Online lending players tweak SME loan underwriting as credit moves online

The small and medium enterprises have been increasingly logging in to secure funding via online platforms. As more and more SME players move online  the players are also tweaking the  basic, online underwriting norms to ensure consistency and thereby reduce NPAs in this segment. Experts explain that in physical underwriting, a bank looks at the company's bank statement, total number of credits/debits, cheque bounces and average balance which is calculated on proxies on three days in a month. While in case of online underwriting, the actual average balance gets captured. The difference can be up to 50-60 per cent."We not only look at total credits and debits, we also classify the entire banking to reflect a month-on-month profit and loss. This helps in better underwriting because you can understand what money is coming from revenue and what money is coming from a loan taken. The average balance can go up if the borrower has taken a loan too. We also look at the vendors who have a banki

Business Standard

DBS Bank Ltd is a Singaporean multinational banking and financial services company

Hopes to increase its SME customer base by 30-40% in the current year

DBS Bank eyes Indian SME sector

CBEC Circular no. 984/8/2014-CX dated September 16, 2014 says that in all cases where the appellate authority has decided the matter in favour of the appellant, refund with interest should be paid to the appellant within 15 days

'To expedite refund, take steps listed in chapter 32 of Customs Manual'

MSMEs reap benefits from investments in brand-building

The demonetisation of high-denomination currency notes has resulted in a liquidity crunch and a short-term dip in retail consumption

Supplies to SEZ can be counted as part of export obligation

Edited excerpts from the SME chatroom dicussions

CRISIL SME Tracker: Diversification drives growth for auto component MSMEs

Industry has seen a slowdown in revenue growth over the past 4 financial years due to lacklustre demand from automobile manufacturers

We refer to your article titled 'DRI summons for no clear reason' in Business Standard on October 24, 2016. How do we deal with the summons that we have received?

'If export obligation is fulfilled, duty exemption need not be surrendered'

Amend MSMED Act to ensure faster payments to MSEs

Delays in receipt of dues from corporates remain a major challenge for micro and small enterprises (MSEs) in India, along with high cost of working capital finance and collateral requirements of lenders.The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 stipulates that receivables of MSE suppliers must be paid within 45 days and accordingly disclosed in the buyer company's annual financial statements.However, CRISIL's study of receivables of its rated MSEs in four large industries - engineering & capital goods, chemicals (including pharmaceuticals), electrical components & equipment, and steel products - reveals that receivables are nearly twice the stipulated period. MSEs constitute three-fourths of the working enterprises in these industries and face the common challenge of sizeable working capital requirement because of their high receivables and inventory positions, accentuated by low bargaining power with principal customers.CRISIL believes two quick ame

We are an Export Oriented Unit (EOU). When we supply our manufactured goods to advance authorisation holders in a Domestic Tariff Area (DTA), we do not charge duty as per S.No. 22 of Notification No. 23/2003-C.E., dated March 31, 2003. Our excise authorities permitted this but now the audit team says that we have to surrender the exemption availed on the inputs used in the manufacture of the goods supplied at "nil" duty, in accordance with the second proviso to para 6 of Notification No. 22/2003-C.E., dated March 31, 2003, and proviso under para 3 of Notification 52/2003-Cus., dated March 31, 2003. Is there any argument we can put before them to avoid this unexpected liability?In fact, the recent CBEC Circular no. 1046/34/2016-CX., dated September 16, 2016 covers this issue specifically and says that the said provisos (mentioned above) will not apply in case of supply of manufactured goods by EOU to Advance Authorisation holder in DTA, without payment of Central Excise duty. You can sh

'Job-worked goods can be counted in discharge of export obligation'

Growth of MSMEs in IT/ITeS constrained by lack of funds

An analysis of 4,000 CRISIL-rated MSMEs shows that those focused on IT/ITeS grew by 12 per cent per annum between FY13 and FY15

'Re-export of imported goods to same supplier not needed for drawback'

Drawback under Section 74 should be allowed on merits without insisting on re-export of goods to the same supplier or that the re-export should take place from the same port

Automation spurs growth for manufacturing MSMEs

In 2014-15, entities with automated operations had an employee cost of only nine per cent of the total manufacturing cost

B2B e-commerce platforms reduce inventory costs by 40% for SMEs

The platforms are also offering multiple choices to SMEs to source raw  material from across India and the globe

For MSMEs, legal constitution can lead to customer stability, faster growth

Micro, small and medium enterprises (MSMEs) registered as companies (private limited and public limited) tend to perform better than those operating as firms (proprietorship and partnership).CRISIL analysed about 4,500 MSMEs, comprising companies and firms in equal measure, over fiscal 2013-15. The analysis revealed that the companies saw a compound annual growth rate (CAGR) of 16 per cent, while the firms grew at 10 per cent. Furthermore, about 67 per cent of the companies had a stable customer base, with a vintage of more than five years, as against 50 per cent for firms. Notably, about 85 per cent of CRISIL's top-rated MSMEs have shown stability in their customer base with a vintage of more than five years, as it is one of the rating yardsticks for evaluating the performance of an entity.CRISIL believes this could be a plausible reason large why corporates prefer to deal with companies - they are perceived to be more transparent in their transactions. A legal constitution will usher

'Registered dealers can pass on duties paid on imports to buyers in DTA'

We are traders of paper and Kraft liner board in Bangalore. We are registered with the excise department and importing (100 per cent duty paid) and selling within India, and doing a little export. Now we have received an order from a SEZ unit, which has advised us to charge excise duty (pro-rata) and later get a refund from the excise department. The SEZ unit will be issuing us a disclaimer certificate for not claiming excise duty at their end. Please advise on this and on the procedure also. Before starting, do we have to seek prior permission from our excise range? What are the documents to be received from the SEZ unit? First, please note that excise duty is a duty on goods manufactured in India. Since your item is imported, there is no question of paying any excise duty at all. What you pay as an importer is additional duty of customs (CVD), which is equal to excise duty. You also pay four per cent additional duty (SAD) that countervails the sales tax/VAT. As a registered dealer, y

MSMEs can gain from ploughing back profits

Micro, small, and medium enterprises (MSMEs) which plough back profits into the business tend to grow faster, compared with peers that don't. CRISIL's analysis of 3,000 rated MSMEs registered as proprietorships and partnership firms shows that 41 per cent had retained profits in 2014-15. The internal accruals allowed these units to manage a prudent mix of debt and equity to fund expansion/modernisation and meet increased working capital requirements. This enhanced their image with lenders, compared with peers which withdrew profits from the business, and allowed these units to raise 20 per cent higher borrowings.Better availability of capital, in turn, led to enhanced capacities and faster revenue growth. In fact, in the three years through fiscal 2015, revenue growth of the firms which had retained profits was double the rate logged by their peers. Operating profit margin (OPM) improved, too. In fiscal 2015, average OPM of the firms which retained profits was 52 per cent higher, compa

We are exporting a product in which we have used components imported under advance authorisation and also duty-paid imported materials and indigenously manufactured components. Can we claim drawback on complete exported products or on only the imported duty paid and indigenously manufactured components? How can we make the claim and at which rate?As per Para 4.15 of FTP, "drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid imported or indigenous inputs (not specified in the norms) used in the export product. For this purpose, applicant shall indicate clearly details of duty paid input in the application for Advance Authorisation." Also, note that as per Para 4.08 of FTP, you must take into account the value of any input used, on which benefit of DBK is claimed or intended to be claimed for value addition calculation. At the time of export, you should file a DEEC-cum-DBK shipping bill. Thereafter, you should file the application for fix

'Drawback available for duty-paid inputs used in export product'

Enterprise-level IT spawns many efficiencies

Enterprises having a business process management system improved their operating margin by 200 basis points because of better inventory control

'Unused imported raw material may be sold by EOUs in DTA'

For MSEs, the promoter is the bank to bank on

Micro and small enterprises (MSEs) are typically promoter-driven, be it operations or financing. A CRISIL study of 6,000 MSEs shows that promoters contribute 50-60 per cent of the net working capital requirement - or twice what they are supposed to contribute - because of restricted access to formal financial institutions.Delays in receivables is a widespread affliction in the sector, which forces promoters to regularly infuse funds to keep the operations going and manage cash flow mismatches. While the Micro, Small, and Medium Enterprises Development Act, 2006, stipulates that receivables of MSEs must be limited to 45 days, CRISIL's analysis shows the average is closer to 65 days.Promoters have to also infuse funds during business exigencies such as unexpected spikes in raw material prices, foreign exchange losses, unanticipated large orders, or delays in insurance claims after calamities such as floods or fire or strikes - and ensure timely production and deliveries.Additionally, MSE

A website where some foreign companies place their advertisements  is covered under Rule 9(b) of the Place of Provision of Services Rules, 2012

'Service tax is payable by provider of online database access services'

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