‘”Small Industries Development Bank of India”

Introduction;

• Definition. SIDBI. Small Industries Development Bank of India. set up on 2nd April 1990 under an Act of Indian Parliament, acts as the Principal Financial Institution for Promoting, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector as well as for coordination of functions of institutions engaged in Small Industries Development Bank of India (SIDBI) set up on 2nd April 1990 under an Act of Indian Parliament, acts as the Principal Financial Institution for Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector as well as for coordination of functions of institutions engaged in similar activities.
• Mumbai, Aug 28 (PTI) Small Industries Development Bank of India (Sidbi) today said Mohammad Mustafa has assumed office as the chairman and managing director.
• The headquarters of SIDBI is located at to promote, finance and for developing Micro, Small and Medium Enterprises (MSME) in India, the Small Industries Development Bank of India (SIDBI) was set up on April 2, 1990, through an act of parliament. The headquarters of SIDBI is in Lucknow.
• It is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in similar activities. SIDBI has also floated several other entities for related activities.
• Today, through a motivated and focused approach towards resolving both financial and non-financial hurdles of the rising number of MSMEs, SIDBI has undertaken a series of structural initiatives and strategic interventions that will help make the MSME sector a strong and vibrant sector.

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• Mumbai, Aug 28 (PTI) Small Industries Development Bank of India (Sidbi) today said Mohammad Mustafa has assumed office as the chairman and managing director. Prior to this, Mustafa was working as a joint secretary in the department of financial services at the Center, Sidbi said in a statement.
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• State Bank of India is the largest individual shareholder of SIDBI withholding of 16.73% shares, followed by Government of India and Life Insurance Corporation of India

Non-Financial Intervention

• As part of the non-financial intervention in the MSME sector, SIDBI had also undertaken various measures in the past. Recently, in association with credit rating agency CRISIL and Credit Information Company Transition CIBIL, it has introduced “CriSidEx” and “MSME Pulse”.
• CriSidEx, India’s first sentiment index for micro and small enterprises (MSEs) has been developed jointly by CRISIL & SIDBI. It is a composite index based on a diffusion index of 8 parameters and measures MSE business sentiment on a scale of 0 (extremely negative) to 200 (extremely positive). The crucial benefit of CriSidEx is that its readings will flag potential headwinds and changes in production cycles and thus help improve market efficiencies. And by capturing the sentiment of exporters and importers, it will also offer actionable indicators on foreign trade
• SIDBI in association with Transition CIBIL launched “MSME Pulse”, a quarterly report on MSME credit activity, for closely tracking and monitoring the MSME segment in the country. The report is based on a study done on over five million active MSMEs who have access to formal credit, with live credit facilities in the Indian banking system.
• SIDBI has launched the ‘Udyami MITRA’ Portal to improve the accessibility of credit and handholding services to MSMEs. They can select and apply for preferred banks through this portal. Under the portal, entrepreneurs can apply for a loan without physically visiting any bank branches and can select from over 1 lakh bank branches, track their application status and avail multiple loan benefits. It also has a facility for uploading all necessary documents. Through the portal, the MSMEs can also seek handholding support for getting finance. SIDBI has also entered into an arrangement with CSC e-governance Services (CSCeGS) to take Udyami Mitra portal to the unserved and the underserved MSMEs. CSCeGS is a special purpose vehicle (SPV) set up by the ministry of electronics and IT which acts as a connecting point for various digitally aligned services to villages in the country.

Other activities

• SIDBI has floated several other entities for related activities, including:
• SIDBI Venture Capital Limited (SVCL) – for providing Venture Capital (VC) assistance to MSMEs;
• Micro Units Development & Refinance Agency (MUDRA) – for ‘funding the unfunded’ micro enterprises in the country;
• Receivable Exchange of India Ltd. (RXIL to enable the faster realization of receivables by MSMEs;
• SMERA Ratings Limited (SMERA)- for the credit rating of MSMEs, renamed as Acute Ratings & Research Limited.
• India SME Technology Services Ltd (ISTSL for technology advisory and consultancy services and
• India SME Asset Reconstruction Company Ltd. (ISARCfor speedier resolution of Non-Performing Assets (NPA) in the MSME sector.

Refinance

SIDBI has initiated various schemes for upliftment of MSME sector and continues to be the prime lending institution for the MSME sector. The necessity of continuously providing low-cost credit to MSEs through concessional resource support to SIDBI has become more pronounced in the present scenario of recovery of the Indian economy from the economic slowdown. As per the Union Budget 2011-12, SIDBI has been allocated 5000 crores to SIDBI for refinancing Banks/SFCs at concessional rates, out of which SIDBI received ` 4,711 crores, which has been channelized to banks/SFCs.

Risk Capital

In order to meet the risk capital requirements of MSMEs, especially those involving innovations and new technologies, the Union Budget for FY 2008-09 announced setting up of a fund of ` 2,000 crores with SIDBI for risk capital financing. Under the Risk Capital Fund, SIDBI provides Risk Capital assistance to MSMEs in the form of equity, preference capital, optionally convertible debenture, optionally convertible debt, subordinated debt, etc. directly as well as through venture capital funds. As on March 31, 2012, a total of 1,193 crores out of the Risk Capital Fund has been committed by SIDBI to MSMEs and VC funds. In order to enhance the equity support to MSME sector, Union Budget 2012-13 has announced to set up the India Opportunity Venture Fund of 5,000 crores with SIDBI.

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What are the main functions of sidbi?

Functions of SIDBI. SIDBI refinances loans extended by the primary lending institutions to small-scale industrial units and also provides resources support to them. SIDBI discounts and re-discounts bills arising from the sale of machinery to or manufactured by industrial units in the small-scale sector.

Functions of SIDBI

• SIDBI refinances loans extended by the primary lending institutions to small-scale industrial units and also provides resources support to them.
• SIDBI discounts and re-discounts bills arising from the sale of machinery to or manufactured by industrial units in the small-scale sector.
• To expand the channels for marketing the products of Small Scale Industries (SSI) sector in domestic and international markets.
• It provides services like leasing, factoring etc. to industrial concerns in the small-scale sector.
• To promote employment oriented industries especially in semi-urban areas to create more employment opportunities and thereby checking migration of people to urban areas.
• To initiate steps for technological up-gradation and modernization of existing units.
• SIDBI facilitates timely flow of credit for both term loans and working capital to SSI in collaboration with commercial banks.
• SIDBI Co-Promotes state level venture funds in association with respective state government.
• It grants direct assistance and refinances loans extended by primary lending institutions for financing exports of products manufactured by small-scale units.

Objectives of SIDBI

• To promote marketing of products of the small-scale sector.
• To upgrade technology and also undertaking modernization of small-scale units.
• To provide more financial assistance to small-scale ancillary and tiny sector.

To encourage employment oriented industries.

• The SIDBI was established as a wholly owned subsidiary of Industrial Development Bank of India (IDBI) under a special Act of the Parliament 1988 and started its operations on April 2, 1990. It took over the responsibility of administering Small Industries Development Fund and National Equity Fund which were earlier administered by IDBI. It is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in similar activities. It is managed by a team of 10 Board of Directors. The authorized capital of the Bank is Rs. 1000 crore and the Paid up capital is Rs. 450 crore.
• The main objective of SIDBI is to provide financial assistance to all SSI s throughout India through SFC s and SSIDC s. SIDBI s motive is promoting industrial development in India, it emphasizes the development of the small-scale industries not to earn any profits. The Charter establishing it, The Small Industries Development Bank of India Act, 1989 envisaged SIDBI to be “the principal financial institution for the promotion, financing and development of industry in the small-scale sector and to coordinate the functions of the institutions engaged in the promotion and financing It is a public financial institution which lends for longer periods. A bank is defined as an institution which accepts deposits for the purpose of lending and investment. Further, Banks lend for shorter durations. SIDBI does not accept deposits and hence it is a financial institution. SIDBI has been addressing needs of MSMEs through its niche products viz. Energy Efficiency, Risk Capital, Bill Discounting and Service Sector.
• SIDBI has also played a pioneering role in extending responsible microfinance through Micro Finance Institution (MFI) route. In addition to funding, capacity building support has also been provided to smaller MFIs to cater to emerging needs for new and innovative products. The programmed has benefitted 3.32 million beneficiaries, mostly women.
• Order to give a boost to start-up Venture Capital ecosystem in India, SIDBI launched INR 20 billion (Euro 266.66 million) India Aspiration Fund (IAF), to act as a Fund of Funds to enhance the flow of equity to start-ups and growth stage MSMEs.
• SIDBI launched an INR 100 billion (Euro 1.33 billion) ‘SIDBI Make in India Soft Loan Fund for Micro, Small & Medium Enterprises (SMILE)’ to make available soft loan to MSMEs, as quasi-equity to meet debt-equity ratio and term loan on relatively soft terms for new MSMEs, as also for pursuing opportunities for growth for existing MSMEs.
• SIDBI has been identified as one of the agencies to set up Trade Receive bales Discounting System (TreDS), an institutional mechanism for the financing of trade receivables of MSMEs from corporate buyers through two or more. It shall deal with discounting of both invoices and bills of exchange.

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