SME Banking

Praveen Kumar | DGM | Bank of Baroda

What is SME Banking?

SME Banking is a great Career option. Almost everyone seems to be talking about How to start a Career in SME Banking, while one should first develop an understanding of What is a Career in SME Banking. Just like you would normally not trust a non Doctor with names of medicines, you should also not trust opinions about SME Banking from non professionals.

DGM Praveen Kumar invested 21 years in SME Banking. DGM Praveen Kumar describes SME Banking as:

SME Banking services provides financing solutions to small and medium enterprises (SME) to grow their businesses in India and abroad.

How DGM Praveen Kumar got into SME Banking?

After completing my BA in Economics, English and Maths from HNB Garhwal University, I got placed at Bank of Baroda. I served there for 38 years. I retired as Deputy General Manager from Bank of Baroda.

DGM Praveen Kumar's Talk on SME Banking

The Journey of a SME Banker: Praveen Kumar's Path to Professional Fulfillment Praveen Kumar, with an impressive 38 years of experience in public sector banking, embodies the expertise and knowledge necessary for navigating the intricate world of SME banking. Having pursued a Bachelor of Arts in Economics, Mathematics, and English Literature at Garhwal University, Praveen has been deeply invested in supporting small and medium enterprises throughout his career. In this article, we will explore what SME banking entails, the educational background and skill sets crucial for success, the positives and challenges of the profession, and what a typical day looks like for a dedicated SME banker like Praveen. What Is SME Banking? SME banking signifies the specialized banking services provided to small and medium enterprises, which are pivotal components of economies around the world, particularly in India. The sector is characterized by specific regulatory limits that define what constitutes a small or medium enterprise based on their investment in plant and machinery. Praveen highlights that the delivery of these banking services often involves establishing specialized branches dedicated to servicing the financial needs of SMEs, ensuring they receive tailored support to thrive in diverse sectors from manufacturing to services. Education Accounting A solid grounding in accounting is essential for anyone aspiring to work in SME banking. As Praveen emphasizes, a banker must be proficient in understanding important financial ratios such as current ratios and debt-equity ratios to effectively assess a loan proposal. This knowledge serves as a critical tool when working with various SME units, as it enables the banker to appraise financial health and feasibility accurately. Contextual Knowledge Gaining contextual knowledge about diverse industries is also vital for success in SME banking. Each financing project comes with its unique activities and contexts, requiring bankers to be familiar with specific intricacies. Praveen notes the importance of understanding the promoter's background and the viability of their projects to determine whether financing is justified. Laws A thorough understanding of pertinent laws is another cornerstone of education in SME banking. As Praveen explains, comprehending legal requirements relevant to setting up an enterprise, such as pollution clearance and necessary licenses, is essential. This legal acumen ensures that the projects assessed comply with all regulations, reducing risks associated with financing. Project Finance Knowledge in project finance is indispensable given the variety of activities across regions. Praveen points out that effective analysis must consider the distinct nature of industries in different geographies—from automobile ancillary units to fish processing facilities. This holistic view is pivotal in comprehensively evaluating the creditworthiness of an SME. Credit Policy Each banking institution has its distinct credit policy, which governs how lending decisions are made. Praveen advises that a banker must remain updated on these policies to make sound credit decisions. Awareness of the bank’s current guidelines is necessary to align financing strategies as per the institution’s approach and risk appetite. Current Awareness Maintaining current awareness is a less tangible but equally crucial aspect of SME banking. Bankers, like Praveen, continuously gather knowledge about market dynamics and the performance of specific industries to guide their financing decisions. Being informed helps in effectively assessing risks, understanding customer needs, and ensuring sustainable lending practices. Skills Communication Effective communication skills are paramount for SME bankers. Praveen highlights the need for clear negotiations with prospective clients and the ability to articulate complex information concisely in loan proposals. Interacting with various entrepreneurs necessitates robust communication to build rapport and understanding. Logical Thinking Praveen emphasizes logical thinking as a fundamental skill for credit analysis. Evaluating proposals requires not only financial assessment but also foresight regarding the project’s viability over the term of the loan. Logical reasoning helps minimize risks in lending, ensuring that loans serve both the bank's and the borrower's interests. Analytical Analytical skills are critical for dissecting complex financial proposals and understanding their implications. In Praveen's extensive experience, he has learned to break down multifaceted projects into manageable segments to reveal underlying risks and opportunities. This analytical acumen serves as a continual advantage in evaluating creditworthiness. Due Diligence Conducting thorough due diligence is an essential part of the SME banking process. Praveen illustrates the importance of field visits to verify the realities of proposed financing projects. This scrutiny provides invaluable insights that go beyond balance sheets, allowing bankers to spot inconsistencies and evaluate projects more holistically. Documentation Proficient documentation skills are critical in SME banking. Praveen notes that ensuring all loan-related documents are accurately executed is vital; these documents serve as legal evidence in case of default. A banker must ensure that they understand the legalities involved and stay updated on any changes in documentation standards. Positives Individual Growth One of the most rewarding aspects of being an SME banker is personal growth. Praveen asserts that the position cultivates maturity and a deeper understanding of diverse industries, enhancing both professional and personal development. This growth fosters a sense of accomplishment and confidence as bankers become seasoned and knowledgeable. Exposure SME banking offers substantial exposure to various cultures and business practices across the country. Praveen views this exposure as enriching, bringing insights into local economies and enhancing a banker’s understanding of business practices. Engaging with different geographic pockets expands one’s perspective and experience. Improvement in Decision Making Working in SME banking naturally hones decision-making skills. Praveen points out that frequent, high-stakes lending decisions cultivate the ability to make informed choices, not just in banking but in personal and social contexts as well. This skill carries over into various life situations, improving overall judgment. Career Growth Praveen emphasizes that a career in SME banking can lead to significant professional growth. Given its specialized nature, expertise in credit assessment is highly sought after in the banking sector. As such, those with strong track records in SME banking can anticipate various advancement opportunities. Challenges Desk Job Despite the exciting opportunities, SME banking also entails challenges, particularly the nature of the desk job. Praveen notes that a significant portion of the work involves detailed analysis and documentation, often leading to long hours at the desk. Balancing desk work with field activity is essential for job satisfaction. Long Working Hours Long working hours are a common expectation in SME banking. Praveen acknowledges this reality, as proposals may require extensive time to assess comprehensively. He emphasizes that commitment to the role often means late nights, especially when striving to finalize proposals and meet deadlines. Continuous Skill Upgradation The dynamic landscape of banking necessitates ongoing skill enhancement. Praveen believes that adapting to economic shifts, regulatory changes, and industry trends is crucial. Failure to keep skills updated could result in knowledge gaps that impact decision-making capabilities negatively. High Responsibility Responsibility looms large in SME banking. Praveen highlights that every lending decision carries the weight of trust, as the funds are ultimately those of the bank's clients. This high level of responsibility can be daunting, necessitating caution and thoroughness in each evaluation. A Day Of SME Banking A typical day for an SME banker is often unpredictable, with early morning starts and long hours stretching into the evening. Praveen outlines how his day begins with preparing for client meetings or pre-approval visits, often requiring travel to various locations. The mix of field visits and desk analysis ensures that no two days are alike, providing a dynamic work environment that keeps him engaged. In conclusion, a career in SME banking offers a unique blend of challenges and rewards, as highlighted by Praveen Kumar. The role not only demands a diverse skill set and an in-depth knowledge base but also promotes significant personal and professional growth. Understanding the nuances of this pivotal sector is critical, as it has a lasting impact on the development of small and medium enterprises and, consequently, the economy at large. As Praveen exemplifies, a commitment to excellence in SME banking not only facilitates individual success but also contributes to the prosperity of communities and industries across the country.

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How to get into

SME Banking?

If you are want to get into SME Banking, start by investing in a Career Plan.

The 14 hour process, guided by a LifePage Career Advisor, will help you introspect and check whether your interest in SME Banking is merely an infatuation or is it truly something you wish to do for the rest of your life.

Next, your Career Advisor will help you document how you can get into SME Banking, what education and skills you need to succeed in SME Banking, and what positives and challenges you will face in SME Banking.

Finally, you will get a Career Plan stating which Courses, Certifications, Trainings and other Items you need to do in the next 7 years to become world’s best in SME Banking.

LifePage Career Plan

14 hour personalized guidance program

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Links for this Talk

DGM Praveen Kumar's LifePage:

[LifePage]
https://www.lifepage.in/page/praveenkumar

LifePage Career Talk on SME Banking

[Career]
https://www.lifepage.in/careers/sme-banking

[Full Talk]
https://lifepage.app.link/20171206-0001

[Trailer]
https://www.youtube.com/watch?v=J9chbmewQ-Q

(SME Banking, Praveen Kumar, Bank of Baroda, Deputy General Manager, Banker, Finance Management, Analytics, Capital Investment)

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