for every business to be registered with it.
It is not only the licenses that directly impact your business are mandatory and necessary. There are several other clearances and permissions to be taken for running a business. For instance, is there fire-fighting equipment in place in your premise. Has the license been renewed regularly without lapsing?
There are several other clearances to be taken from designated bodies on carbon emissions, noise pollution, safety equipment audit. While it is important to have all the licenses and permissions required for your business in place, it is equally important to renew them from time to time.
So, the SME loan you applied for has been credited in your account. While this is great development for your business and your money matters have been sorted, here are a few things that you can start doing immediately after receiving the loan that will positively impact your enterprise.
1. Have a repayment plan in place: This should ideally be done before the application process, so that once the loan is credited you have a repayment schedule in place. Remember, you can improve your credit ratings by timely repayment of the loan thereby build a positive reputation and financial health of your enterprise.
2. Don’t rush into taking another loan: Financial institutions might roll out tempting offers on new loan products that could be hard to refuse but do not rush in taking another one before having serviced the existing SME loan. More loans mean more money to repay at regular intervals. Your loan should not become a burden on you. Rather than going for a new loan account, carefully examine whether you need more money. If the answer to this question is yes, then seek a top up from your existing lender or go for refinancing with the same lender.
3. Invest in upgrading technology: One should not think that buying an expensive laptop or a mobile phone will lead to upgradation of technology in the business. It is the automation of the processes like documentation, accounting etc that will boost the efficiency of your business.
4. Seek professional advice: Taking advice from a chartered accountant or a law firm can help the business phenomenally as they can bring their expertise in your venture. A CA firm can guide you on the health of your finance and how you can upscale it further without hampering your business prospects.
5. Create your brand value: Invest in marketing your products and your business as a whole. Develop a website of your enterprise and invest in designing your logo and other stationery material. These steps will enhance your brand image and help positively in your business growth.
A good marketing strategy in place ensures that the products offered by your enterprise are sought out for in the market. While marketing is a valuable tool that entrepreneurs must integrate in their business, the next two decades will also require equal emphasis on social and environmental sustainability for flourishing the MSME sector.
Many a times there is a debate on why should one spend on marketing when the product is good and innovative enough to get sold on its own merit? But here it is very important to note that you might have an excellent product to offer, but if the consumers are not aware of the same, there is less likelihood that it will translate into good sales. However, marketing should not be confused with sales.
The process of marketing begins from the basic stage of the product. Entrepreneurs must study the consumer habits, trends and the changes expected by them in their line of products. The same amount of research must go into pricing the product after carefully evaluating the competition and the response of the consumers on pricing. Once the product and price are in place, awareness about your product should be done to the right audience. For instance, if you are manufacturing FMCG products, you must study the market beforehand and identify the platforms on which your potential consumers are hooked on so that promotional campaigns can be carried out for marketing the products.
The best available marketing platform in today’s day and age is the digital online platform. Marketing your products through an effective social media campaign can get you maximum leverage for your business.
New age entrepreneurs must give equal emphasis on long term social and environmental sustainability in their business. While entrepreneurs are more focussed on boosting the sales and profits figures, they often tend to neglect the environment that might affect their business in the long term.
For instance, there might be a growing competition in your line of business and you could be in a struggling position to combat that. But if you involve environmental sustainability model in your business right from the beginning chances are that you might score over the competition in terms of pricing as well as brand reputation.
The climate is going to have a strong impact on the business in the next two decades and therefore it is necessary to plan how your business will thrive in those conditions. Example, having an alternate energy model like a solar energy plant can help you cut down costs and affect your pricing.
Similarly, while contributing to the society is generally considered to be the work of big corporates through their corporate social responsibility programmes, entrepreneurs can adopt a social sustainability model for their better brand recognition and reputation. Remember, if you contribute to the social causes through your business, it will have a positive impact on the reputation of your enterprise.
There is a huge credit deficit in the businesses run by women entrepreneurs in the country. Women are often not projected as highly in leadership roles in the MSME sector and are engaged in the informal, low skilled sector. We at CGCL have a counter view on this. We believe that women, who are the principal decision-makers in consumer spending can offer better innovation in the businesses if motivated enough. We are committed in unlocking the potential of new age women entrepreneurs who face a big challenge in having access to finance.
Globally, 30 per cent of the MSMEs are run by women and there is a credit deficit of around 300 billion dollars that hampers the growth of enterprises run by women. We see an enormous potential in women-run-businesses and believe in empowering them and become a partner in their prosperity.
We believe that women can open new markets because of the different strengths they possess than men. Women entrepreneurs leverage unique assets and abilities, and these can play a vital role in emerging economies like ours. For instance, a woman taking tuitions at home wants to expand her venture and open a coaching class or a nursery playgroup but is stuck with finances. Here is the potential that is completely off the radar. She can become a successful entrepreneur if her dreams if given a boost initially. Who knows that the same woman who would teach 4-5 students at home can run a chain of coaching classes in the city. By doing this not only will she realise her own dream but also contribute significantly to the society by generating jobs to run her business et al.
So, if you are a woman already having a business or wanting to start one and facing difficulties in expanding the same, reach out to us. We are here to help you. While you focus on growing your business, we will take care of your financial needs. We will support you in all stages of your business growth.
It is extremely satisfying to own a business and becoming a successful entrepreneur. But a lot goes into making a venture successful. If a new age entrepreneur takes care of the few basic but important things, nothing can stop the business from flourishing.
We list below 6 tips that you can apply in your business that will maximise the chances of success:
1. Proper planning: An effective business plan is an absolute must before you venture out to realise your dream of becoming a successful entrepreneur. Although it might take pain staking efforts, you will realise that they were totally worth it. So, create a strategic business plan taking into consideration the competition in the business, manpower needs, overhead costs, marketing tools etc before setting up a business.
2. Plan for long term: It is important to know exactly how much capital would you require to start a business. This would include costs like setting up cost, operational costs and buffer provisions. For example, what if a client delays a payment? Would it affect your immediate operational cost? Have you made enough provisions to survive this scenario? These are the questions that you should reasonably satisfy before you take a plunge in the world of business.
3. Study the competition: Never commit the mistake of underestimating the competition and do a thorough research on the strategies and models adapted by the competition in your line of business. Study the strengths and weaknesses of the competitors and device your strategy accordingly. You may have adequate funds and a business plan in place but if you have not analysed the competition you might fail in the business.
4. Don’t start a business just for the heck of it: One might get bored by being a regular employee over a period of time and develop a thought that he can start his own venture using his expertise and skill sets. However, what is important to note here is that while an electrician might be very good at his craft but before starting his own business he should evaluate himself on whether he has the qualities required for becoming a businessman? One must understand that becoming an entrepreneur requires involvement in all the facets of the business. It is therefore important to evaluate whether one has the business acumen and understanding of these subjects before starting a business.
5. Innovate and automate: Bringing uniqueness in your business and the products you deal in will not only help in sustaining the business, but you will also stand out from the competitors. Take help of experts in your line of business who can guide you on what innovation can be made in the business. Sometimes all it needs is a little change in traditional approaches that can bring about a sea change in the perception of your business from external stake holders. An entrepreneur should also make optimum use of the available technology for various processes of the business. Automation can not only make work easier but also become a vital factor for future expansions.
6. Have strong and clear fundamentals: Decision making process becomes very simple if the fundamentals are clear in the mind of the entrepreneur. Right from manpower management, client servicing and expansion plans become more easier if the fundamentals of the business are clear. For example, if transparency is one of the fundamentals, it should reflect in all facets of your business.
The Micro, Small & Medium Enterprises (MSME) segment is expected to play a vital role in the growth of the Indian economy because of its tremendous potential to generate employment and bridge the urban-rural gap. The development of this segment is extremely important to meet the national imperatives of financial inclusion of various strata of the society. At CGCL, we see ourselves as playing the role of a catalyst in the social revolution that the MSME sector is going to bring in the coming years. We will nurture and support the new age entrepreneurs who have the potential to create globally competitive businesses from India.
If one looks at the global scenario, it is the MSME sector that has bailed out regions from economic downturns. The MSME therefore truly deserves to be attributed as a backbone for a country’s growth. Empowering these very entrepreneurs who will be contributing significantly is CGCL’s core agenda.
There is a silent revolution that the MSME sector is set out to bring in the nation. It is a false notion that only the billion-dollar corporates are generating employment in the country. The truth is that around 40%of the total work force comes from the MSME sector. It is important to note that is the small and medium enterprises who are generating employment in the rural and semi-urban areas leading to growth in the utmost underserved areas. By supporting them build their enterprises by financing for expansion or buying sophisticated equipment or training of their personnel, CGCL plays the role of a catalyst in the truest sense. The money raised by entrepreneurs from us helps them in introducing modern technology to their businesses making them capable of competing with their international counter parts and generate more employment and enhance the skill sets of the people which ultimately has a solid social impact.
We weave ourselves in the enterprises we support in a way that while it helps entrepreneurs to grow their enterprises and fulfil their dreams, at the same time the very enterprise also becomes an important stakeholder in the location where it is situated. Growth of a small or medium enterprise directly affects several other small businesses and boosts the overall growth of the region.
The increasing trend of the contribution of this sector in the GDP indicates that MSME sector will be instrumental in the transformation of the Indian economy from an agrarian to an industrial one.
At CGCL, we do not look at them as ‘small’ businesses. We look at them as high quality businesses as the zeal in the entrepreneurs running them are so high that they are involved in the business activities 24x7. The insatiable hunger in these new age entrepreneurs attracts our attention and takes us on a mission to become a part of their success stories and ultimately the ‘India Growth’ story. We strongly believe that entrepreneurship-led economic growth is more robust and inclusive.
Creating a vibrant entrepreneurial ecosystem will require strong capital inflows as well. We at CGCL are committed to this cause and are reaching out to those who have great ideas but are stuck with finances. As an important stakeholder of the innovation ecosystem, CGCL has a crucial role to play
You might have decided to take a loan to meet your business requirements and have already chalked out a plan in that direction. So just as you take a financial plunge, CGCL presents the 10 things you must know about SME loans:
Only banks can give SME loans:
This is a misnomer that prevails in the minds of many entrepreneurs even today. Though one can take business loans from banks, there are several other financial institutions like NBFCs that offer variety of business loans. In fact, the alternatives to the banks have emerged as more customer friendly in the past few years.
Do I need a perfect credit score to get an SME Loan:
While a good credit score is always preferable by the lenders before approving the loans, this is not the only criteria that would be the deciding factor in deciding whether to approve the loan? From the borrower’s perspective, if he doesn’t have a good credit score at present, he should look at the options of the institutions from where he can take loans from the current credit score and slowly and steadily should build up a good credit score so that he gets a good bargain in future.
Will I miss the bus due to the ‘long’ time taken to get a loan?
This is again a wrong notion that takes a very long time to get a business loan. Money matters are crucial and can affect the business if money is not handy when needed. Traditional business loans that banking institutions offered in the past did take time for processing, approvals and disbursals However, with the advent of technology and competition among lenders in this space have resulted in favourable scenario for the borrowers. Many institutions now offer spot approvals and assure disbursal within a week. We at CGCL for example are committed towards making finances available to our customers by completing loan formalities in less time.
Some of the documents that I need to keep handy:
Running helter-skelter in the last minute to arrange for documents can delay the application process. Instead, a little homework done before making a loan application can prove beneficial to both the lender and the borrower. For example, keeping documents like copies of PAN, Aadhar card and a passport size photograph can ease the KYC formalities. Copies of income proofs such as Income tax returns of the last three financial years, registration details of the business, a detailed proposal on the reason why the loan is required can speed up the process.
Have clarity of mind by asking these questions to yourself:
Loan is a financial obligation that needs to be dealt with complete focus right from the beginning. One must be clear about all facets of the loan that he is about to take. For this, one must put across questions to himself like
1) How much loan do I need? (It shouldn’t be more or less than required)
2) Do I have a plan on how to use the funds and about repayment of the same?
3) Where exactly am I going to utilise the funds et al
The Goods and Service Tax rolled out earlier this year is the biggest tax reform since Independence and is a game changer for various businesses. There is a lot of anxiety in the minds of various stake holders of the financial services business. So how is GST going to affect your loan with CGCL. Is it going to pinch your wallet? Well, not really!!
No change in interest rates:
Interest rate is one of the biggest factor that affects the loan business both from the borrower as well as the lender’s perspective. So here’s the good news! GST will not affect the interest rates be it home loans, SME loans or construction finance loans.
So what has changed?
The service tax on financial services that earlier was 15% has been replaced with 18% GST. So for example, if a financial institution charges anywhere between 0.25% - 1% of the total home loan amount as processing fees, then for a loan amount of Rs. 10 lakhs, earlier the processing fees would have been Rs. 2500 – Rs. 10000 plus 15% service tax amounting to Rs. 2875 – Rs.11500. Now the same would cost Rs. 2950 – Rs. 11800 with 18% GST.
From the above example, one can make out that while the processing fees have gone up post GST, the amount won’t burn a hole in one’s pocket
We have all made new year resolutions year after year with personal targets kept in mind. We want to pay attention towards losing weight, kick a vice, reading more books and so on. New year resolutions always bring along with them excitement and a deadline to adhere to. Accomplishing these resolutions have a profound sense of pride and achievement in us and we set furthermore goals to improve the quality of our life. Likewise, we can set goals for our business as well that can be a mix of achieving targets to learning from lessons of the past and not committing them in future.
Below are the five resolutions we suggest you must make to bring in the new year:
1) Make business reviews a weekly event: Set a target for various activities like increasing sales to bringing down costs for the new year. But setting goals only will not culminate into achieving them. For this you need to review your actions every week and see whether the plan is going in the right direction or needs modifications.
2) Train yourself in something new: Be it a short-term certificate course or a part time vocation that might help your business, try and train yourself in something new this year. Technology is upgrading by the minute and you may want to introduce these advancements in your business. Having a short-term certification course might just help you in easing your processes and increasing the efficiency of the business.
3) Network, network, network: Networking with professionals or other entrepreneurs in your line of business could help you tremendously in improving your business decisions or processes. Many a times we follow traditional methods in running the business and through networking and business meets you might come across innovative ways that can help you improve the quality of your business.
4) Resolve to introduce one innovation in each processes of your business: Innovation is the key to success. Stay focussed and jot down what is that one innovation that you can make in your business processes that will make you stand out in competition. Innovating would also mean increasing the efficiency of the business processes.
5) Jot down what did not work for you last year and eradicate it: While you embark on the new year, you must sit down and think what were the things/mistakes that did not work out favourably for your business. If somethings proved disasters for your business, just eradicate those practices this year and if you had committed a few mistakes last year that resulted in hampering the business, learn from those and don’t repeat them this year.
Human resources are the most crucial ones in deciding the success of a business. While you may have formulated the policies, it is the people who are going to implement it. Remember the happy index of the staff can contribute majorly to the success of your venture. Long working hours, strict deadlines and the environment of a manufacturing unit can often take a toll on your employees mental and physical well-being. We list below how taking your staff on a weekend holiday can not only boost their morale but also inculcate the values of your enterprise in them.
1) Taking your team over a weekend in a nearby resort, for example, will create a positive image of the owner and the overall work culture of the company. If planned well in advance, the bookings too won’t burn a hole in your pocket and taking them out in a lean season will not affect the business as well. It will have an impact on the workforce who will realise that they are being valued by the enterprise.
2) You will also get to know your team better and their hidden qualities might come out in the open if there are various activities planned also in the trip. You can identify these talents and use them in growing your business.
3) It will surely earn you good word of mouth publicity and the market reputation will grow as far as potential employees are concerned. Such activities spread fast in the market as the employees discuss them with friends, share the pictures on social media etc. People would look forward to work with you seeing that you value your work force and don’t treat them badly.
4) Recognise their efforts and award them suitably in these outings. Who doesn’t like to receive awards? It instils a sense of pride in achieving professional goals and also motivates and inspires others to put in efforts so that they can become recipient of such awards. This not only boosts the morale of the work force but also helps in team building process.
Eligibility: A number of factors like age, gross/net income etc ...
- As per 2017 estimates, the MSME sector consists of 51 million units and provides employment to over 117 million persons. The sector contributes 7% to India's GDP while accounting for 45% of the total manufacturing output that contribute 40% of the exports from India.
- About 55.3% of the country's MSMEs are based in rural areas.
- Close to 95% output of MSME sector is used in domestic consumption.
- SMEs manufacture close to 6000 products in India.
- SMEs account for 16 per cent of total bank lending in the country.
- According to a survey carried out by American Express Global SME Pulse 2017, 71% of the SME respondents hold an optimistic view about their domestic economy, followed by Japan with 62% and Japan with 54%
- In a first, Ministry of MSME has been awarded the ISO 9001-2008 certification. Implementation of ISO standards has enabled the Ministry to identify areas for improvement and also bring in transparency and accountability in its functioning.
- The government has developed a web-based application module and Mobile App 'MyMSME' has been launched enabling entrepreneurs to submit their applications for schemes online and track it at their convenience.