Jain
Jain
Jain
EMPIRICAL STUDY OF
DEVELOPMENT BANKS &
ENTREPRENEURSHIP
PROMOTION
IAEME Publication
IAEME PUBLICATION
FINANCIAL PERFORMANCE OF SELECT ED BANKS IN PAT IALA -(PUNJAB NAT IONAL BANK, UNIO…
IAEME Publicat ion
PRIYANKA
Research Scholar, Shri Venkateshwara University, Gajraula, India
Dr D.P Jain
Supervisor, HOD Commerce, Hindu College, Sonepat
Supervisor, Shri Venkateshwara University, Gajraula
ABSTRACT
This study aimed at investigating the role and effect of “Development Banks &
Entrepreneurship promotion “loan attained by Small Enterprises from development banks
in fostering promotion and enterprise development in India. The study was carried out NCR.
Literature on development banks, entrepreneurs and finance in Small enterprise was
extensively reviewed. To measure the extent of promotion, three levels of promotion were
categorized, namely introduction of completely new ways and products, modifications of
ways and products and adoption of new ways and products. To achieve the desired results, a
questionnaire, interviews guides and field observations were used for data collection. The
statistical Package for Social Sciences (SPSS) and content analysis were used for data
analysis.
INTRODUCTION
In India efforts to promote and develop entrepreneurship among the youth began with
Industrial Campaign during the early 1960s. It has now taken the form of a nationwide
movement. While Gujarat is credited as being the first state in the country to make planned
and systematic efforts in entrepreneurship development, in the North India, is the pioneer in
this field.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324 (Print),
ISSN 0976 – 6332 (Online), Volume 6, Issue 1, January-April (2015), pp. 01-08 © IAEME
Entrepreneurs are considered to play a vital role in the global economy although a
solid body of academic literature linking entrepreneurship (innovation) and economic growth
did not emerge until the 1990s. The work of researchers such as Boettke et al 2009 and
Wennekers and Thurik 1999, points out that economic growth cannot be understood if the
true “agents of change” – the entrepreneur – is dismissed from the process. The development
of business entrepreneurship has become a global phenomenon since it is perceived as the
sure-way solution out of poverty. Entrepreneurialism is an attractive theme of study because
it serves as a link between human and economic development since people with a greater
variety of life choices allowing for an improvement of their skills are able to contribute more
to their society.
There were six development banks operating at the all-India level, together with a
range of other national and state-based agencies (IDBI, 2004). Each of the all-India
development banks was accorded a particular role in economic development. For example,
the Infrastructure Development Finance Company Ltd. (IDFC, 2003) was charged with
providing the foundations for the development of industries by "removing impediments to the
movement of capital to infrastructure sectors" in financing projects such as roads, power and
agribusiness. The Industrial Investment Bank of India Ltd. (IIBI) was the primary funding
and reconstruction agency for the rehabilitation of 'sick' and closed industrial units (IDBI,
2000). The Small Industries Development Bank of India (SIDBI), incorporated in 1990, was
set up to finance SMEs, including village and cottage industries through to high-technology
SMEs, and its role was accorded particular relevance in fostering balanced regional
development
The research is an investigation concerning regional development and the economic
financing function of the development banks, examining how well the banks fulfilled its role
in respect to fostering the start-up and growth of SEs in developed / developing regions of
India. At this time the landscape of the public (and private) banking system in the nation
underwent significant change as a result of the implementation of reforms recommended by
the Narasimham Committee in 1992 and 1997 (Ketkar & Ketkar, 2008).
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324 (Print),
ISSN 0976 – 6332 (Online), Volume 6, Issue 1, January-April (2015), pp. 01-08 © IAEME
REVIEW LITERATURE
• To find out the effects of loans received from development banks for promoting
business venture.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324 (Print),
ISSN 0976 – 6332 (Online), Volume 6, Issue 1, January-April (2015), pp. 01-08 © IAEME
• To identify challenges and solutions associated with loans for Enterprise Promotion.
• To study the extent to which development banks have been successful in generating
entrepreneurship environment in small scale sector of the national economy.
METHODOLOGY ADOPTED
The researcher visited five small enterprises among the 35 enterprises which had
responded to the questionnaire for interview in order to get more explanations. Unstructured
interview was used. The unstructured interview was chosen not only to give a greater
freedom for the researcher to ask questions and lead the direction of the interview but also
gave room for the respondents to provide in-depth information.
The population was small enterprises that were situated in Delhi (NCR) and three
banks IFCI ICICI and IDBI. Sample Population, the criteria identified for formal business
entrepreneurship in Delhi is based on a singular sample of the private sector, those associated
through those have taken financial assistance from ICICI BANK, IDBI BANK, IFCI BANK
only representative of a small group of entrepreneurs and cannot be considered representative
of the whole of private sector activities in Delhi (NCR). Since there are many businesses in
Delhi (NCR), researcher was able to provide the knowledge needed to get around and provide
the sample needed for the research. Statistical tools like ANOVAs & Percentage Analysis has
been used for interpreting the results. The research used explanatory design. Explanatory
research attempts to clarify why and how there is a relationship between two or more aspects
of a situation or phenomenon. Both primary & secondary data has been used for the research.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324 (Print),
ISSN 0976 – 6332 (Online), Volume 6, Issue 1, January-April (2015), pp. 01-08 © IAEME
It can be seen from above table that the simple coefficient correlation between
Development Banks and Entrepreneurs promotion recorded 0.223 values indicating a weak
relation at 0.01 level of significance. Since there is a positive though weak relationship
between them we accept the alternative hypothesis; this implies there is a relationship
between Development Banks and Small Entrepreneur Promotion. The weak relationship may
implies that there is supposed to be a working relationship but it is weak. That is, the impact
of the relationship is not felt between both of them.
TABLE: ANOVAb
Model Sum of Squares Mean Square F Sig.
1 Regression 11.940 11.940 9.822 .002a
Residual 227.309 1.216
Total 239.249
TABLE: COEFFICIENTSa
a. Dependent Variable: Development Banks and small enterprises are working together to
develop best practices in India
If calculated F > 0.05; reject null Hypothesis Ho and accept H1. From the above
ANOVA (F distribution), calculated F is 9.822 at 0.02 significant levels. Since F is 9.822 at
0.02 is greater than 0.05, we accept H1 and reject H0, which implies that there is a working
relationship between them.
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324 (Print),
ISSN 0976 – 6332 (Online), Volume 6, Issue 1, January-April (2015), pp. 01-08 © IAEME
H2: Development Banks does not implement the sections in the banks loan policy on
Entrepreneur that states that all small enterprises should contribute to the growth of national
economy.
H2: Development Banks do implement the sections in the banks loan policy on Entrepreneur
that states that all small enterprises should contribute to the growth of national economy.
TABLE: ANOVAb
Model Sum of Squares Mean Square F Sig.
1 Regression .264 .264 .561 .455a
Residual 88.095 .471
Total 88.360
a. Predictors: (Constant), The section on development banks states bank loan policy
entrepreneurs is elaborate enough. b) Dependent Variable: Is the section of development
banks stating that entrepreneurs of small enterprises should contribute to the growth of
national economy being implemented at all levels?
TABLE: COEFFICIENTSA
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324 (Print),
ISSN 0976 – 6332 (Online), Volume 6, Issue 1, January-April (2015), pp. 01-08 © IAEME
From the above result, the calculated F is 0.561 at 0.455; it is less than 0.05
significant levels. We accept Ho and conclude that Development Banks does not implement
the sections in the banks loan policy on Entrepreneur that states that all small enterprises
should contribute to the growth of national economy.
CHALLENGES
• It was observed and found that there were similar constraints for promotion that were
finance oriented in the studied women enterprises. One was a small amount of loan
that was provided. The amount was not enough to make an investment on promotion.
• “investing in upgrading of product is very expensive and sometimes very risky, I
rather use the money I got from loan in buying more raw materials and adding some
more workforce so that I increase quantity of what I produce, that is more profitable
and it is the one thing applicable considering the amount of loan we get from the
Financial institution.”
• Also the data revealed that the weekly returns of the part of loan amount was a
constraint to the enterprisers. That is due to the finance arrangements that the
entrepreneurs were supposed to go back to these (IDBI, IFCI, ICICI) banks weekly to
return some portion of the loan as arranged as part of terms and conditions for
obtaining the loan.
• Other constraints that came about included high interest rates that was charged.
• The most common constraint that was spoken by almost all the respondents was the
gestation period for starting returning the loan. It was found that these enterprises saw
that there was a very short gestation period until the starting of paying back the loan.
The banks should give us even a year before starting collecting their debts.
• Loans for promotional activities given that you make a good assessment of the
amount of loan needed and the terms and conditions that come with the loan. Also
without forgetting good finance management skills and hardworking.
CONCLUSION
Investing in promotional activity is not a short time thing, the profits from these
activities takes time to be seen. Now if you are given a loan that has to be paid back after six
months what good does it do if you put all of the loan taken into something that will not be
even half done by six months. Also it was found that the terms of procedure of payments
needed to be evaluated and changed according to kind or type of an enterprise. The weekly
payback should have considered the type of the enterprise and the product produced and not
the amount of the loan that was taken. The weekly paybacks should be flexible because all
days are not the same in terms of profits, some weeks business is bad compared to others.
This way maturity of profits of the loan could have been captured. Other solution that was
put forward asserted that Loan should be directed to production and not other personal
consumption. This is due to the fact that sometimes the loans that are obtained from these
micro credit institutions end up being used in other social activities and just a few of the loan
remained is put into investment into the enterprise. The common solution that was so
stressed was concerned with reduction in interest rate. The entrepreneurs suggested that
reduction in interest rate will have a more effects on promotion activities because the
entrepreneurs can now afford to take bigger loan and the payback will be easier and also it is
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International Journal of Advanced Research in Management (IJARM), ISSN 0976 – 6324 (Print),
ISSN 0976 – 6332 (Online), Volume 6, Issue 1, January-April (2015), pp. 01-08 © IAEME
effective because the amount invested will be bigger enough to realize increase in
productivity and hence profits.
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