Small Enterprise Magazine - December'22

["behalf of SMEs by fostering a offering training services in If these issues are addressed, business-friendly environment credit management. They there would be a greater and producing favorable should also improve their possibility for the country's economic indicators. By service delivery and embark on economy to grow and prosper. addressing these needs, MFIs a branch expansion drive. This could meet the demands of would enhance their - AVNI PORWAL SMEs by reducing their interest contribution to savings rates. mobilization and improve credit availability in the MFIs must continue to support economy, as well as help close their SME clients such as the financing gap in SMEs. 51 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance BANKING OPPORTUNITIES FOR SMES It has always been challenging for SME industries confrontation for SMEs. It is a fact that all big to survive. They face problems related to inade- corporate players are driving the market and quate funding for working capital, poor financial obtaining more growth. These critical pain points promotion, data collection, etc. In the recent can be considered an opportunity for small trend, digital transformation is now a new enterprises. SME businesses are focusing on diversification or social stability, The SME Banking aligning with financial leaders SMEs are emerging in all areas. Opportunity: to boost the Indian economy. Fortunately, SMEs are best They have always complained known for supporting GDP As corporate clients become about getting lower credit limits growth and job creation. more established, the SME and funds. Banks have Irrespective of all, fintech is now market becomes increasingly historically practiced analyzing prevailing in developing new attractive. financial statements and taking services with them. collateral when lending to The SME sector provides a SMEs. Yet, after all these It is time for SMEs to bring variety of new target challenges, it is lucrative to see change and adopt a new markets. Additionally, how significantly SMEs business model. This article opportunities for business contribute to the Indian gives preference to the areas development can diversify economy. From development in where banks can look out for the banking portfolio. the private sector to economic the needs of SMEs. The SME market is large, has sufficient growth potential, 52 \\\\ Small Enterprise \\\\ Dec 2022","and is still largely untapped. has now become a strategic methods of lending working growth target for banks from all capital to small corporations. Small and medium-sized over the world. The businesses offer a variety of intermediaries for providing Business development: sector and geographic financial services to SMEs are Banks have begun to target diversification opportunities. disappearing. SMEs as a profitable segment instead of overlooking or The asset-liability Let us explore some solutions avoiding the market. The management of an SME that banks can provide to profitability of serving SMEs portfolio is less complex and SMEs; is prompted by developing generates a stable income. new business models to Digitization and engage small enterprises. SME integration promotes automation: Small With the help of automation, cross-selling opportunities enterprises are not convinced banks can eliminate the need within the larger economy. to adopt digitization in their for business owners to focus business culture. However, on all accounting activities. How can banks help SMEs banks are now moving and Instead, banks want SMEs to succeed? heavily reliant on put efforts into expanding It is tough to sustain in this digitalization to have business. fast-paced competitive transparency and agility in environment. Therefore, the first business with automated Monitoring the risk: Banks step banks can take toward accounting systems. are SMEs that have been supporting SMEs is to know Automation will increase the perceived in the past by their challenges and address time frame for SMEs to focus banks as risky, costly, and prerequisites. It is evidence of on marketing and product uncertain to serve. SMEs the pandemic. Any crisis development strategies. believe that bank tends to impacts SMEs' revenue, profit ignore them and instead margin, and sales volume. If we Credit transformation: One concentrate their attention look at the positive side, the of the unwanted thresholds on well-established business. pandemic has profound for SMEs is a capital crunch. However, mounting evidence changes in SMEs. Small When in need of money, suggests that banks are enterprises are examining how SMEs always look for finding adequate solutions to to modify their business models support, but banks make challenges such as according to current market them feel excluded. Due to determining credit risk and conditions. One of the factors rapid changes in the market, lowering operating costs to that can boost and solve banks are now eventually handle this sector profitably. day-to-day problems in SMEs is showing their interest in the acceptance of digital improving the Scope of Subsidy - Various channels in marketing and creditworthiness of industries are part of functioning. It is increasingly enterprises. For banks, unmet subsidiaries; agriculture, apparent that fintech plays a SME demand for financial housing, farm exports, massive role in advancing services has become an automobiles, and health care employment, value chain, indicator of the opportunity are the main. A less number economics, and social inclusion to expand their market share of enterprises are aiming to for corporations. and increase profit. Many get the advantage over banks now report that they subsidiaries. It is SMEs are constantly perceive significant time-consuming and costly. transitioning from a market that opportunities in the SME Enterprises have to invest is supposed to be tricky to sector. Keeping this in mind, everything on their own. function in respective areas. It banks are introducing new 53 \\\\ Small Enterprise \\\\ Dec 2022","After the commencement of like Mudra yojana for startup banking, banks must develop business, it takes a lot of time India. Similarly, banks like BOB, their own approaches based on and effort to expect a Yes bank, HDFC, etc, are their unique strengths and subsidized amount. A little designing various schemes to capacities. Effective SME seriousness in following this issue long and short-term loans. banking models are not based process effectively can be a After having all these facilities, on a single approach to serving turning point for SMEs. SMEs are still struggling to all SME clients. Instead, effective sustain themselves because models recognize the diversity Final thoughts internal parameters like capital, in the market and segment India is well known for its eligibility, interest rates, and clients accordingly. start-ups. Therefore, SMEs are repayments tenures are not in the most deserving sector to favour. - PALLAVI VERMA get support from banks and the Government of India. It is the There are several emerging fastest and largest job creator lessons for banks that want to sector in our country. strategically engage the SME Participate in generating market from the experience of employment, increasing GDP, serving Small and Medium and exporting. GoI has even Enterprises throughout the launched multiple campaigns value chain. To succeed in SME 54 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance BANK APPROACHES TO THE CHALLENGES OF SERVING SMEs For SMEs, access to finance is a significant merit, if they fail to commit to one main challenge. They need affordable lending approach, the result is a hybrid. Banks should solutions, improved credit risk scoring, and less focus on the unique challenges faced by SMEs to friction. But banks often fall short of these meet their funding needs. Listed below are four objectives. While each of these approaches has ways to improve bank offerings for SMEs. SMEs struggle to access businesses. These businesses are needed funds for payroll. finance. struggling to grow and remain SMEs across Africa face significant competitive, which in turn has a One of the main barriers for SMEs challenges when it comes to knock-on effect on the recovery to access finance is speed. Only securing access to finance. With of the continent's economy. A 3% of SMEs were able to obtain commodity prices reaching recent study exposed that almost funding in less than a week. Two record highs, the lack of two-thirds of SMEs needed extra weeks is a long time in a accessible finance has led to a finance to meet regular business rapidly-changing market, and a lack of capital for small expenses, while nearly a quarter week is too long for SMEs to wait. 55 \\\\ Small Enterprise \\\\ Dec 2022","In addition, larger SMEs struggled First, banks must rethink the way as freelancers or independent to secure loans, taking longer they offer their lending services. contractors. This trend is than smaller companies. However, According to an EY Global SME expected to continue as more this doesn't crucially mean that survey, the most requested businesses are looking for more the SME cannot access finance. service from banks was innovative and convenient guaranteed access to faster banking options. There exist several reasons why credit, faster approval processes, small companies are unable to and certainty of funds when they The current environment for SMEs access finance. One reason is that need them most. Second, has many challenges: low-interest small and medium-sized corporate banks need to rethink rates, tighter regulation, and enterprises cannot qualify for their approach to lending. With rising customer expectations. formal tax brackets. They are also the COVID-19 pandemic affecting Traditional banks haven't been not subject to stringent employee the business world, many banks capable of keeping up with SMEs' regulations and do not have to are only just coming to grips with growing expectations. Despite register their companies in order the power of digital. this, they still hold a large portion to get finance. The problem has of the financial services industry's become a growing concern for While traditional banks are business. Small and midsize the European Union, which has affordable and credible, they can businesses want better product set up the Small and Medium be frustratingly slow. Fortunately, offerings and less friction when Enterprise Action Plan (SMEP). there are alternative lenders that banking. SMEs are increasingly With a streamlined loan offer a quicker loan process. A turning to alternative digital application process, the World smaller, faster loan from an providers to improve their Bank is aiming to bridge this gap. alternative lender can help solve a customer experiences and attract The plan also intends to improve company's short-term cash-flow new customers. financial sector infrastructure and problems. While smaller introduce lines of credit directly alternative lenders don't have the Banks can meet the needs of to SMEs. brand name of big banks, they SMEs by offering more tailored still provide an excellent service products. Using an anchor They need affordable lending for SMEs. And while they may be product doesn't solve the solutions more expensive, they may not problem of a healthy product or The lack of affordable lending have the same reputation as a meet capital costs. Rather, they solutions in Africa is one of the large bank, but they can be more must devise auxiliary products biggest challenges facing small flexible and competitive. and credit offerings that meet and medium-sized enterprises SME needs and demonstrate a (SMEs). While many banks have They want better product lower-cost process to be reliable. been able to attract small and offerings and less friction. In other words, they need to medium-sized enterprises by Banks have focused on the become day-to-day companions lowering their interest rates and consumer market in recent years, for SME development. increasing the size of their but SMEs now represent a huge customer bases, the process opportunity. In addition to They want better credit risk remains cumbersome and largely greater revenue potential, SMEs scoring. paper-based. For this reason, also generate returns of between Banks and other financial SMEs need innovative and flexible 10% and 15% on equity, institutions have a huge stake in lending solutions to overcome providing significant the success of SMEs, but these problems. Listed below are opportunities for financial historically, they've fallen through three key challenges that small institutions. One recent trend to the cracks when it does come to and medium-sized enterprises drive change is the \\\"gig assess their credit risk. Small face. economy,\\\" a flexible work culture businesses, often referred to as where members opt for working SMEs, are too small to be covered 56 \\\\ Small Enterprise \\\\ Dec 2022","by credit rating agencies, and credit-related issues. The hybrid technologies, data, and analytics. they are too small to afford approach is the best choice for And if they do that, it will help data-driven statistical credit risk, SME credit risk scoring, as it them transform their credit risk scoring models. Instead, they combines financial and offerings. And it will serve as a have relied on 'expert judgment' non-financial factors. The study springboard for further based on the knowledge of also considers the characteristics ecosystem services. individual underwriters about the of SMEs and the performance of business sector and firm. These their major shareholders, which - AVNI PORWAL reliance\u2019s on 'key person' risk, lack differ from the general credit of transparency, and lack of scoring models. consistency have made the process of assessing SME credit Banks require to adapt their risk a highly subjective and business models and credit difficult one. policies to meet the needs of SMEs. Small & medium-sized Currently, banks collect enterprises (SMEs) are considerable amounts of increasingly looking for more information during the credit efficient lending processes and scoring process. This information faster credit approval. Lenders is used to categorize customers, can change the way they serve track risks, and determine SMEs by adopting new 57 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance BRIDGING THE MIDDLE: SME BANKING TODAY SMEs are companies with financial needs that are serve to a strategic objective for banks too large for microfinance but too small for worldwide. The \\\"missing middle,\\\" which refers to corporate banking models to properly serve. They the gap in financial services available to SMEs, is are a substantial and economically significant closing. SME banking appears to be increasing sector in almost every country on the planet. quickest in emerging markets (low- and SMEs account for over 50% of national output in middle-income countries), where the gap is the high-income and several middle-income nations. greatest. Emerging market banks are increasingly formulating strategies and establishing SME The SME banking industry is in upheaval. It has divisions. evolved from a market thought too difficult to SME: Economic Importance They account for more than 95 In high-income countries, The SME sector is vital to national per cent of all registered account for 50% of GDP and economies since it contributes businesses worldwide. employ more than 60% of the significantly to employment and workforce. GDP, and its growth is tied to an They account for more than economy's formalization. half of all jobs worldwide. This figure is lower in low-income 58 \\\\ Small Enterprise \\\\ Dec 2022","nations, mainly where the SMEs Around the World \u2014 The third type of problem in informal sector is large, but it is discovered that these banks saw the operating environment is still important. the SME sector as a significant macroeconomic variables. market with strong prospects. These factors include overall The contribution of the SME insecurity, high-interest rates sector to GDP also indicates its SME Banking: Challenges (i.e., the high cost of capital to economic relevance. Encountered lend), and exchange rate risk. The most often mentioned As of 2018, India had 51 obstacles to SME banking include Government Policies for SME million SMEs, accounting for Finance 37% of non-agricultural GDP Regulatory barriers can directly Governments have implemented and employing 40% of the increase the difficulty to charge a number of policies to assist workforce. SMEs contribute market rates or recovering SMEs in obtaining financing. significantly to the nation's non-performing loans making GDP. the supply side less profitable, Reforming existing while on the demand side, they legal\/regulatory barriers: Reforms SME Banking Opportunity & might impact SMEs' willingness that enhance SME access to Trouble with SME Lending or ability to borrow. finance may entail identifying and Historically, banks saw the SME removing legal and regulatory sector as hazardous, expensive, Weak legal frameworks can barriers like those discussed and difficult to serve. dissuade banks from helping above. In one country, this could SMEs. A prime example is mean simplifying accounting Banks usually refuse to lend ineffective contract procedures or formalizing money to businesses with less enforcement. If flaws in the processes for SMEs. In another than $2 million in revenue. legal and judicial systems make jurisdiction, it could imply contract enforcement difficult, lowering capital requirements for Banks see SME loans as the transaction cost of lending SME portfolios, possibly by high-risk businesses with a rises, making it less appealing making exceptions to difficult customer base. to banks. SMEs that lack international standards adequate and enforceable established for large loans. SMEs must spend more than rights to their own assets may 24 hours on loan origination be unable to secure sufficient Governments may take efforts to documentation after collateral to qualify for a bank broaden the SME finance market, approaching many banks, and loan, on the demand side. as well as to encourage SME they must wait weeks or months for the loan to be granted. Many banks continue to use a paper-intensive, laborious, and time-consuming procedure. Maintaining Excel sheets alone may result in data loss if not integrated with systematized loan origination and other processes However, accumulating evidence suggests that banks are finding efficient solutions to difficulties A recent survey of 91 banks in 45 developed and developing nations \u2014 Bank Financing for 59 \\\\ Small Enterprise \\\\ Dec 2022","access to credit by providing are examples of such initiatives. Project is working to establish public goods and services aimed the Development Bank of at incomplete markets and market Outcomes Nigeria (DBN) in Nigeria. As of failures. This can be useful, As of August 2019, Lebanon's May 2019, the Development especially in nations where access SME's (Innovative Small and Bank of Nigeria's credit line to to transparent information is Medium Enterprises) PFIs for on-lending to MSMEs challenging. On the demand side, co-investment fund had had disbursed US$243.7 governments may offer SMEs invested $10.23 million across million, reaching over 50,000 financial statement preparation 22 enterprises, leveraging end-borrowers, 70% of whom training. Governments can strive $25.47 million in co-financing. were women, via 7 banks and to establish or support the 10 microfinance banks. country's credit information In India, a digital MSME loan infrastructure, such as credit aggregator and matchmaking Conclusion bureaus and collateral registries, platform have gathered $1.9 SMEs started off as a risky outlet on the supply side. billion in private sector finance on the investment table, but they for MSMEs, making it the have come a long way and proven Intervening directly in the market country's largest online lender. to be a financially uplifting to kick start or incentivize business model on the contrary. financing to SMEs\u2014most Two World Bank Group lines of Business plans fail every now and governments appear to act in credit in Jordan aim to boost then. That\u2019s how it is supposed to some way. Direct lending through MSMEs' access to finance and, be, but this one looks like it has a government-owned institutions as a result, contribute to job long way to go on the path to and directed credit programmes, development. Through nine success. in which the government collaborating banks, $45.2 contributes money to banks, million has been on-loaned to - PALLAVI VERMA particularly for lending to SMEs, 3,345 MSMEs. The Development Finance 60 \\\\ Small Enterprise \\\\ Aug 2022","FuelYourGlobalExpansion UsingInstaReM ACross-BorderPaymentsSolutionForSmallBusinesses Global Low Cost Simple Secureforeigncurrency CompetitiveFXrates, Centralizedtracking accountsthatallowyour nohiddenfees andreconciliation customerstopayyouin theirlocalcurrency Getintouch:[email protected] www.instarem.com","COVER STORY | SME Banking & Finance BANKING THE SME MARKET SME banking is an untapped market in terms of and more than 50% of employment, are crucial digital transformation. SMEs have not benefited drivers of job creation and global economic from the same innovation in the UK's SME development. However, banks frequently view banking sector compared to retail clients since it SME lending as a low-priority issue. Why? has not been adequately digitalized. Because supplying SME customers has a high SMEs are frequently ignored and underutilized operating cost for banks but also comes at a despite their need for simple access to financing. relatively high cost compared to the possible Most economies, especially emerging nations, reward. SME customers might be challenging to depend heavily on SMEs, which also make up the serve due to their diversity. Many banks don't bulk of enterprises globally. The World Bank adjust their offerings for sub-segments or differ- claims that SMEs, which account for 90% of firms ent stages of business life. SMEs' demand for better digital rivals. Views about SMEs are the growth of small businesses? banking services is motivated by starting to alter as institutions their need for more unique want to understand their A loan takes a long time to be product offerings and lower requirements and demands. granted because the onboarding friction. Banks refocus on this and loan processes are laborious sector due to demand and Why have banks not yet and disjointed. SME lending was competitive pressure from digital developed a quick and mostly an in-branch or dependable strategy to support paper-based process. This 62 \\\\ Small Enterprise \\\\ Dec 2022","procedure has slowed down Enhance access to funding \u2014 fundamental relationship with us considerably further due to the loan application process is for advising, transactional, and COVID-19, which requires banks still complicated for SMEs, and credit-related services. Here are a to digitize their operations. The there are often lengthy delays. few of the main items we provide: volume of SMEs requesting This can severely strain the government assistance in many resources of SMEs. More SMEs Term Loans: Secured by nations during the past few than large businesses in immovable property or other months provides unmistakable Europe struggle to obtain suitable collateral, term loans proof. loans. Access to financing is typically range in length from the most significant concern one year to as long as thirty What SMEs' pain issues should for 8% of SMEs, twice the years, supporting growth in a bank concentrate on percentage for larger variety of ways, including addressing? businesses (4 per cent). SMEs capacity expansion, product There are many issues on the encounter lengthy, complex, diversification, plant transformation agenda for and friction-filled client modernization, and similar traditional SME banking, from stiff journeys because their other requirements. The procedures and inflexible business models are typically obligation to repay is based on products to consumer friction and borrowed from retail or the anticipated cash flow of legacy technology that prevents corporate ones. In addition to your company. change. preventing change, legacy systems remain a massive Working capital loans are Personalize - The diversity of barrier to SME banking intended to support a SMEs is a significant factor in transformation efforts. company's ongoing operations. why they don't profit from the These are provided in the form same financial innovation. A cutting-edge mobile banking of cash credit or overdraft to SMEs can range in size from a system gives Small and Medium satisfy working capital one-person business to an Enterprises (SMEs) access to requirements. organization with 200 financial services and business employees; however, many intelligence. The marketplace of Export Fund: This loan can be banks do not customize their all registered members is used as a Pre-Shipment Credit products to specific market accessible, and SMEs may manage against a firm order or as a segments or business life their daily operations, obtain Letter of Credit for acquiring cycles. It highlights the financial services, contact subject raw materials, significance of personalization. matter experts inside the banks manufacturing\/processing, for guidance, and more. The bank packing, and shipment of Getting rid of legacy - Manual adopts the solution and makes it goods. Either foreign currency processes are frequently available to its SME clients. or Indian currency is used for drawn-out and tedious. financing. Because front- and back-office Utilize the influence of SME procedures are frequently banking Import funding: This typically copied from retail or corporate goes to raw material and models, there is a great deal of comprehensive transaction capital goods importers. complexity and friction, which support results in lengthy, complicated, Letter of Credit: Depending and friction-filled client tailored to SME requirements on the trading cycle, this form experiences for SMEs. In of the facility is typically addition to preventing change, Direct connect features provide offered for three to six months. legacy systems remain a expert advice for SMEs We offer a variety of massive barrier to SME banking Variety of specialized solutions to non-fund-based facilities in transformation efforts. assist SMEs in gaining access to addition to money-based banking services and starting a working capital facilities, such 63 \\\\ Small Enterprise \\\\ Dec 2022","as a letter of credit, bank orders. discounting of credit-worthy guarantees, solvency invoices or receivables drawn certificates, and so on. TReDS Bill Discounting: To against letters of credit or firm make it simple for MSMEs to orders may be offered for 3-6 Buyers'\/Suppliers' Credit: By convert their trade receivables months. the RBI, Our Bank arranges into funding, the Trade buyers'\/suppliers' credit Receivables Discounting Conclusion through foreign banks or System (TReDS) was One may say that SMEs are the correspondents to help established in 2017 under the lifeblood of the economy. If they importers save money. supervision of the RBI. Thanks succeed, the economy succeeds. Commercial vehicle loans are to trends, MSMEs can receive Therefore, small is not only offered to our SME customers discounts on invoices and bills attractive but also crucial when it to purchase and\/or upgrade of exchange in exchange for comes to SMEs. commercial vehicles used for early payment. business-related But it's also tricky. SMEs have a transportation. Cash Credit\/Over Draft: A structural disadvantage when short-term loan to cover your asking for capital, which may be Inland bill discounting: This ongoing needs for operating amplified during times of crisis. service gives domestic traders cash. As and when necessary, I've discussed how banking a rapid and affordable finance you may constantly draw up to supervision and regulation might option. Depending on the the predetermined limit. aid SMEs with funding issues. But tenor of the bill, discounts can let me be clear: our responsibility be given for three to six A quick and inexpensive funding is only to assist banks in months on creditworthy solution is provided by inland bill maintaining their stability. invoices or receivables drawn discounting facilities. Depending against letters of credit or firm on the tenor of the bill, - JAYA 64 \\\\ Small Enterprise \\\\ Dec 2022","","COVER STORY | SME Banking & Finance DIFFICULTIES IN ACCESSING FINANCE Small and Medium size Enterprises may be a new The SME industry is growing daily and plays a term in economics, but it is an ancient system in vital role in the national economy. And it will its existence. It starts from earlier small-scale perform well on global industrial platforms too. animal husbandry or dairy farming to making A good source of capital is the basic need of the mechanical parts. All are perfect examples of SME industry. Proper assistance by the govt. This SMEs. In the present time, ancient enterprises are needs constant growth of these enterprises. It progressing and presented in a more polished cannot be denied that it takes an integral part in way. the economy of a progressive nation. But the Small and medium size schemes and private investors. may be enumerated as follows- enterprises have to deal with They must cross or overcome many obstacles, mainly in the next hurdles to get the The symmetric bridge of finance. The enterprises' owners proper access to the capital to information is very much do not have the lump sum invest in the business. But most needed between suppliers amount of money to set up the SMEs face difficulties in and demanders. They are the business. They have to be accessing finance. The typical most influencing pillars of a dependent on the government difficulties faced by the SME\/SSI business. 66 \\\\ Small Enterprise \\\\ Dec 2022","Sometimes there is less advancement of SMEs can be about providing loans to transparency in paper works, a reason for national financial SMEs because of high-risk and business dealings may acceleration and growth. factors. Sometimes the have trouble gathering private investors agreed to findings. The working capital and asset grant a loan with a building, including workers' high-interest rate. But there Acclaimable aspects of SMEs pay, require continuous is no explicit assurance of are the employment of many funds. The primary source of getting back the invested ordinary people. But the funding is credit from Banks amount with interest. This is business owner cannot afford and schemes for SMEs. Small the reason the SMEs face to hire skilled labor because Enterprises find it challenging difficulties in arranging of the scarcity of funds. They to acquire credits as the finance. have to deal with the business is new. There are no unskilled workforce, which assets for SMEs to show or Banks are reluctant to may affect productivity. mortgage. Due to the provide loans to SMEs. They defaults, the Banks checks on prefer to allot loans to the Without proper planning and the credit capacity leading to big industries because of the ever-changing market needs the unavailability of credit to assured return of the loan sometimes influence the the SME. with interest. While many profit. If the business cannot SMEs become defaulters. The establish a good turnover, Most of the time, payment to risk factors play a role in not the owner faces difficulty the lenders is delayed due to getting loans from the banks. arranging investments from the non-availability of private investors or banks. revenue for the SME. The There is a lack of information delayed repayment of loans about government aided Developed sales channel and credits eventually leads schemes. Improper plays an integral part in to a bad credit score barring campaigning about the promoting business. A the SME from further schemes is the main reason proper marketing strategy availability of funds from the they could not avail the can most gear up Small and banks. benefits of the schemes. Medium size enterprises. All the basic needs of the Insurance for the risk factor We all know the business depend on quick of perishing SME is not time-consuming official access to funding. available. Such a factor again procedure to take advantage leads to fear for financial of government-regulated But the vital part of the institutions passing on credit schemes. One has to problem is arranging the credits to the SME. contact the officials regularly capital to initiate business. because of the procedure. The next important step is Risk management services This might be problematic. also about money; are costly business divisions maintaining a good flow of unavailable in tiny business A lot of official paper works money to manage the houses. Without the proper have to be completed before continuous production, risk management, the SMEs obtaining the govt. Schemes; transportation cost and other find it challenging to manage might restrict the owner from essential expenditure. the funds long-term, leading avail of the benefits. to a credit burden and slow New sustainable accessibility development progress. The result of the difficulties of finance is the primary Lots of hindrances can affect demand of SMEs. Easy access SMEs face severe problems in productivity and profit. SMEs to capital might boost finding private investors. sometimes cannot provide an productivity, and the They are unenthusiastic excellent return to the investors. 67 \\\\ Small Enterprise \\\\ Dec 2022","So the private investors always and sustainability in the consumers as well as are dubious about the competitive market with enterprises. Economic growth is investment in SMEs, while they constant growth. Economic and only possible when the mass get an assured return from the moral upliftment is necessary leads to a good livelihood. A big-scale industry. These may for Small and Medium scale large number of employments lessen the growth rate of SMEs. enterprises. are involved in SMEs. Both rural Managing the whole procedure and urban middle-class on a low budget is the priority Innovation is essential to survive semi-skilled persons are getting of an entrepreneur; it will in the industry with a strong full-time employment because prevent them from customer relationship. All the of the SMEs. It has a vital role in implementing new and barriers should be removed a progressive socio-economic innovative ideas for the between the investors and the world. betterment of the business. The entrepreneur. Always keep an critical focus of an entrepreneur eye on the consumers for their - RAHUL GUPTA should always be the expectations. A competitive development of the business market is highly acclaimable by 68 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance WHY SME LOANS GET DENIED Small and medium-scale enterprises are intensely business smoothly. We can all agree that involved with the economy of the nation. Some of financial flow is always necessary for running or the time, they also play a pivotal role in pushing growing a business. To supplement their up the economic growth of a country. But in most economic scarcity, SMEs typically apply for loans, cases, SMEs face many financial obstacles, such but they are met with heartbreaking denials. as arranging capital to start or running the In some cases, SMEs are good books. used to assess a person's or responsible for denials of loans; Discuss such issues and some business's creditworthiness. lack of performance, previous easy remedies to overcome the Without a good credit score, business dealings, and eagerness hard times. getting loans would not be easy, to repay the loan all play a so before applying for a loan, significant part. Because any Credit score SMEs must sort out all previous company, bank, or personal SMEs have to be well researched monetary dealings and court creditor will not provide money in credit score and credit history. judgments, if there are any. The without any background check. In a nutshell, this is the magical abundance of loans on the market So first, try to be in the investors' password to obtaining credit; the may hurt loan availability because credit score is data that can be 69 \\\\ Small Enterprise \\\\ Dec 2022","it will affect one's credit score. workers before they are paid for gambling; there is uncertainty Low credit scores are the most the product or service. Workers about getting back the common reason for the denial of and suppliers are the pillars of investments. loans. A low credit score indicates business. If the investors get that it would be troublesome for unsatisfied credentials, they will Any bankruptcy-like situation on the creditors to repay the loan turn down the loan. the credit profile is a dangerous amount. So creditors will not be signal. The application for a loan ready to grant the loan out of In the world of business, might be rejected. But do not be uncertainty. everybody works for a profit. hopeless; it doesn't mean SMEs Investors invest their hard-earned will not get a loan in the future History of business dealings money to get a profit, and SMEs borrowing. Sometimes, SMEs also Banks and other financial channelize the invested amount get credit from another companies that provide loans to for their production and business risk-taking lender. If one can SMEs collect data from the growth. Improper business show positivity and productivity, market and the history of maintenance and the inefficient one may get a loan, though there previous monetary dealings governing body of SMEs might be are a lot of difficulties. Try to before granting credit because it the reasons for turning down the remove the bankruptcy tag from is risky for the creditors. However, application for the loan. As a the business profile by achieving it is their business to make loans result, entrepreneurs must some positive goals. Try to obtain at a high-interest rate. They must demonstrate their sincerity and a secured credit card, or enlist be sure first about the eligibility ability to advance the business yourself as a member of a credit of the SMEs to repay. Credit and through proper management. It is union. Arrange a co-signer to debit are the most critical factors a critical factor for new and re-claim the credit and put the in granting a loan. SMEs also have small-scale industries. business on the desired track. minimal mortgage options due to the limited resources of their Investor constraints; high-risk Inappropriate Loan Application small-scale industries. factor Lastly, an inappropriate loan In recent times, the industry has application or preliminary official Always try to maintain a good witnessed some bankruptcy. Small paperwork might be a reason for term with the investors and repay and medium-sized businesses are rejecting the loan application. the debt on time. Keeping an always a risk for investors. They Most loans providing financial organized official record of your hesitate to invest in SMEs or institutes are not eager to give business transactions; without startups because it's like loans to SMEs. So, they can one, it would be difficult to get credit. Necessary cash flow in business Small and medium-sized businesses may struggle to produce documents demonstrating good cash flow to run the business or well-established business growth. This low cash flow is a wrong signal for small-scale entrepreneurs trying to get loans. Maintaining a good cash flow is always tricky, even if they are profitable. They must retain cash liquidity with suppliers and 70 \\\\ Small Enterprise \\\\ Dec 2022","quickly leave the plea if they application. a loan in a short period. This discover flaws in their may represent stubbornness or documentation review. An Some important notes for the stress. Numerous credit incomplete application in every betterment of SMEs inquiries on the business aspect will be denied; this may account within a short period exhibit the inefficiency of Always try to pay the monthly can hurt the business profile. paperwork or conceal bills or any other periodical information. Both create a transaction on time. Timely Try to avail government-aided negative attitude towards the payments of the debts or bills schemes; one can get a loan at investors. ensure the borrower's a low-interest rate. capability and potential Try to provide all the necessary trustworthiness. No one keeps If one gets multiple loan documentation along with the faith in the defaulters. Timely rejections, it might be stressful. loan application, such as bank payment will represent But always believe in the personal statements, legal documents, tax punctuality and save the late potential and keep our heads; be returns, and financial statements. fee as well. a phoenix, start fresh. Try to If the investors want to know assemble the lessons from the about the future business plan, It will be helpful in the future if previous mistake. provide them with the plan in a the entrepreneur maintains more easy-to-understand and lower credit utilization limits. It - RAHUL GUPTA organized way. One will be in a would be a good sign to get a higher position than others if they loan from the lenders. can convince the investors Frequent borrowers may not through clarity of information and get loans quickly because proper planning. One has to be some investors think it might cautious about filling out the be a habit of lending. Do not apply multiple times for 71 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance SME CREDIT RATING Financing is a major concern for a small enter- Even support from commercial banks and finan- prise than the big ones for getting success. Lack cial institutes is often considered to be costly and of accessibility to financing is constantly full of risk. Even SMEs are broadly unattended in observed by SMEs(small-to-medium enterpris- the case of basic financial services. In such crucial es).SME is a comfortable term for segmenting conditions of limited financing, SME owners businesses and other organizations that are in suffer in making investments to enhance produc- between somewhere the SOHO( small office home tivity and the competitive environment in the office)size and the large enterprise. SMEs felt market. It creates problems in developing new that financial accessibility was the barrier to market conditions by hiring talents to future hike business growth. up productivity. SMEs contribute a large part rating can be a big support to access the firm\u2019s financial to India's GDP by employing SMEs in getting a business ability to find the risk factor millions. It is an important loan for their growth and associated with it with section of society to push the expansion. wholesome health. In total economy to a certain SME grading provides profitable level. Even, SMEs How does credit rating entrepreneurs and investors can lead in against problems become important for SMEs? with information related to while trying to find funding. It SME Credit Rating is these organizations. Let's can have a diverse effect on significant to fetch financing have a look at why credit growth and development and availability. Here the agencies rating is important via the impact the economy. Credit like SMERA, etc. can help to benefits associated with it: 72 \\\\ Small Enterprise \\\\ Dec 2022","Builds credibility credit rating supports the national economy, their Credit rating plays an company to negotiate on diversification made it important role but if it is its ground with suppliers. difficult to judge them. But by a trustworthy institute The report generated by the set standards of the then it becomes a golden the credit rating agency as rating system can set the chance to explore the the third party can be a benchmark to check the future growth of the support system for the entity's parameters and business. Just like CRISIL company to prove its validity claims. This can rating for SMEs provides payment capacity to the support the lenders and lenders, correct and crystal suppliers. bankers with the required clear whole readability into important details to finance a company\u2019s financial Reference documents those SMEs. Although the health. verification via a credit conventional credit rating report checks the financial aspects After that, only the lender The enterprise's operation by comparing to the large thinks about the loan and financial status are companies it cannot be the payment based on the deeply checked before the correct system of credibility repayment condition of the production of the credit for SMEs. company. Lenders feel report. The risk and other secure with the SMEs strong points are also There are SME Credit rating rating for giving out loans included in the report. The agencies like SMERA, which as per the information report made the gap filled can help to get the validity embraced by it. for extra checking of the check of enterprises by the background of the stepwise actions. Attractive Interest rates borrowers before the Credit rating for SMEs approval of the business Role of credit rating provides the risk factors loan. Even the time cannot agencies like SMERA: associated with the loan be exceeded for the loan appraisal that can help the appraisal as the required It provides an attentive organizations to rethink documents are present on assessment of business the possibilities ahead. The spot via the report. and financial risks interest rates can be in associated with it. favor as the lower the risk Worthy self-evaluation factor, the more chances of As all the positive and It measures business offering the best interest negative points are stored credibility on a set of rates by the lenders to the in the credit report, lenders benchmarks that can be borrowers. Hence, the can use these to fix specific to the SME. borrower's organization problems financially and can have lower rates of trigger profits by Helps to assess the interest with a supportive channelizing funds in the organizational parameters credit rating. correct direction. Hence, a such as finance, operations, credit rating plays a great technology, etc. Support of negotiating role in each stage of the terms with suppliers strategic plan with the The process of credit rating Credit rating is beneficial other details. (360 rating methodology) for the company that can The credit rating help it to negotiate for What is the role of Credit methodology holds the deep supplies of mandatory raw rating agencies for SMEs? check of multiple risk factors. materials in need on As we know now that SMEs The deep research of credits. A good SME are an essential part of the background with complete details as documents of the respective enterprise happens 73 \\\\ Small Enterprise \\\\ Dec 2022","in this. At last, the perfect Detailed analysis by rating on its strength and weak beneficial report is provided analyst points in a detailed study by to the lenders, buyers, the rating agencies. The bankers, and other SMEs. Assignment of Rating by credit rating helps in the Rating Committee economic growth of the Execution Process nation ahead with the SMEs. To ensure the completion of Communication of rating the credit rating has been to the Rated Entity - BINDU TIWARI done without leaving any aspect of the enterprise Dispersal of Rating checked, counted, and measured correctly, six steps The credit rating scale that is execution process is used. used to rate the enterprise can have digits as The execution Steps are: 1,2,3,4,5,6,7,8, where 1 indicates the highest and 8 Submission of Information indicates the lowest. and documents Conclusion Site Inspection and The SME Credit Rating helps management discussion to rate the enterprise based 74 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance MANAGING CREDIT RISK Making decisions is a significant part of manag- is vulnerable to credit risk, along with other ing an SME. Customer payment is one things. A late-paying customer can cause turmoil decision-making scenario that frequently results for SMEs with little outside support. Maintaining in problems. When it comes to consumer a robust credit system is key to handling strict payment, you must always choose carefully credit management and customer relationships. It because it can make or break your firm. also makes it possible for you to keep your In addition to being necessary for business, giving market share. credit to customers is also ethical. However, this What is Credit Risk? eventually cause a default. which vary depending on the When a bank extends credit to a company or region and are based borrower, there is a chance that the Responsibility for credit risk on whether the debtor is a loan may not be repaid. Based on Although credit risk management consumer or a commercial the borrower's or the business's involves several steps, it can be borrower. capacity to meet future obligations, roughly divided into two groups. As loans may be granted (of principal follows: To make a personal loan, creditors and interest). must know the borrower's financial Measurement condition, including their income Lenders go to great pains to (about all of their responsibilities), comprehend a borrower's financial Mitigation other assets, and liabilities. They will situation and determine the also want to know how their credit likelihood that the borrower would Evaluation of Credit Risk history looks. Personal guarantees Lenders evaluate credit risk using their unique risk evaluation systems, 75 \\\\ Small Enterprise \\\\ Dec 2022","and collateral are frequently used in may be used to describe scores for percent or 8 percent interest rate if personal financing. individual debtors (or something they plan to give credit to them at a similar). 5 percent interest rate (in the event Contrarily, commercial lending is that rates ever increase materially). considerably more complicated, and The score indicates the probability It is referred to as a \\\"qualifying rate\\\" many company clients borrow more that the borrower will cause a at times. significant sums of money than default event. The likelihood of a private customers. Several borrower defaulting decreases with A lender might be considering qualitative and quantitative credit score and rating; it increases providing a borrower with a 10-year methodologies are needed to rate with lower scores and ratings. term loan. Still, they might first want the risk of a commercial borrower. to evaluate how the credit metrics These are some categories of Credit Risk Reduction would alter if the loan had a 6- or qualitative risk assessment: If credit risk is not managed 7-year amortisation (if conditions correctly, lenders may experience changed and the lender wanted to Knowing what's happening in the loan losses, which hurt the financial accelerate the repayment of the corporate world and the larger services industry's profitability. loan). economy Among the techniques, lenders employ to reduce credit risk (and Controlling the portfolio Examining the borrower's loan loss) are, but are not limited to: Financial institutions and non-bank industry of operation lenders may use portfolio-level assessing the company's Credit deal controls to reduce credit risk. strengths and weaknesses in the Credit structuring approaches market as well as its growth enable some reduction of credit risk. Monitoring and comprehending the plans percentage of each type of loan in The amortization duration, the the total loan book are two Examining and comprehending utilization of (and the caliber of) strategies. the ownership and management collateral security, LTVs (if the business is privately (loan-to-value), and loan covenants The Five C's of Credit owned). The examination will are a few examples of credit The 5 Cs of Credit are a paradigm consider management's structure components. that is frequently used to help reputation and the owner's credit understand, measure, and mitigate scores. For instance, a riskier borrower credit risk. There are 5 Cs: might have to agree to a shorter The financial analysis makes up amortization time than usual. It's Character it's a personal loan, who the quantitative portion of the possible that a borrower will need is the borrower and do they have a credit risk assessment. Lenders to submit more frequent (or good credit history? consider several performance thorough) financial reporting. It is and financial ratios to determine crucial to comprehend any Character refers to the reputation the borrower's overall financial attainable collateral security and and dependability of a firm's health. structure credit appropriately. management about commercial creditors; if a company is a private A borrower's credit assessment Sensitivity testing corporation, the character also will result in a score based on the Sensitivity analysis is the process by includes ownership. lender's analysis methods, which a lender modifies a few models, and underwriting elements of the proposed credit Capacity criteria. structure to determine how the Capacity refers to a borrower's borrower's credit risks would vary if capacity to acquire and repay debt. Numerous names can be given to the speculative circumstances Different debt service and coverage the score. For instance, credit ratings materialized. Examples comprise: ratios are used to assess a or debt ratings are used to describe borrower's capacity for retail and scores for public debt instruments A lender would want to check the commercial borrowers. (such as AAA, BB+, etc.); risk ratings borrower's credit metrics at a 7 Understanding the borrower's 76 \\\\ Small Enterprise \\\\ Dec 2022","REPORT competitive edge is essential for loans are set up to reduce credit Assessing the borrower's profile is commercial lenders since it will risk. the first step in effective credit risk affect the borrower's ability to management, which continues produce cash flow in the future if it Understanding the value of the through recovery and beyond. can keep or increase this advantage. assets, their location, the ease of Banks must develop flexible lending transferring the title, and the right processes equipped with pertinent Capital LTVs are crucial (among other rating systems to determine A borrower's \\\"wealth\\\" or overall things). creditworthiness and set reasonable financial health is frequently interest rates. They can hide any described as their capital. Lenders Conditions future loan defaults in the future will determine how much debt and Conditions include the goal of the with this. Additionally, banks must equity sustains the borrower's asset credit, extrinsic events, and other set aside enough capital to offset base. elements of the outside world that significant loan losses and stay could present hazards or afloat. These procedures are Knowing whether a borrower can possibilities for a borrower. required to lower greater default obtain alternative funding from probabilities and enhance the other sources is crucial. Exists a They can be political, condition of loan books. linked business with available funds macroeconomic, or related to the (for a business borrower)? Can a current phase of the economic cycle. -JAYA parent or relative guarantee a Industry-specific difficulties and personal loan for a borrower who societal or technological may not have a stellar credit history? advancements that could affect competitive advantage are examples Collateral of circumstances for company loans. Collateral security is crucial in how Conclusions 77 \\\\ Small Enterprise \\\\ Dec 2022","OBJECTIVE BENEFITS TO MSMES To provide financial assistance and support for green \u2022 Global competitiveness and brand recognition in the projects in the MSME sector as aligned to nation's market commitment to reduce Green House Gas (GHG) emissions \u2022 Better work environment \u2022 Better profitability by reduction in energy & LOAN AMOUNT environment related cost \u2022 For MSME - Maximum loan -Rs. 20 crores \u2022 Risk sharing facilities available for EE\/Greener\/ \u2022 Service provider or aggregator subjected to Cleaner Projects MSME linkage - Rs. 50 crores ELIGIBLE BORROWERS KEY FEATURES \u2022 RESCOs, ESCOs, EPC companies and vendors or any \u2022 Concessional interest rate as per rating MSME on either Supply or Demand side of Green \u2022 Maximum repayment period up to 10 years Value Chain \u2022 Quicker Sanction \u2022 Upto 100% funding for smaller projects upto Rs.5 \u2022 MSMEs Executing projects or providing services, related to the activities eligible under the scheme to crores with Cash Collateral in the form of SIDBI FDR various government bodies on BOT, BOOT, BOOM, \u2022 For larger projects, upto 90% funding with 10% PPP etc Promoter's Contribution To Know more, visit our nearest branch. Locate us at: www.sibdi.in Follow us on SIDBlofficial sidbiofficial sidbiofficial SIDBI Official ACTIVITIES COVERED SIDBI (Small Industries Development Bank of India) \u2022 Renewable Energy Small Industries Development Bank of India, \u2022 Energy Efficient Buildings Green Climate and Energy Efficiency Centre, \u2022 Cleaner Transport 10th Floor, Atma Ram House, 1 Tolstoy Marg, New Delhi-110001 I \u2022 Waste Management Telephone: 011-2344 8300 I E-mail: [email protected] \u2022 Resource and Energy Efficiency Measures \u2022 Waste Water Treatments \u2022 Cleaner means of production \u2022 Any new & innovative project with a potential for climate change mitigation or ensures Sustainable Development Goals (SDGs)","COVER STORY | SME Banking & Finance RISK MANAGEMENT One of the first things you should consider when But how do you approach figuring out the beginning the planning phase of a project is what unknowable? Don't panic; there are actionable could go wrong. Although it sounds terrible, steps you can do despite the paradoxical-sound- pragmatist project managers know that this kind ing nature of the situation. To help you discover of thinking is preventative. To know how to and monitor risks on your project, we'll talk manage risks when project planning, you need to about tactics that give you a sneak peek at have a mitigation strategy. potential risks in this post. What is Risk Management? for each risk to ensure that already established for itself The detection, analysis, and mitigation plans are in place if determine whether risks are reaction to risk elements that are problems develop. Risk accepted or rejected. inherent in a business's operations management for more minor are all included in risk projects may entail a detailed, The risk management structures management. Effective risk prioritized list of high, medium, and can be used to support other risk management is acting proactively low priority hazards. mitigation systems if a corporation rather than reactively to influence establishes risk management as a future events as much as feasible. Risk Management Strategies disciplined and continuous process As a result, sound risk management Structures for risk management are to detect and resolve issues. They can potentially lessen the likelihood made to do more than identify consist of budgeting, cost of a risk happening and its possible current hazards. The uncertainties management, planning, and consequences. should be calculated, and their organizing because the emphasis is impact on a firm should be on proactive risk management in For various projects, risk predicted via a sound risk such a scenario. management might mean different management framework. The things. Risk management tactics on outcome is a decision between Risk reactions typically take one large-scale projects may require taking risks or rejecting them. The of the following shapes: considerable detailed preparation risk tolerance levels that a firm has Rejection: A company works to 79 \\\\ Small Enterprise \\\\ Dec 2022","remove a particular risk by A company organization will be each of the identified hazards. eliminating its root cause. able to address obstacles or Prioritization ensures that risks that obstructions to its success with such can substantially impact a business Mitigation: Reducing the a plan. are addressed more immediately likelihood that a risk will because it is impossible to minimize materialize reduces the The Process of Risk Management all existing risks. predicted financial value in 6 Phases attached to the risk. How then do you approach project Determine the threats risk management, which seems Finding an acceptable remedy Recognition: A company could elusive? You create a plan for risk comes first, followed by identifying occasionally be required to take management. It all comes down to the issue in many situations. Before a risk. If a company entity the method. Follow these six determining the best way to creates contingencies to lessen actions to turn disadvantages into manage risks, a company should the impact of the risk, should it assets. identify their root causes by asking, materialize, then this alternative \\\"What generated such a risk, and is viable. Determine the Risk how could it affect the business?\\\" Brainstorming is the primary A company must adopt a method used to identify risks. A Develop an appropriate response problem-solving strategy while company gathers its staff so that When a business entity decides to developing contingencies. A they can discuss all the different risk evaluate potential solutions to thorough plan may be carried out factors. The next step is to prioritize reduce identified risks and avoid as soon as the situation calls for it. their recurrence, it must consider the following: What steps can be made to stop the danger that has been identified from happening again? What should you do in addition if it does happen afterwards? Create safeguards against risks that have been identified The concepts discovered to be helpful in risk mitigation are developed into various activities here and contingency plans that can be used in the future. The plans can be implemented if risks arise. Conclusions The risks that our company endeavours face can have an impact on their survival and expansion. Therefore, it is crucial to comprehend the fundamentals of risk management and how they may be applied to lessen the impact of threats on company entities. -JAYA 80 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance EMBEDDED FINANCE FOR SMEs WITH BANKS AND DIGITAL PLATFORMS The technology-driven era of modern society has banks. Embedded finance provides financial captured the vast area with ease for a diverse set services to SMEs at the right period by reducing of activities including financial transactions. friction and opening the new possibility for new Embedded finance for SMEs in the same context is clients to get engaged with. the revolution for SMEs from tiring sessions of As per the survey, there can be as a gateway to third-party support SMEs and consumers to two major models that can financial services. get the required banking support digital platforms that services when they need them, have shifted into embedded Platform Own products within the platforms and banking for SMEs. \u2013Platform branded financial interfaces that they are products can be offered habituated to use on daily basis Pass through services \u2013 under the platform's name. to flow of life and work. As per Here the platform will serve the predictions in the market, Embedded banking finance can 81 \\\\ Small Enterprise \\\\ Dec 2022","embedded banking for SMEs business owners. opportunity by making SMEs can capture 26 % of the global more flexible to invest more in SME banking revenue by the Benefits for SMEs: value-added banking services. It year 2025 SMEs are happy with the can reach under banked SME accessibility of embedded crowd and deliver new product SMEs get benefitted through a finance to have the financial offerings as per the demand of set of services that satisfy their services on the spot the market. day-to-day need for banking. whenever they need them. These services they can access In the coming next five years easily through the common They don\u2019t need to log in to Embedded finance for SMEs can platform of daily business another app for the financial create a software as a service or conduct. Even the complete aspects like bank transfers or SaaS for commercial banking. market for embedded finance filling out a loan application, Here the old business models for SMEs could be worth $124 etc. can transform into the new billion by 2025 expected. infrastructure. So, this is the Even the additional benefit time for each bank and the The leading banks and comes with embedded platform to decide the area to platforms are giving thought to finance which is value-added get expertized to fit itself in the finding out the secure and best services like finance changing environment. position for them in the management and analytic emerging sector along with the tools. Banks and digital platforms suitable partner support to help The collaboration of banks with them deliver the creative SME banking market growth digital platforms will give a call hypotheses at scale. with embedded finance via to varied opportunities in the the platform economics future. SMEs are ready to explore SMEs are more interested in banking services from the transactional embedded finance Banks \u2013 Banks can connect digital platform products like accounts, cards, with digital platforms to There can be many sample etc. than financial products reach the massive pools of banking services to get opted including materialistic financial SME customers. It can for but SMEs haven\u2019t rushed decisions like loans or generate potential revenue into those like fintech, etc. from overdrafts. As per the survey, it streams without suffering the the old banking techniques. is revealed that the cost of end-to-end Even Accenture's global SME transactional banking product distribution. Now the leading survey shows that the revenues are mostly at risk due banks are thinking about the calculation will change in the to the embedded finance chance to compete under future. This they said as digital leaders or players. Initially, their brand supported by platforms are focusing on SME banks will not get connected to their products and services. clients with embedded finance the platform efficiency by losing After that find where to facilities. their primary transactional collaborate with the digital relationship but rather observe platform leaders to fetch the Digital platform leaders range consistent dissolution of share solution to SME challenges. It from the gig economy, of wallet. will help reach a new e-commerce, marketplace, population of customers. transactions, and social media There can be chances that to cloud-based accounting, embedded finance for SMEs will For Digital platforms- Digital financial management, support push SME banking market platforms can provide easy solutions, and productivity. Even growth via platform economics. accessibility to branded bank the digital platform has earned The emerging trend of financial services for business a high degree of trust in small embedded finance may transactions. Even the digital generate new scope for 82 \\\\ Small Enterprise \\\\ Dec 2022","platform needs to partner the increase in the business about putting this into the and connect with a bank for size. action stage. SMEs can opt-in financial offerings and create future for the digital platform a solution to SME problems. The next population is 44% support with embedded finance of SMEs would prefer digital to grow. The maximum crowd of SMEs platforms to offer such is warming to embedded services connected to a - BINDU TIWARI finance conventional bank. The need As the survey says that the SME gets falls as the size of the situations will change by business gets enlarged. connecting to the digital platforms that can provide Here 47% of the SMEs want access to SME clients with the to pay the same or more for ease of seamless experience embedded finance than that they offer. traditional banks. Here also the interest rate increases The projection as per the SME with the size of the business. survey says: Bottom lines There is 41% of SMEs that are The coming years can be the interested in using banking time for the banks in the services through a digital majority to decide what their service provider and even the strategy can be related to interest gets enhanced with embedded finance and to set 83 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance BILL DISCOUNTING \u2013 HOW CAN SMEs BENEFIT Bill discounting or invoice discounting is the such cases as they already have very limited chance to borrow the sanctioned amount of funding available to them and need a huge short-term based funds from a lender on the amount to compensate with. What to do in that outstanding invoices that the borrower holds. case? Small or medium-sized businesses require such funds to continue meeting their daily needs. Such kind of financing assists the business in case of short of cash while the customers would Let\u2019s take an example from our daily schedule of complete the payment of outstanding invoices excessive outstanding in some cases. There may later on. Bill discounting supports the business to be situations when the bigger businesses also move on for the inventory that will trigger the need to shut down even after increased debt via business running to fetch future orders flawlessly. loans. But small businesses can\u2019t even exist in Why bill discounting on confirmation of payment from what will you do as you don't preference? the client after 30 days or more. have enough amount in hand to Assume yourself as an SME, Now, in between, you pitched start the new project at all? when you just delivered a big another client and that client project with the raised invoice wants to start the project Here bill discounting can be an followed and got the immediately. Now in this case advantage for SMEs.The alternative financing solution to 84 \\\\ Small Enterprise \\\\ Dec 2022","SMEs of bill discounting Within the period of 1 to 2 working capital provides working capital finance days, the raised invoices will For excess funding, in the form of invoices paid get converted into cash and businesses move for bank before the stipulated deadline. transferred to the businesses loans in general. There are at an affordable discounting conditions with SMEs Features of Bill discounting rate. needing working capital You need to show the raised faster than bank loans. In invoice to the lender and get With the help of such such cases bill discounting the funding without any financing, Small or medium can be the correct solution to security reference. enterprises(SMEs) can get immediate cash as soon complete a set of business the invoices are raised. The A hard copy is not mandatory projects with the supported quick access to cash support but the soft copy of the payments from the lenders. helps businesses to work with invoices is accepted. more than one assignment at So, with bill discounting, you a time to expand their Present the total amount of don\u2019t need to wait for 30 to 120 business with the payments invoices to receive 90% of days to get the invoices paid of their dues or any financial that as finance. which can help in achieving requirements. future projects in hands for The sellers are having progress on business. Reduction of fund ownership of all the invoices collection time in the process. How can SMEs Benefit from The wastage of time impacts bill discounts? other projects to get There are diversified options There are a few unavoidable delivered when the delivery to choose from for financing reasons for SMEs that can be of services or goods is done whether online or offline and plus points to opt for bill with one project and then they serve as per your needs. discounting to enhance raised invoices. But the productivity in their businesses. payment in cash takes too The eligibility to get the much time. Bill discounting finance is lenient and the Collateral or security-free cuts off this long period by finance will be provided at financing converting the blocked fund low rates with less To get the excess funding via into cash to help you move paperwork. a bank or any other lenders, to the next step of your there is a demand for business to grow. What is the work procedure security documentation as a for bill discounting? guarantee to avail of the Cost-effective discounting funding. The SMEs can use cost The SMEs raise invoices for their assets in crucial When you opt for a bank the services they provide or conditions like gold, home, loan, the interest rates are an goods that are supplied to etc. for security here. But with additional burden on the the companies. Generally, the bill discounting this negative borrower. While you choose credit period covers the phase can be omitted. The bill discounting, it can have range of 30 days to 120 days. only additional affordable two included costs a service minimal fee is deducted from charge for the facility and Now, here to remove the the invoice payable while discounting fee. The delay in the finance opting for bill discounting. discounting fee here is the collections with the reduced This minimal amount is the cost of borrowing funds. The risk factors associated, SMEs payment to the service to service fee is based on the can present their invoices to release the funding. annual turnover of the the service provider company for invoice discounting and Fast accessibility to collect the finance. 85 \\\\ Small Enterprise \\\\ Dec 2022","business that is using the hectic for the service provider providing funds and suppliers. facility. These two charges company. So, the selections for the bill are still pocket-friendly for discounting can be a more the SMEs that can lead their Bottom Line profitable deal than any other business towards a profitable Nowadays there are plenty of option. graph of success. lenders who are accepting applications from small or - BINDU TIWARI The flawless working medium enterprises to finance strategy of funding their raised invoices to support The complete process of bill their business productivity. discounting is done by the These lenders or companies discounting provider check your business sales company, so the borrower volume as per the current status can focus on business growth of your business growth to completely. The only help of sanction the funding for the business is to provide the invoices. Even the condition documents required to benefits everyone involved in proceed and then paperwork the process whether it is buyers with other operations is or financial institutions 86 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance JOURNEY TO SME BANKING TRANSFORMATION SMEs(Small and medium-sized enterprises) are evolved to support SMEs' success. the strongest hit by the changing environment especially when the crisis arrives. During Towards the beneficial aspects of SME COVID-19 the case became more worst and then transformation, banks need to have a thorough the need for SME Banking Transformation knowledge of their challenges. Where to start for SME banking sustained period of impactful Even there is scope for banks transformation? change and seek support from to strengthen their relationship There should be a deeply focused their banks. with SMEs by leveraging and approach on the areas of concern developing the SME ecosystem to find the solution for the Here to support SMEs for the via new platform models. problems faced by SMEs and the best result, banks need to be banking support required. Let's attentive to the real needs of As per the survey on the impact have a look at the actions SMEs, help them to get the of the pandemic on SMEs, the required: basic rights, transform their major percentage such as 74% of credit operations and become small businesses got affected SMEs are running through a more flexible as per their need. negatively through the period of 87 \\\\ Small Enterprise \\\\ Dec 2022","COVID-19 through profit margin, the other efforts focused on Here are a few hypotheses out of revenue, and sales volumes on a specific operational challenges a set to describe how SME huge ground. and supported streamlined banking can dominate the compliance tasks. Even banks challenges of 2020 to have The short-term impact can be took hold of the latest winning growth in 2030. It expected but the pandemic technologies on the ground for includes the compelling forced SMEs to adapt to the more growth but in a small number of opportunities for tomorrow\u2019s profound change in their world. fit-for-purpose use conditions. market leaders with the higher Due to this condition, the Maximum banks are focused on challenges for tomorrow\u2019s directors of the small business are cost escalation. stragglers. forced to peep inwards and think to find their company's place and The conditions are improving with Tech giants and huge goal in the economy. a stronger fundamental platforms spread their banking transformation than before to services as the maximum After a deep study of the overcome the market threat number of companies adopt condition, more than half 56% caused due to pandemic. self-finance operations and decided to renovate their Conventional products are not in provide credits to the suppliers business models in response to demand by the clients as per their changing market conditions and relevance and they want more The modern transformation of the move with more digital channels. value-added services to have banking services may threaten the dense experiences.There are many traditional processes and their Future of SME Banking Industry disturbances already lined up relationship with the clients. The quick transition of SMEs s under the topic that what will When a client asks for credits places high pressure on the come and confirm that from the bank they expect more financial service providers to get tomorrow\u2019s leaders will need to from them than just the credits. adapted to satisfy their emerging explore with a bold vision. This Even the smart banks know the customer's needs.The hypotheses includes defining a purpose and requirements and expectations of that can define the future of the modifying offerings that will their customers based on the corporate, commercial, and SME move with the mission. With that, current status of performance and banking industry by focusing on the client-centric facility to fetch growth opportunities. the issues: the digital services and products easily should be on priority. Now the leaders will present a Bank's transformation different offering to all types of concerning increments has a businesses despite their sizes. partial role in shifting the client's expectations to have a higher digital reveal. The global breakdown in the economy and ongoing low-interest rates with low asset quality have lessened the scope of growth opportunity to come across. In the last five years, banks have done incremental transformation for the corporate, commercial, and SMEs. But the problem is not solved as it is just a partial satisfaction to the client's expectations. On the other hand, 88 \\\\ Small Enterprise \\\\ Dec 2022","These businesses then will get the SMEs to provide them the will help by serving to keep included in their clients\u2019 supply relaxation from the stressful like-minded and complementary chain. Here the stragglers will lose environment. clients together with third-party a huge amount of market shares service providers like accountants, to large self-banking corporates. Where these smart banks are real estate professionals, etc. They will be forced to access the working towards client growth cheaper deposits to stay back in other lagging banks will stick to Bottom Line the race. their rigid rules based on revenue Smart banks are moving forward and employee counts. This limits to provide the expectations filled Restructuring of the their capacity to reach the with services and keep track of client-centricity in a segment continuously changing needs of the client's business growth less world by Banks the client. throughout their life cycle. The leaders in banking sectors will Backward banks are in diverse modify their banking structure Banks act as trusted advisors, conditions due to their rigidity and operating models to provide leveraging data to mark their not to change the approach for the products and services that can presence in shaping clients' the transformation. A healthy be the choice of clients. Banks will future business strategies relationship between a bank and focus on the digital offerings for The client's expectations are rising its client cannot be built, if the their clients despite where they fit from the banking providers about clients can\u2019t find the growth into the conventional segments. the strategic requirements for the opportunity under the shed of its advancement of their business leader. These banks will be ready to solve that can connect them to the the old problems associated with growth opportunity. Here leaders - BINDU TIWARI 89 \\\\ Small Enterprise \\\\ Dec 2022","You aspire to Grow We aspire to be your sarthi in your journey Unlock your True potential With Our Consulting Services Marketing & Branding Strategy Consulting for cost reduction Advisory for Automation in manufacturing Digital Transformation of business Competitive business planning Operational Excellence Procurement consulting Support for MSME schemes Leadership training as required ` Darshana Thakkar \u2013Founder & CEO +91-9106708639\/91-9824484945 508,VCCI Building , GIDC, Makarpura, Vadodara-390010, Gujarat Website: www.transformationstrategyhub.com E-mail : [email protected]","COVER STORY | SME Banking & Finance REMEDIES FOR TACKLING DIFFICULTIES IN ACCESSING FINANCE In the ball game of Business in the Indian Industries (SSI) find it difficult to curb out the perspective the need to acquire, invest and funding or the minimum finances required for diversify funds meets a huge part of financing their various activities in the business and its roles of the Management of any Business. Big operations. Many windows and developments tycoons and business giants tends to chuck out have come up to help SME at their financial needs funds from diversified sources and also provide from both the Government and Private Sectors good support to the lenders in the long run of considering the importance of SME in a develop- doing business. At this point the Small and ing economy. Medium Enterprises (SME) and Small Scale The ways of tackling finance process of implementation is helps the overall development mainly done through public of the country through and funding issues for SME sector Banks and Institutions. business. The SME can turn up The Government and its Finance and opt for any Government are enumerated hereunder: Department comes up with Funding Schemes available and Government \u2013 Various Financial short term plans to inject take the advantage of such and Funding Schemes are funding to the SME and new funding to their business. developed and implemented by Entrepreneurs which in turn the Government to boost SME sector and its development. The 91 \\\\ Small Enterprise \\\\ Dec 2022","With globalization, existing and the new and pass on the benefits to the liberalizations, financial policy enterprises are eligible to be SME and SSI while the Private reforms and change of covered under the scheme. The Banks come up with small frameworks by the Government scheme is being implemented funding sources and schemes the space and ease of doing through banks and one can opt which mutually helps the Banks Business by the SME has been for the same with an and the SME to earn profits and always considered to be the application and prescribed run their business. Presently in potential developmental front procedure. the age of E-Banking the paper and such activities have works and hassles have been provided scope to the SME`s to On recent developments the considerable reduced and the work and develop their PradhanMantri MUDRA ease of opting the funds have business through finance, Yojana (PMMY) scheme led to more SME funding with technology and efficient work launched by the Government good returns. The tagging of force. The pivotal role of on April 8, 2015 for providing Permanent Account Number Government being the loans up to 10 lakhs to the (PAN), ADDHAR with Tax and implementation of SME funding non-corporate, non-farm all banking transactions have through banking institutions small\/micro enterprises. These provided the banks with a clear and ease of regulation of loans are classified as MUDRA picture of credibility of the through Industrial Policy for loans under PMMY. These loans person or the institution or doing business. are given by Commercial Banks, business during processing of RRBs, Small Finance Banks, MFIs the funding. The risk factor or Reserve Bank of India- The and NBFCs. The SME or bad debts is catered through RBI implements and borrower can approach any of mortgages, assets etc. along emphasizes on flow of bank the lending institutions with previous financial credit to SME`s especially in mentioned above or can apply statements. With the emerging rural and semi urban areas of online through this portal. policies, merger of Banks and the country. The goal is to efforts to keep the money provide financial support to Banks (Private and Public available with banking SME @40% of the funding by Sector)- As the backbone of institutions rolling, the every bank on an approximate the economy the Banks both in availability of funding for SME, basis to support the SME in public and private sectors take Self Help Groups, sustainability, funding, capacity an enormous role in financing Entrepreneurs, Agricultural building and asset creation. The the SME`s through money Business have a greater chance RBI controlled by the lending or credit in forms of of availability of funds with Government Financial Policies Loans, Schemes, Bonds etc. The ease. The loans for the SME and implements the fund flow for Banks provide tailor made SSI units have a controlled SME developments contributing schemes and loan facilities to interest rates and repayment the overall growth of the SME`s which are guaranteed schemes which are less economy. through Property, Business compared to the prevailing turnover, other assets or market rates. The Government has also guarantee etc. On some developed and implemented prescribed paper works the Specialized banks for SME and Credit Guarantee Schemes banks process the same with SSI financing have been known as the Credit Guarantee background checks and provide operational since long. The Fund Scheme for Micro and the same to the SME with specialized financial institutions Small Enterprises (CGMSE) for nominal interest rates and pay aim at providing tailor made availability of collateral-free back schemes. The Public solution to the SME functioning credit to the micro and small Sector Banks works upon and funding with a hassle free enterprise sector. Both the Government backed schemes process. The principle 92 \\\\ Small Enterprise \\\\ Dec 2022","Institution being \u201cThe Small providing developments to the In the struggle for survival in Industries Development Bank of SSI and SME through the competitive market most of India (SIDBI)\u201d was set up in cooperation and alliances. Such the SME perish in the long run April 1990 as a financial cooperatives also help the SME due to want and dearth of institution for promotion, in obtaining credits and the funding. There are financing and development of banks risk is lowered through approximately 42.5 million SME`s. SIDBI also coordinates the guarantee. registered and unregistered with other such institutions for SME in India which is uniform implementation of The main problem of SME operational. Needless to say the developments of SME and SSI. financing is the lack of contribution of the SME in information on present development of the nation and Small private institutions and financing schemes and shortage also creating employment is an business are also providing of credentials for obtaining the important factor for overall credits to the SME against credits. Government must economic growth of the interests especially in short ensure wide spread of country. The ease of doing term for immediate needs of information on the schemes and business and availability of the SME. The process of availability of financial helps to funds through various sources obtaining such credits is very the SME and promote such has promoted the growth of the easy but the rate of interest is implementation. With the SME sector but still a lot of work on the higher side. increasing demand for credit, is to be done to promote the Credit Risk Databases, Credit SME and pull them to the Co-operative and Societies- Bureaus and SME Credit Ratings heights to attain a developed These are small unified societies are being utilized by financial economy. and cooperatives of SME and institutions to pass on risk free Business houses with industries credits to the borrowers. - RAHUL GUPTA having the same goal of 93 \\\\ Small Enterprise \\\\ Dec 2022","COVER STORY | SME Banking & Finance GOVERNMENT SUPPORT OF SME FINANCE India has about 60 million+ Micro Small and to employment generation and entrepreneurial Medium Enterprises, including registered and development. SMEs are heavily reliant on debts to unregistered ones. SMEs have contributed about fulfil their start-up needs, cash flow and invest- 40% of total manufacturing and 34% of total ment needs. Therefore, bank lending becomes the exports to the Indian Economy. They have become most common source of external finance for crucial; to the country\u2019s economic growth, leading many SMEs. The government has taken a capital investment by the and Venture capital and variety of measures to support SMEs. Because of the financing business angle networks are SME access to finance because scenario of the SMEs two the new sources of financing of the sector's importance. The broad approaches have been for SMEs government has also identified and that need to be announced that to boost the adopted at the national level - The current trend for financing collateral free lending and has been more flexible loan assistance to re-energize Facilitating the access of SMEs schemes as well as loan to extant sources of financing guarantees. Like in India, all 94 \\\\ Small Enterprise \\\\ Dec 2022","other developing countries effective government support Bharat. understand the role that to the SME banking sector small-scale industries play in does not exist, despite some Credit Guarantee Funds an economy - in terms of measures appearing to be Trust for Micro and Small balanced and sustainable more effective than others. Enterprises - The government growth, generating The policies and practices of India has launched a loan employment, developing concerning the financing of scheme for MSME businesses entrepreneurial skills and SMEs are progressive. These that allows for loans without contributing to export financing guidelines are issued collateral. Both new and earnings. by the Reserve Bank from time existing enterprises can apply to time. This is to ensure a for loans under the scheme. The loans extended to SMEs smooth and timely flow of are business loans which are credit to such enterprises and National Small Industries custom-made to suit the thereby enhance the Corporation Subsidy - The requirements of each SME. All competitiveness of such NSIC is a Government regulations for SME financing enterprises. enterprise under the MSMEs, have been defined under The and it is ISO certified. In Micro, Small and Medium Government Schemes addition to providing finance, Enterprises Development Act, The government has been a technology, market, and other 2006 which states that the major part in influencing the services across the country, its Central Government can guidelines for Small and primary purpose is to assist facilitate the promotion and Medium Enterprises. Through MSMEs in growing. development of the incentives, they help small competitiveness of SMEs. businesses upgrade their Credit Link Capital Subsidy Through skill development in technology and encourage Scheme for Technology employees, entrepreneurs and research and development. Upgradation - Small management, technological Infrastructural and businesses can upgrade their upgradation, marketing development investments flow processes through this scheme assistance or\/and heavily with the support of the by financing technological infrastructure facilities of such National Bank for Financing upgrades. A technological SMEs. The government Infrastructure and upgrade can affect numerous measures range from Development (NBFID). processes within the Additionally, they provide organization, such as reforming existing information on how much manufacturing, marketing, and legal\/regulatory barriers - support the MSME sector will supply chain. the strengthening of SMEs receive in terms of amenities will be and investments, which will Eligibility Criteria indirectly also create new jobs. Certain eligibility requirements specified through are required for each SME to notifications or guidelines. The Government initiatives for apply for the schemes, and the MSMEs have been such eligibility criteria vary taking actions to develop proactive and ensure that all from each other. However, the SME finance market the benefits of these schemes some of the basic broadly, and reach each MSME at the right requirements are - moment. For immediate relief Jumpstarting or to the sector, various Age of the individual incentivizing lending to initiatives have been launched SMEs directly by intervening by the government following Amount of credit sought in the market. the ideas of an Atmanirbhar Type of business A single framework for Credit score of the 95 \\\\ Small Enterprise \\\\ Dec 2022","individual quite low. In Germany and create employment China, MSMEs contribute 55 opportunities, which has now Capital invested per cent and 50 per cent to become the basic focus of the their GDP respectively. In Government of India. The Annual turnover of the India, the economy has also provisions of adequate business swayed towards services than financing to this sector have manufacturing. Though the been an important element of SMEs and MSMEs are the manufacturing systems are the bank policies. There has backbone of new India and also developing and are been a paradigm shift in the contribute to each sector by increasing competitiveness. context of government bringing in innovation, and schemes and banking technology. To support SMEs Business innovations have opportunities for SMEs. and MSMEs between all the contributed to the spread of challenges of financing and entrepreneurial culture among The MSMEs provide solutions funding requirements - there MSMEs. A unique to critical issues in the country lies various opportunities and characteristic of MSMEs is that like poverty, unemployment, options for financing. 6.3 they are widely dispersed income inequality, regional MSMEs in India contribute across various sectors of the imbalances, etc. - thereby 33% of the GDP of the country economy and offer a variety of creating unparallel growth in and also employ a large products and services to meet the Indian economy. segment of the population, the needs of local and global particularly in the non-formal markets. - PALLAVI VERMA sector. Although when compared to other countries Final thoughts the MSMEs' contribution to Small enterprises make one-third of our GDP is still economical use of capital and 96 \\\\ Small Enterprise \\\\ Aug 2022","Technology AI & AUTOMATION DELIVER GREATER CX IN A DIGITAL WORLD In the erstwhile Industrial era of the 70-80s, The moments of truth in consumer journeys could organization size was a very important factor for present fleeting opportunities, which when mined growth. How large the company is made a huge in real time, could offer a great competitive difference to their fortunes and growth prospects. advantage. Alternately, the advantage could be lost forever, if missed at the opportune moment. In the now Digital age, size has seized to remain that critical. Instead, agility has emerged as a key It is very promising that brands are adopting determinant of success. How fast an enterprise automation tools and agile methodologies at a can learn and respond to market changes in a rapid pace. To an estimate by a leading SAS highly digital economy, pretty much decides the provider, two-thirds of customer engagement will momentum of gains it stands to make. Agility is be via digital devices and smart machines, by not just about speed, but also about dexterity. It 2030, replacing human intervention. is described as nimble proficiency for quick learning, pivoting and scaling sharply, once it is proven successful. 97 \\\\ Small Enterprise \\\\ Dec 2022","Artificial Intelligence & Machine AI that everyone is familiar with are would take days, that has now learning chatbots, which are programs in been replaced by the use of AI for AI is said to effectively replace language learning, reasoning, sentiment analysis. The system can humans injobs, which machines can self-correction and response that intelligently extract key learning do faster, more accurately and at a interact with customers much as and propose top next best action fraction of the cost. The applica- humans would. steps that the team must under- tions of AI for industry present take, and resolve consumer issues, tremendous opportunities for But that is not even the tip of the that too in real-time improving customer resolutions, iceberg. Wherever there is a large response time and better experi- volume of data, AI has a use case in The goal of Machine Learning is to ence, in real-time. Itis being speeding up the extraction of allow machines to automatically adopted at breakneck speed across learning through ultra-fast compu- learn & progressively get smarter tech-driven businesses that are tations. AI is being deployed for from past data without explicit disrupting erstwhile operating processing data at key customer programming each time, to provide models. touch-points to analyze, personal- more updated and accurate output, ize and offer triggers, customized on the fly. Machines are \u201ctrained\u201d When dealing with an enormous offers, and propositions that are to learn a specific task &to detect quantum of structured and humanly not possible, enabling patterns and trends to automatical- unstructured data, AI enables a better customer engagement, ly update the results. Even minor machine to simulate human conversions and revenue optimiza- shifts in consumer behaviour get behaviour by rapidly expanding the tion through relevant offers. monitored and responded to, rate of computation of complex without human intervention problems. With AI, intelligent A large quantum of Customer systems can perform any complex feedback is being collated by Google search algorithms have task like a human, but at far greater brands, from all brand touch points become smarter over time, and speed and in a fraction of the time. and the World Wide Web. Where even NLP bots that develop deeper conducting manual analyses and language & response skills over The most common application of derivation of insights & actions time, as they compute & analyze 98 \\\\ Small Enterprise \\\\ Dec 2022","more data, are examples of ML deployed for specific business and intelligence (AI) technologies applications in use extensively. IT use cases at scale, they help together empower rapid enormously reducethe time for end-to-end business process Brands deploy AI\/ML-based processing, improve efficiency and automation and accelerate digital Retention and revenue models that reduce costs dramatically. transformation, helping brands to once built, become smarter over achieve their goal of enhancing CX time as they continue to \u201clearn\u201d The most common applications are - much better and faster. from more data and thus evolve for back-office operations like the quality of output from the workflow, email desk automation, - Anjali Malhotra, models - like enhancing cross-sell financial accounting, and bank Founder at C-Xel revenue, lowering churn based on reconciliations. These can help in She is a specialist in Product, customer segmentation and vastly improving CX through the Marketing, Customer, profiling. Such programs give faster turnaround of resolutions, Analytics, Digital Transforma- increased conversion statistics over which are otherwise slow due to tion & IT across BFSI, Media, time, as they can capture minute dependence on these time-con- and FMCG industries. For nuances and use them to predict suming manual processes and more information visit likely consumer behaviour. The human dependence, which may be www.c-xcel.com dexterity to build them and refresh error-prone. them on-going provides the brands with a head-start An enterprise can work towards an entirely paperless back office by Automation \/RPA deploying RPA to its largest AI applied to repetitive and repetitive tasks such as data otherwise time-consuming collection, reporting, on-boarding, processes, with the explicit purpose managing orders, payroll process- of achieving the same goal much ing and more. faster and cheaper, creates a robotic process automation (RPA) A combination of Robotic Process chain. Since RPA technology is Automation (RPA) and artificial 99 \\\\ Small Enterprise \\\\ Dec 2022",""]