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This is to certify that Miss POOJA RAMESH PANGUL of B.Com Banking and Insurance Semester V (2016-17) has successfully completed the project on “INDUSTRIAL FINANCE BY SIDBI” under the guidance of Prof.




Principal Dr. Usha Mukundan

Seal of the College

Project Guide / Internal Examiner Prof. (Mrs.):

External Examiner Prof. Date:


I, POOJA RAMESH PANGUL of the student of B.Com (Banking &

Insurance) Sem. V (2016-17) hereby declare that have completed the project on


The information submitted is true and original to the best of my knowledge.

Signature of Student Name of the Student: POOJA RAMESH PANGUL Roll No. :1027


I would like to express my sincere gratitude to the Almighty for having showered his immense blessing on me and has enabled to complete this research work.

I would also like express my heartfelt gratitude to our Principal Dr. Usha Mukundan, who has given me opportunity to conduct this study.

My guide is Prof. (Mrs.) Lakshmi Chandrasekaran also deserves sincere thanks that she has given me her guidance throughout the project and made it a success.

My parents have been a backbone to me in completing this Project and my friends who extended their constant support during my study also deserve heartfelt thanks.










Industrial Finance by SIDBI




Role of Industrial Finance By SIDBI








Features of SIDBI

















Introduction :


Small Industries Development Bank of india is an independent financial institution aimed to aid the growth and development of micro, small and medium-scale enterprises (MS was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India. Currently the ownership is held by 34 Government of India owned / controlled institutions. Beginning as a refinancing agency to banks and state level financial institutions for their credit to small industries, it has expanded its activities, including direct credit to the SME through 100 branches in all major industrial clusters in India. Besides, it has been playing the development role in several ways such as support to micro-finance institutions for capacity building and onlending. Recently it has opened seven branches christened as Micro Finance branches, aimed especially at dispensing loans up to 5 lakh. 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. Credit Guarantee Fund Trust for Micro and Small Enterprises provides guarantees to banks for collateral-free loans extended to SME. SIDBI Venture Capital Ltd. is a venture capital company focussed at SME. SME Rating Agency of India Ltd. (SMERA) provides composite ratings to SME. Another entity founded by SIDBI is ISARC - India SME Asset Reconstruction Company in 2009, as specialized entities for NPA resolution for SME.

Types of Industrial Finance by SIDBI :


Venture capital is an area of finance that specializes in funding new companies and their expansion efforts. Trade finance makes international trade possible by issuing Letters Of Credit (LOC) used to purchase goods from overseas companies. An LOC funds the manufacturing of products when a company uses the LOC as collateral for a manufacturer’s loan. Bank loans help finance accounts receivable, and credit cards help finance a company’s travel and entertainment expenses. All this activity in turn serves to keep money flowing throughout the global economy.

Function of Industrial Finance by SIDBI :

With a view to ensuring larger flow of financial and non-


assistance to the small-scale sector,


Government of India set up the Small Industries

Development Bank of India (SIDBI) under a special Act of the Parliament in October 1989 as wholly-owned subsidiary of the IDBI. The bank commenced its

operations from April


head office

with its






the outstanding

taken over

portfolio of the IDBI relating to the small-scale sector.









include :

1. To initiate steps for technological up-gradation and modernisation of existing units. 2. To expand the channels for marketing the products of SSI sector in domestic and international markets. 3. To promote employment oriented industries especially in semi-urban areas to create more employment opportunities and thereby checking migration of people to urban areas


Benefits of Industrial Finance by SIDBI : 4

Benefits of Industrial Finance by SIDBI :


  • Much lower fixed costs.

  • Much closer business model to SIDBI’s core business.

  • Wide geographical outreach.

  • Better diversification of risks.

  • Strengthening of SIDBI’s position within these dor.

  • High growth without requiring much equity.

  • Higher ROI.

  • Broadned range of product and services to a new clients target.

  • Reduces risks while sending a new business line.

 Much lower fixed costs.  Much closer business model to SIDBI’s core business.  Wide

Sources of Industrial Finance by SIDBI :


1) Risk Capital and Technology Finance Corporation Ltd. (RCTC) 2) Technology Development and Information Company of India Ltd. (TDICI) 3) Tourism Finance Corporation of India Ltd (TFCI) 4) North Eastern Development Finance Corporation Ltd (NEDFI). 5) Investment Institutions of India 6) Commercial Banks 7) Post Liberalization Policy Reforms in Industrial Finance Since 1991.

1) Risk Capital and Technology Finance Corporation Ltd. (RCTC) 2) Technology Development and Information Company of

1) Risk Capital and Technology Finance Corporation Ltd. (RCTC):

Risk Capital Foundation (RCF) established by the IFCI was operating since 1975. In January 1988, the Risk Capital and Technolog finance was set up. It was no different but just a reconstitution of the old RCF. It provides risk capital, venture capital assistance and technology finance, all under one roof. It, thus, encouraged the innovative entrepreneurs and technocrats for their technology oriented ventures. Projects that envisage advancement, promotion, transfer, adaptation,


technological upgradation and commercialization of new technologies etc. for the modernization of industries are supported by the technology finance schemes.

2) Technology Development and Information Company of India Ltd. (TDICI):

Technology knowledge, information and know-how and technological development through technology upgradation was the spirit of the late 1980s. To echo the spirit and to reinstate the development of the Indian industry. The ICICI and the UTI set up in 1988, the Technology Development and Information company of India Ltd (TDICI). The company sought to promote technology development through transfer and upgradation of technology and by providing of technology information. It is at its spirit a technology venture finance company that grants project finance to new technology ventures for development of indigenous technology, technologist entrepreneurship and to support commercial R & D operations in industries.

3) Tourism Finance Corporation of India Ltd (TFCI):

The tourism industry was booming in the late 1980s. As an industry to supplement the development of the main stream Indian industry, it was needed to be supported and promoted. In this light, the Tourism Finance Corporation of India Ltd. (TFCI) commenced its business in February 1989. It caters the financial requirements of the tourism industry for their allied activities, facilities and services. It provides financial assistance to both conventional and non-conventional tourism projects in terms of loans, underwriting of and direct subscription to industrial securities, deferred payments, suppliers credit and equipment leasing.


4) North Eastern Development Finance Corporation Ltd (NEDFI):

In the overall development of the Indian industry since the Independence, the upper most and remote corner of the Indian subcontinent in the North-East received little attention. During 1990s, the government realized that such facts would not go in the interest of balanced development of the Indian industry in all regions. With this realization, it set up the North Eastern Development Finance Corporation Ltd in 1995. It was expected that it would help accelerating industrial and infrastructural development in the northeast region. The primary focus of the NEDFI at its initial stage remains on identifyingand develop entrepreneurship and to finance the establishment of new 129industrial and infrastructure projects in the north-east region. It also pays adequate attention to expansive diversification and modernization projects of existing industrial enterprises.

5) Investment Institutions of India:

Imparting finance remains the need for industrial growth. Raising finance too remains the need to recoup the finance for further investment in industry. Hence, a need was felt to have an institutional network in India that would raise finance from competent sources and divert it to investment in industry. One such competent source of finance is the Indian public and one such institutional network would be the Investment Institutions of India. These investment institutions are Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC) and Unit Trust of India (UTI). They were set up in 1956, 1973 and 1964 respectively. The LIC deals in life insurance business and the GIC deploys their funds in accordance with the government guidelines. The UTI


mobilizes savings of small investors through sale of unites and channelises them into corporate investments.

6) Commercial Banks:

After the Independence, commercial banks have emerged as a significant sources and managers of funds to the Industry. The bulk of bank finance remains of short- term nature particularly to meet working capital requirements of industries. It may be released against security and personal guarantee. After 1974, banks have been extending medium and long-term loans also. Their operations of investment are so far confined largely to the sale and purchase of government securities rather than in holdings of industrial securities.

7) Post Liberalization Policy Reforms in Industrial Finance Since 1991:

The financial sector is in the process of rapid change. It is consequent of structural adjustments initiated by the Government in various sectors of the economy since 1991. The government took several steps to implement reforms in the financial sector in a phased manner. It acted on the recommendations of the Khan Working Group and the Narasimham Committee. The Khan Working Group was constituted by the RBI under the chairmanship of S.H. Khan. The purpose was to harmonize the role of development of the financial 131 institutions and banks. The Narasimham Committee too was expected to report on reforms in the financial sector. The recommendations of both the committee laid significant implications on the operations of development financial institutions. They recommended several reforms to harmonize to co- ordination between the role and operations of banks and the DFIs. These reforms addressed to reduction of resource requirement, de-regulation of interest rates, introduction of prudential norms like income recognition,


asset classification, provision for bad and doubtful debts and capital adequacy strengthening of bank of DFIs supervision etc., and improvement in the competitiveness of the system particularly by allowing entry of private sector banks etc.

asset classification, provision for bad and doubtful debts and capital adequacy strengthening of bank of DFIs



Role of Industrial Finance by SIDBI:

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 authorised capital of the Bank is Rs. 1000 crore and the Paid up capital is Rs. 450 crore.

SIDBI Associates :

Credit Guarantee Fund Trust for Micro and small Enterprises. India SME Technology services LTD. SME rating agency of INDIA LTD. (SMERA) India SME asset Reconstruction company LTD. SIDBI Venture Capital Limited (STCL). SIDBI Trustee Company Limited (STCL).

SIDBI Subsidiaries :

SIDBI provides direct, indirect and micro finance facilities.

Direct Finance:

In the form of term Loan Assistance, Working Capital Assistance, Support against Receivables, Foreign Currency Loan, Scheme of Energy Saving for MSME sector, equity support etc.

Indirect Finance :

The Indirect

assistance in the form

of Refinance is





Institutions (PLIs),


comprising banks, State Level Financial Institutions, etc. having a wide network of branches all over the country. The main objective of Refinance Scheme is to increase the resource position of PLIs which would ultimately facilitate the flow of credit to MSME sector.

Micro Finance:









entrepreneurs and business for establish their business.

Objective of Small Industries Development Bank of India (SIDBI) :


Small industrial Development Bank of India (SIDBI) was established in 1990, as a wholly owned subsidiary of industrial Development Bank of India. It was set up for the promotion, financing and overall development of small scale industries in the Indian economy. In the year 2000, SIDBI was delinked from the IDBI. Now the objectives of SIDBI are as follows:

  • A) Development of small Industries:

Small Scale Industries play an equally important role for economic development of a developing country like ours. SIDBI was set up for financial capital to the small entrepreneurs and establishing small scale businesses on easy terms and conditions.

  • B) Co-ordination with Various Intermediaries:

Various intermediaries are there to provide financial and other help to promote small scale industries in the country. SIDBI acts as an apex body in financing small scale industrial and makes a coordination among the industries of all such intermediaries.

  • C) Development Activities:

SIDBI involves itself in various developmental activities by promoting tiny and small enterprises, rural industrialization, upgrading technology.etc.

  • D) Providing Quality Services:

SIDBI strives to provide quality services to small


medium scale industries through various tailor made programmes.

  • E) Marketing the products of Small Industries:


It is a very difficult task to create market for products produced by small scale industries. SIDBI adopts various strategies to create a steady market for such products.

Advantages and Disadvantages of Industries :

Industries are necessary for the wellbeing of the people of every country because industry together with agriculture helps the country in achieving its economic growth and development. However with everything else there are two sides of coin. Given below are the advantages and disadvantages of industries

Advantages of Industries:

1) Industries help in generating the employment opportunities for the people and in majority of the nations after agriculture it employs the highest number of people and therefore it can be said to be livelihood of many families. 2) It is due to presence of many industries that we get to use array of products like television, cloths, automobiles, furniture etc…, which helps in making our life easier and improves the general standard of living. 3) A prospering industrial environment is good for the country because government get income in the form of taxes from the industries, which in turn is used by the government for the well being of the people. 4) It makes the country independent because once country start producing goods with the help of industrialization it does not have to depend on other countries for its demand and it can save its money by reducing the imports and it can even export its produce leading to foreign exchange income which in turn makes the country more prosperous. 5) SIDBI Foundation For Micro Credit


6) SIDBI Foundation for Micro Credit (SFMC) was launched by the Bank in January 1999 for channelizing funds to the poor in line with the success of pilot phase of Micro Credit Scheme.

Disadvantages of Industries:

1) The biggest disadvantage of industries is that it leads to increase in pollution as many units emit poisonous gases which over the years have turned out to be the major cause behind global warming. 2) Industries leads to shift in the preference of people and they tend to prefer working there because of more money and opportunities rather than in agriculture sector and hence a gap is created because of this which in the long term can lead to food shortages because of the lack of interest in agriculture and allied activities. 3) Since industries tend to attract many people it leads to problem urbanization where many people from rural areas shift to urban areas leading to urbanization problems like lack of housing, congestion, lack of green space, health related problems and so on. 4) It sometimes creates monopolies which ultimately lead to exploitation of consumers of the country and the huge gap between the rich and poor is also attributed to the industries.

Mission :

SFMC's mission is


create a national

network of

strong, viable and sustainable Micro Finance Institutions (MFIs) for providing micro finance services to the economically disadvantaged people, especially women.

Approach :

SFMC is the apex wholesaler for micro finance in India

providing a complete range of financial and non-financial


services such as loan funds, grant support, equity and institution building support to the retailing Micro Finance Institutions (MFIs) so as to facilitate their development into financially sustainable entities, besides developing a network of service providers for the sector. SFMC is also playing significant role in advocating appropriate policies and regulations and to act as a platform for exchange of information across the sector. The launch of SFMC by SIDBI has been with a clear focus and strategy to make it as the main purveyor of micro finance in the country. Operations of SFMC in the coming years, are expected to contribute significantly towards development of a more formal, extensive and effective micro finance sector serving the poor in India with focus on innovation and action research.

Rating of MFIS :

Most micro finance programmes were initially operated by NGOs and were not subjected to regulation and supervision as they were registered as Societies or Trusts. Non-regulation of these institutions worked to their detriment and these institutions were not able to have smooth access to funds from the financial sector which was vary of lending to such entities. This constraint, coupled with the fact that SFMC was launched with a view to upscale the flow of micro credit with enabling policy modifications relating to simplification of the procedures in availment of assistance and substantial relaxation in the security/ collateral requirement posed a difficult challenge. Therefore, to meet the requirements of the revised dispensation which called for selection of suitable micro finance intermediaries which could be trusted with bulk assistance without collateral constraints, Capacity Assessment Rating [CAR] was introduced by SFMC as a supplementary tool to assess the risk perception. On SFMC's initiative, rating of MFIs was started by five agencies. With the passage of time, and ripening of the sector, most of the informal NGOs have transformed into formal NBFCs. Rating of MFIs has gained sector-wide


acceptance and has become a pre requisite for getting assistance from the banks/ financial institutions.

Financial Assistance :

Micro finance :

MFIs are provided annual need based assistance. One of the unique features of the scheme is the comprehensive financial support being provided to the MFIs/ NGOs to

expand their operations



as to increase their

efficiency. SIDBI’s support comprises of loans as well as

equity/ quasi equity support, as the case may be, depending on the need of the client institutions.

Missing Middle Segment :

SIDBI has also been extending financial assistance for the Missing Middle Segment of the micro enterprises. In India, ‘Missing Middle’ connotes the financing gap that lies above micro-finance loans and below traditional institutional financing i.e., loans with financial volumes ranging from INR 50,000 to INR 10 lakh. The support under this scheme is channelized through Participating Financial Institutions (NBFCs, RRBs, UCBs, MFIs, etc.).

Portfolio Risk Fund (PRF) :

Portfolio Risk Fund (PRF) was created by SIDBI with funding support from Government of India and made operational since March 2004. Normally, the Bank stipulates security requirement of FDRs equivalent of up to 10% of the loan sanctioned to MFIs under SFMC dispensation. Once the case is covered under PRF, 75% of security requirement (i.e.7.5% of the loan amount) is booked under PRF and balance 25% (i.e. 2.5% of the loan amount) only is to be furnished by the individual MFI by way of FDRs.


Methodology :

SIDBI's support is not for any specific methodology. MFIs may on lend to Self Help Groups/Joint Liability Groups/individuals. They may also adopt any other lending channel so as to effectively reach financial assistance to the poor clients.

Responsible Finance Initiatives :

SIDBI has been playing a pro-active role in propagating

Responsible Finance in the MFI sector. The major initiatives taken by SIDBI in the field of Responsible Finance Practices are – Creation of a Lenders’ Forum Laying down standards for the sector through measures like concept of risk rating, portfolio audits, system audits, etc.

Carrying out Sectoral Studies/ Impact Studies.

Creating awareness about Clients’ Protection Practices.

Facilitating Development of a common code of conduct for the MFIs and ensuring adherence thereof through COCA exercise by accredited third party agencies.



Direct Assistance Schemes :


SIDBI directly assists SSIs under Project Finance Scheme Equipment Finance Scheme Marketing Scheme Vendor Development Scheme Infrastructural Development Scheme ISO-9000 Technology Development & Modernisation Fund Venture Capital Scheme

Assistance for leasing to NBFCs, SFCs, SIDCs and Resource support to institutions involved in the development and financing of small scale sector. These Schemes are mainly targeted at addressing some of the major problems of SSIs in areas such as high tech project, marketing, infrastructural development, delayed realisation of bills, obsolescence of technology, quality improvement, export financing and venture capital assistance.

Indirect Assistance Schemes :

Under its indirect schemes, SIDBI extends refinance of loans to small scale sector by Primary Lending Institutions (PLIs) viz. SFCs, SIDCs and Banks. At present, such refinance assistance is extended to 892 PLIs and these PLIs extend credit through a network of more than 65,000 branches all over the country. All the Schemes of SIDBI both direct and indirect assistance are in operation in all the States of the country through 39 regional/branch offices of SIDBI.

Main Schemes Of SIDBI :

  • A brief summary of the Schemes available with SIDBI. More details are available under the Section Policies & Schemes.


  • National Equity Fund Scheme which provides equity support to small entrepreneurs setting up projects in Tiny Sector.

  • Technology Development & Modernisation Fund Scheme for providing finance to existing SSI units for technology upgradation/modernisation.

  • Single Window Scheme to provide both term loan for fixed assets and loan for working capital capital through the same agency.

  • Composite Loan Scheme for equipment and/or working capital and also for worksheds to artisans, village and cottage industries in Tiny Sector. Mahila Udyam Nidhi (MUN) Scheme provides equity support to women entrepreneurs for setting up projects in Tiny Sector.

  • Scheme for financing activities relating to marketing of SSI products which provides assistance for undertaking various marketing related activities such as marketing research, R&D, product upgradation, participation in trade fairs and exhibitions, advertising branding, establishing distribution networks including show room, retail outlet, wears- housing facility, etc.

  • Equipment Finance Scheme for acquisition of machinery/equipment including Diesel Generator Sets which are not related to any specific project.

  • Venture Capital Scheme to encourage SSI ventures/sub- contracting units to acquire capital equipment, as also requisite technology for building up of export capabilities/import substitution including cost of total quality management and acquisition of ISO-9000 certification and for


expansion of capacity.

  • ISO 9000 Scheme to meet the expenses on consultancy, documentation, audit, certification fee, equipment and calibrating instruments required for obtaining ISO 9000 certification.

  • Micro Credit Scheme to meet the requirement of well managed Voluntary Agencies that are in existence for at least 5 years; have a good track record and have established network and experience in small savings- cum-credit programmes with Self Help Groups (SHGs) individuals.

New Schemes :


To enhance the export capabilities of SSI units.


Scheme for Marketing Assistance.


Infrastructure Development Scheme.


Scheme for acquisition of ISO 9000 certification.


Factoring Services and


Bills Re-discounting Scheme against inland supply bills of SSIs.

Major Scheme :

Technology Development & Modernisation Fund :




up Technology Development &

Modernisation Fund (TDMF) scheme for direct assistance of small sale industries to encourage existing industrial


units in the sector, to modernise their production facilities

and adopt

improved and updated technology so as to

strengthen their export capabilities. Assistance under the









purchase of capital equipment acquisition of technical



process technology and


products with thrust on quality improvement,

improvement in packaging and cost of TQM and




series certification.





permitted SFCs and




grant loans for modernisation


projects costing upto Rs. 50 lakhs. The Coverage of the TDMF scheme has been enlarged w.e.f. 1.9.1997. Non-

exporting units and units which are graduating out of SSI


are now scheme.

eligible to avail assistance under this

units in the sector, to modernise their production facilities and adopt improved and updated technology so

National Equity Fund :

National Equity Fund (NEF) under Small Industries Development Bank of India (SIDBI) provides equity type assistance to SSI units, tiny units at one per cent service charges. The scope of this scheme was widened in 1995- 96 to cover all areas excepting Metropolitan areas, raising


the limit of loan from Rs. 1.5 lakhs to Rs. 2.5 lakhs and covering both existing as well as new units:

  • (a) The following are eligible for assistance under the Scheme:

  • New projects in tiny and small scale sectors for manufacture, preservation or processing of goods irrespective of the location (except for the units in Metropolitan areas).

  • Existing tiny and small scale industrial units and service enterprises as mentioned above (including those which have availed of NEF assistance earlier), undertaking expansion, modernisation, technology upgradation and diversification irrespective of location (except in Metropolitan areas).

  • Sick units in the tiny and small scale sectors including service enterprises as mentioned above, which are considered potentially viable, irrespective of the location of the units (except for the units in Metropolitan areas).

  • All industrial activities and service activities (except Road Transport Operators).

  • (b) Project cost (including margin money for working Capital) should not exceed Rs. 10 lakhs in the case of New projects in the case of existing units and service Enterprises, the outlay on expansion/modernization/ Technology upgradation or diversification.

  • (c) There is no change in the existing level of promoters' Contribution at 10% of the project cost. However, the Ceiling on soft loan assistance under the Scheme has Been enhanced from the present level of 15% lakh per Project to 25% of the project cost subject to a Maximum of Rs. 2.5 lakh per project.

Promotional and Development Activities :


SIDBI is actively involved in promoting tiny and small scale industries by means of its promotional and developmental activities through suitable professional agencies for organizing Entrepreneurship Development Programmes, Technology Upgradation & Modernization Programmes, Micro Credit Schemes and assistance under Mahila Vikas Nidhi to bring about economic empowerment of women specially the rural poor by providing them avenues for training and employment opportunities.

SIDBI's ASSISTANCE Tiny Units Women Entrepreneurs Backward Areas


Refinance against

Interest on term


Interest on

term loans in

loans for fixed


respect of

asets and

(% p.a.)

projects/activities eligible for assistance under the Scheme

working capital advances (excluding interest tax) (%



Upto and inclusive of Rs.





Over Rs. 25,000

Not exceeding


and upto Rs. 2 lakh



Refinance against

(except RRBs)

Interest on term

Interest on

term loans in

loans (excluding


respect of projects/activities

interest tax) (% p.a.)

(% p.a.)

eligible for assistance under TDMF and ISO 9000 Schemes (Applicable to all eligible institutions)


Upto and inclusive of Rs.





Over Rs. 25,000

Not exceeding


and up to Rs. 2 lakh



Over Rs. 2 lakh

Not exceeding




Overview of Small Industries Development Bank of India and its activities :

Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, presently acts as the Principle Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and also co- ordinates the functions of the institutions engaged in similar activities. As on March 31, 2012, the Authorised Capital of SIDBI is ` 1000 crore and Paid up Capital is `


450 crore. Presently, the Bank provides refinance support through a network of eligible member lending institutions for onward lending to MSMEs and direct assistance is channelised through the Bank’s branch offices. SIDBI also extends financial assistance in the form of loans, grants, equity and quasi-equity to Non-Government Organisations / Micro Finance Institutions (MFIs) for on-lending to micro enterprises and economically weaker sections of the society, enabling them to take up income generating activities on a sustainable basis.

Refinance :

SIDBI has initiated various schemes for upliftment of MSME sector and continues to be the prime lending institution for 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 crore to SIDBI for refinancing Banks/SFCs at concessional rates, out of which SIDBI received ` 4,711 crore, which has been channelised to banks/SFCs.

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 crore 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, sub-ordinated debt, etc. directly as well as through venture capital funds. As on March 31, 2012, a total of ` 1,193 crore 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 India Opportunity Venture Fund of ` 5,000 crore with SIDBI.


Features of SIDBI:

Since 1992-93 SIDBI liberalized its term of assistance and amplified procedure with a view to widen its scope for large coverage of schemes. Some of salient features of SIDBI can be listed as follows.

SIDBI has been operating Single Window Scheme (SWS) which is enlarged to cover units in identified area. The extent of refinance against cash credit


sanctioned by banks under SWS was raised from 50 to 70 percent.

  • SIDBI provide refinance facilities under Automatic Refinance Scheme (ARS). The limit of term loans under ARS was initially fixed at RS. 10 lakhs but was raised later to Rs. 50 lakh and the extent of refinance has been raised from 75 to 90 percent.

  • SIDBI has introduced equipment financing for assistance to existing well-run small-scale units for technology up gradation modernization.

  • SIDBI has introduced refinance scheme for resettlement of voluntary retired worker of National Textile Corporation (NTC) and help them to buy up to four looms.

  • SIDBI has set up a venture capital fund to assist entrepreneurs within a short span of time; SIDBI has emerged as a major player in the field of finance for the small scale sector.

Problems and Issues of SIDBI:

Because of their unique characteristics, SIDBI face a variety of problems. In this section, the problems are examined in connection with two stages of environmental performance improvement. Environmental performance improvement can be divided into two major stages, namely, awareness raising and implementation. The awareness raising is significant as it relates to the establishment of a solid foundation for SIDBI to move towards environmental improvement.

Stage I: Awareness Raising :


Lack of information on the cost-benefits of improving environmental performance basically, a fundamental obstacle to improving environmental performance of the SME sector is a lack of knowledge and information concerning environmental issues. SIDBI generally have a perception that the only driving force to improve environmental performance is legislative compliance. Moreover, SIDBI tend to believe that their processes have little or no impact on the environment due to their small- scale production. This perception is derived from the fact that they have limited information on the Operational losses in their production processes. Hence, this mental model prevents a great number of SME’s from realizing the hidden costs of inefficiencies in production. Accordingly, the SIDBI keep running their businesses as usual and resist change. In order to motivate the SME’s to improve their environmental performance critical information on cost- benefits can illustrate the benefits of environmental improvement and help to develop a positive attitude regarding environmental improvement. However, it seems that such information is not widely disseminated in the SME sector. Weak External Pressures/Incentives Environmental policy development in various countries began with command-and-control (CAC) measures. Accordingly, regulatory instruments were applied to force polluters to comply with regulations and standards. However, due to the large number and distribution of SME’s, the command and control approach became less efficient due to resource limitations in terms of the monitoring and inspecting of personnel and budget allocation. While public pressure regarding environmental conservation and requirements by global markets on environmental standards increases, most companies are carefully watching the International Standard Organization (ISO) certification and the introduction of Environmental Management System (EMS) within their


corporate and manufacturing facilities. Most industries, particularly those producing goods for export, are focusing on developing environmentally- friendly products. However, most SME’s, unlike large-scale industries, are not fully aware of the trend in the international market since they are often isolated from it. In addition, voluntary approaches, such as ISO 14000, green labeling, and clean technology have become other means of management of natural resources and the environment as the market created was stimulated by Consumer demand. However, compared to the SME sector, large firms are more active in taking voluntary initiatives.

Stage II: Implementation :

Lack of Internal Capacity Even though a number of SME’s are moving towards better environmental performance, they are limited from taking action. The major obstacles are their weak capacity and limited resources in terms of:

Financial resources :

One of the major obstacles is the limited financial resources of SIDBI since the majority of the SME sector is pursuing a survival business strategy. They suffer from financial problems, such as late payment of bills and lack of access to loan financing, they find it difficult to adapt to the changing markets and they lack the capability to attract new financial resources. As a consequence, the adoption of full-scaled EMS, such as the ISO 14001 model, or the installation of pollution abatement technologies, seems to be too costly for SIDBI. Moreover, investment capital for major process improvement is another issue of concern since accessibility to financial


resources is a major problem for a number of SME’s as they tend to lack self-capacity to attract funding from local, regional and national financial institutions and also from international institutions and organizations. The problem has a supply and demand component. From the supply side, SIDBI face difficulties in obtaining loans due to the banks' perceptions of high associated risks. On the demand side, SIDBI often have inadequate financial statements and lack accounting records, business plans and the necessary knowledge to present their business case in a realistic and favorable light to financial sources. In order to address this problem, there is, therefore, a need for better information flows among the financial providers, the SME’s and the concerned government agencies.

Human resources :

Lack of trained and qualified human resources is another barrier that requires improvement. Generally, human resource allocation in the SME sector is limited to essential business functions, such as technical, accountancy, sales and marketing. In most cases, there are no environmental personnel in the SIDBI to undertake related tasks effectively.

Technologies :

Utilization of outdated technology, as a result of limited capital investment, makes the SIDBI less competitive. The majority of SME’s is relying on outdated technologies that cause pollution and are inefficient in production. In addition, inappropriate pollution abatement technologies result in inefficiencies in pollution treatment.

R&D activities :

R&D activities are limited in the SIDBI. This inhibits innovative improvement within the sector. One of the major reasons for the poor performance is technological obsolescence coupled with information deficiency and poor


management practices. Thus, SIDBI lack technical capacity in these enterprises to identify access, adapt and adopt better technologies and operating practices to improve their environmental performance.

Business-as-usual operation and management :

Normally, SIDBI functions in a business-as-usual mode. They are not fully aware of the emergence of a new business environment. For example, non-tariff barriers, new trade and technology. The nature of the SIDBI establishment is a major problem affecting environmental improvement of SIDBI in terms of infrastructure as the physical distribution of SIDBI tends to be haphazard. Many of SME’s are located in concentrated commercial and residential areas, thus, they are unable to expand their sites and install pollution treatment facilities. Moreover, the scattered distribution prohibits the development of shared treatment facilities, while the stand-alone treatment system of SIDBI is not in an economy of scale to operate efficiently.

Weak Supporting Framework :

Despite obstructive structures in the awareness-raising and implementation stages, the framework support of SIDBI is weak. Also, the various programmes supporting the performance of SIDBI have not helped SIDBI effectively. Weak institutional arrangement of supporting SIDBI Linkages among agencies involved with the SIDBI development have not been strengthened. The network of institutions that is supposed to deliver supporting programmes to SIDBI development is fragmented and cannot offer the corresponding services effectively.

Lack of SIDBI focused programmes :


Many developing countries previously pursued a strategy of accelerated industrialization based on large- scaled enterprises. Accordingly, development programmes and investment schemes were established in light of large industry promotion while there are limited focused programmes that are devoted to SIDBI development. Gaps between international support and local implementation. Even though the environmental improvement of SIDBI has drawn the attention of international organizations, the international support for SIDBI development cannot reach local SME’s effectively. The major barriers include language and the adjustment of the programmes to the local context. SIDBI have been struggling with these problems for many years and their challenge becomes more severe when they wish to improve.

SIDBI Plan to Develop Alternate Market for Small Scale Industries:

At a time when focus of attention is on ICE Stock information, communication and entertainment the Small Industries Development Bank of India is making effort to develop alternative market for small scale Industries (SSIs) in the new millennium. The whole idea of SIDBI's present exercise in bring about greater corporation of SSI sector and encourage growth limited companies, which are in better position to access funds in the form of equity debt: "SSIs are characterized by a very low equity base and, therefore, any improvement in equity capital will bost their capacity to withstand competition in the market source added. The report deal with the changes required in the setting up of existing capital market to make them accessible and


suitable to SSIs and development of a alternative markets for equity and debt tailored for the Small -Scale Sector. These recommendations will also be useful for the Union. Finance Ministry for framing suitable policies and bringing about modification in the existing policies relevant to SSIs sector. According to available statistics, a large majority SSI units (nearly 80% are proprietorship, while 17 are partnership only 2% comprising about 60,000 units) are limited companies. Further, tentative estimates, indicate that even if these units raised 50j percent of their capital requirement from the market, the size would be of order of Rs. 5000 crores. Loan Facilitation & Syndication Services for Entrepreneurs What is Loan Facilitation & Syndication Service? Under this initiative, SIDBI facilitates Bank loans for new as well as existing manufacturing and service sector units. SIDBI’s initiative in partnership with Banks, Rating Agencies (RAs) and Accredited Consultants (ACs). It’s a transparent, structured mechanism for timely consideration of loan applications.

Why Is It Needed?

  • To generate complete structured applications along with necessary documents as are needed by Banks for sanctioning of loans.

  • Independent Validation by ACs of the information furnished by MSMEs in the loan applications provides a second check thereby enhancing the reliability of furnished information and acts as an additional comfort to the banks in handling the loan applications.

  • Rating (not mandatory) of proposals by Rating Agencies, as and when required, provides an independent opinion and helps the bankers for considering applications expeditiously.

  • The initiative would reduce delays and is expected to enhance flow of assistance to MSME sector.


Benefits to MSME Entrepreneurs :

Bank Loan Process Made Easier Improved Acceptance of the loan proposals by banks.

How does it Work?

SIDBI has empanelled Accredited Consultants (ACs) who will prepare the Basic Information Memorandum (BIM) for the MSME entrepreneurs based on the information and requirements indicated by the MSMEs. It is not only a loan proposal but more than that. BIM will capture all information required by the Banks and the Rating Agencies, if needed, BIMs prepared by ACs would be submitted to SIDBI by ACs with the approval of MSME entrepreneur. If required, SIDBI may get the proposal rated by RBI approved Rating Agencies. SIDBI provides Equity / Quasi- Equity for Growth Oriented existing units, Finance for Service Sector Units, and provides credit to MSMEs for Energy Efficient and Cleaner Production Processes. In all other cases, the application would be forwarded to Public Sector Banks with whom SIDBI has entered into a MoU for the purpose of Loans. SIDBI, in essence, will handhold the Entrepreneur through all stages of loan processing.

Services provided by Accredited Consultants :

  • Guide new / existing entrepreneurs regarding availability of schemes of SIDBI / commercial banks.

  • Inform MSMEs of Government subsidies / benefits

  • Provide borrowers with debt counselling

  • Prepare Basic Information Memorandum (BIM)

  • Facilitate response to queries raised by banks etc.

Applications for loans and their processing :


  • a) SIDBI has a comprehensive loan application form for

the borrowers. At the time of making available application form, SIDBI will provide information about the interest rates applicable along with the annualized rates of interest, and the fees/charges, if any, payable for processing, pre-payment options and charges, if any, and any other matter such as availability of CGTMSE guarantee which affects borrower’s interest, so that a meaningful comparison with those of other banks can be made and informed decision can be taken by the borrower.

  • b) SIDBI provides acknowledgements for receipt of all loan

applications. The Bank has put in place risk assessment tools for credit rating which have enabled to great extent

to directly reach out to smaller customers in the MSME segment by cutting down the appraisal and processing time. Expected time frame for disposal of loan applications, from the date of satisfactory receipt of complete information/ data/ clarifications/ reports, etc., would also be indicated to applicants.

  • c) SIDBI would verify the loan applications within a

reasonable period of time. If additional details/ documents are required, borrowers would be intimated at the earliest.

  • d) In case of all applications which are denied financial

assistance, on account of not being found support worthy as per the policy framework and/or risk perception of the Bank, either with or without detailed appraisal, SIDBI would convey in writing, the main reason/ reasons which in the opinion of the Bank after due consideration, have led to rejection of the loan applications. Such communication to the applicant would be dispatched as soon as possible. Credit Guarantee Fund Trust for Small Industries (CGTSI) Coverage in North Eastern Region

The Ministry of Small Scale Industry, Government of

India, and SIDBI have set up the Credit Guarantee Fund

Trust for Small

Industries (CGTSI), to help small

scale/tiny units in accessing institutional credit, both


term loan and working capital, for their viable projects without arranging for collateral security and/or third party guarantee. As on August 30, 2006 banks/institutions have availed of CGTSI guarantee in North Eastern Region in respect of 1147 units covering aggregate assistance of Rs 2718 lacks in North Eastern Region.

SME Rating Agency of India Ltd (SMERA) Coverage :

As a part of SIDBI's thrust towards emerging as one step shop to serve the SME sector, the SME Rating Agency of India Ltd. (SMERA) was launched as country's first and only rating agency dedicated to the SME segment. A joint initiative of SIDBI, Dun & Bradstreet Information Services India Pvt. Ltd., Credit Information Bureau (India) Ltd and banks, SMERA's primary objective is to provide ratings that are comprehensive, transparent and reliable and which would enable the rated units to borrow at competitive rates of interest. SIDBI calls upon the existing SMEs in the country to get them rated by SMERA in order to have competitive edge in availing credit at lower rates.

Business Domain of SIDBI :

The business domain of SIDBI consists of small-scale industrial units, which contribute significantly to the national economy in terms of production, employment and exports. Small-scale industries are the industrial units in which the investment in plant and machinery does not exceed Rs.10 million. About 3.1 million such units, employing 17.2 million persons account for a share of 36 per cent of India's exports and 40 per cent of industrial manufacture. In addition, SIDBI's assistance flows to the transport, health care and tourism sectors and also to the professional and self-employed persons setting up small- sized professional ventures.

Promotional and Developmental (P&D) Initiatives:


As an apex institution for the small-scale sector, SIDBI also plays a major role in meeting the varied developmental needs of the Indian SSI sector. The P&D initiatives of the Bank aim at improving the inherent strength of the small scale sector so as to enable it to face the emerging challenges of globalization as also economic development of poor through enterprise promotion resulting in self employment and creation of additional employment.

SIDBI has sanctioned grants to various organizations like TCOs, Industry Associations, reputed NGOs and other agencies to conduct topical seminars and EDPs, and also sponsored the participation of SSI units in exhibitions at subsidized rates to enable them to market their products.


Products :

Direct finance :

SIDBI had been providing refinance to State Level







Corporations / Banks etc., against their loans granted to

small-scale units Since the formation of SIDBI in April, 1990 a need was felt/ representations were made that SIDBI being the principal financial institution for the small


should take



financing of

SSI projects






So it was decided to introduce direct assistance schemes to supplement the other available channels of credit flow to the small industries sector. Since then, SIDBI has evolved itself into a supplier of a range of products and services to the Small & Medium Enterprises [SME] sector.


Direct Credit Schemes :

Purpose: - Assistance for purposes, such as

  • Setting up of a new SSI unit/ service sector unit.

  • Expansion / Diversification/ modernization/ technology up gradation/ quality certification.

  • Any other activity considered relevant to the project.

  • For undertaking various marketing related activities.

  • Acquisition of additional machinery / equipment.

  • Meeting working capital requirements including gap in MPBF or margin on selective basis.

  • Any other activity as per guidelines (having linkages and benefits accruing to SSI sector from the proposed assistance). All activities covered under erstwhile marketing assistance scheme for SSI’s.

  • Minimum loan amount.

  • Generally Rs.50 lacks for setting up new unit and Rs.25 lacks for other purposes. In respect of well-run existing SSI units, the minimum loan could be Rs. 10 lacks.

Bills finance scheme :

Bills Finance Scheme involves provision of medium and short-term finance for the benefit of the small-scale sector. Bills Finance seeks to provide finance, to manufacturers of indigenous machinery, capital equipment, components sub-assemblies etc, based on compliance to the various eligibility criteria, norms etc as applicable to the respective schemes.

To be eligible under the various bills schemes, one of the parties to the transactions to the scheme has to be an industrial unit in the small-scale sector within the meaning of Section 2(h) of the SIDBI Act, 1989.


Channels Of Assistance : SIDBI’s financial assistance to small-scale sector has three major dimensions: 1) Direct

Channels Of Assistance :

SIDBI’s financial assistance to small-scale sector has three major dimensions:

1) Direct assistance:

The objective behind SIDBI's direct assistance schemes has been to supplement the efforts of PLIs by identifying the gaps in the existing credit delivery mechanism for SSI’s. Assistance is provided directly through 43 branches of SIDBI. The assistance is extended directly for setting up of new SSI units, small hotels, hospitals/nursing homes, technology up gradation and modernization, expansion and diversification, marketing of SSI products, setting up of multiplexes, development of infrastructure for the SSI sector, discounting of bills etc.

2) Indirect assistance:


SIDBI's schemes of indirect assistance envisage credit to SSI’s through a large network of 913 PLIs SIDBI has bagged the prestigious "ADFIAP Development Award 2003" for its Rural Industries Programme designed to give impetus to rural development by creating sustainable industrial and service enterprises in rural areas spread across the country with a branch network of over 65,000. The assistance is provided by way of refinance, bills rediscounting and resource support in the form of short- term loans/line of credit in lieu of refinance etc.

3) Development and Support Services:

SIDBI extends development and support services in the form of loans and grants to different agencies working for the promotion and development of SSI’s and tiny industries.


SIDBI, primarily a refinancing institution has offered various direct as well as indirect (through refinance to the financial institution) start up term loan facilities to the small entrepreneurs.

This includes the following:-

General Scheme :


For setting up new small-scale units & for all

activities eligible for assistance under the scheme including professionals practice/ consultancy ventures & services sector units such as tourism related activities/hospitals/nursing homes/hotels/marketing & industrial infrastructure projects.



All forms of organizations in the small scale sector

(i.e. Proprietary, Partnership Company, Cooperative Society etc.) for infrastructure development all forms of organization such as public, private ltd.

Schemes for cottage, village & tiny industries:


Assistance for equipment’s or working capital as also for shed.


Artisans, Village & Cottage Industries & Small Industries in tiny sector. Limit- Not to exceed than 0.5 million Rupees.

Schemes for SC/ST & Handicapped:


Assistance for equipment’s or working capital.


SC/ST & Physically Handicapped persons. Limit- Not to exceed than 0.5 million Rupees.

Schemes for Small Road Transport Operated (SRTO’s):


To meet expenditure towards cost of chassis, building initial taxes/ insurance and working capital.


Small road transport operators.

Limit- Need based.


National equity fund scheme:


To meet gap in prescribed minimum promoter’s

contribution and in equity.


Small entrepreneur for setting up new projects and

existing in small

scale sector

and rehabilitation of

potentially viable sick SSI units irrespective of the location, satisfying the investments ceiling prescribed for tiny entrepreneur undertaking expansion, modernization, technology up gradation and diversification. Limit- Cost of projects not to exceed Rs. 1 million, soft loan limit 25% of cost of projects subjects to max Rs.2, 50,000 per projects service charges 1% p.a. on soft loan.

Mahila Udyam Nidhi:


To meet gap in prescribed minimum promoters’

contribution or in equity.


Small entrepreneurs for setting up new projects in small-scale sector and rehabilitation of potentially viable sick SSI units irrespective of the location. Enterprises would include all Industrial units and Service Industries satisfying the investment ceiling prescribed for tiny entrepreneurs.

Self Employment for Ex-Servicemen:



For setting up small industrial projects including service industries and specified transport activities which are eligible for finance as per SSI norms.


Ex-servicemen sponsored by Director General, Ministry of Defense, Government of India. Limit- Scheme operated through SFC’s twin function of project not to exceed than 1.5 million, Soft loan limited to meet gap in equity subject to a maximum of Rs. 2, 25,000 per project. Service charges-1% p.a. during moratorium period thereafter, interest at 6% p.a. on soft loan.

Subsidiaries :

1) SIDBI Venture Capital Ltd. [SVCL] a wholly owned subsidiary of SIDBI acts as the Asset Management Company of the National Venture Fund for Software and Information Technology. The fund has a committed corpus of Rs.100 crores as on March 31, 2003.

2) SIDBI Trustee Co.Ltd. [STCL] has been set up to carry out trusteeship functions for Venture Capital Funds. Presently STCL is acting as Trustee of National Venture Fund for Software and Information Technology.

3) Credit Guarantee Fund Trust Scheme for Small Industries [CGTSI] promoted jointly by Government of India and SIDBI, was launched by the Hon'ble Prime Minister on August 30, 2000. The credit guarantee


scheme of CGTSI aims at helping the new and existing industrial units in SSI sector, in getting collateral free credit by way of both term loan and working capital from eligible member lending institutions. Member Lending Institutions include scheduled commercial banks; select Regional Rural Banks and Government of India may approve such of the institutions as.

4) Technology Bureau for Small Enterprises [TBSE] was set up by SIDBI in 1995 in collaboration with United Nations Asian & Pacific Center for Transfer of Technology. The Bureau aims at helping SSI units to attain international competitiveness through transfer of latest available technologies from both within and outside the country.

SIDBI’s financial highlight :

scheme of CGTSI aims at helping the new and existing industrial units in SSI sector, in

The bank has achieved consistent growth in financial parameters since inception. The total assets of the bank have grown from a level of Rs. 5309 crores in March 1991 to Rs 36, 561 crores in March 2009. The income has increased from Rs. 425 crores in 1990-1991 to Rs. 1598


crores in 1999-2000 and in 2001-2004 the income has increased to Rs. 1600 crores and to Rs. 5000 crores in 2006-2009. While the net profit has grown from Rs. 36 crores to Rs.459 crores during the same period. The capital to risk asset ratio as at end March 2000 was at 27.8 percent and 96.2 percent of the assets were standard assets. The bank has been paying dividends on equity holding to IDBI since inception.

SIDBI’s findings :

Over the past decades, SIDBI has evolved into a strong and small-scale sector credit giving Facility apex developmental institution with a complete grass roots level understanding of the Complexities of the small-scale sector. SIDBI is a major shareholder in the Small-scale Industry in India. The bank is fully equipped organizationally, financially, and domain knowledge wise to Emerge as a strong player in the Small-scale Industry Credit system. Promoting various groups Reflects SIDBI”s capabilities in capacity-building and nurturing the small- scale Industry.

A small-scale industrial unit is considered sick if it has at the end of an accounting year incurred losses equal to or exceeding 50% of its peak net worth in the preceding 5 accounting years. The sickness in SSI units have been causing concerned to policy-makers because of the


productive assets lying unutilized or underutilized in this units, the huge assistance from financial institutions and banks locked up in them and the adverse impact on employment in case the unit closes.

Case Study on SIDBI “ A Successful Financial Institution in SME Financing”

Worldwide, the wind has been changing in the finance sector in general and banking-investment sector in particular. Such a panorama teaches us that now, is the time of cooperation rather than a competition, now it’s a time of convergence rather than cutting each other’s neck over customers and markets, now it’s a time of consolidation rather than antagonism. Curing the fatal disease requires the doses of small pills; impressive thoughts come out from the small brain, similarly, India requires prominence of small and medium enterprises for curing its problem of low economic growth vis-à-vis developed nations. To cure the overall disease of lack of appropriate growth of Indian SMEs – Small and Medium Enterprises, India needs several small pills such as adequate credit delivery to SMEs, better risk management, technological up


gradation of Banks esp. Public Sector Banks, attitudinal change in Bankers and so on. Among them, the major problem of inadequate financing to SMEs needs an urgent attention. Having said this, it is pertinent to mention that Small Industrial Development Bank of India has achieved landmark results in the domain of small and medium enterprise financing and fulfilling their credit requirements time to time in various forms such as long term project finance, working capital finance, bill discounting etc. However considering the level of appetite for credit facilities of Indian small and medium enterprises, private and public sector banks in India need to work out an unique and innovative model of financing to this vital sector (SME) of Indian Economy. In today’s changing world, retail trading, SME financing, rural credit and overseas operations are the major growth drivers for Indian banking industry. The scene has changed since the adoption of financial sector restructuring programme in 1991. The reform in the financial sector in India along with the overall second generation economic reforms in Indian economy has transformed the landscape of banking industry and financial institutions. GDP growth in the 10 years after reforms averaged around 6 %. With the introduction of the reforms especially in financial sector and successful implementation of them resulted into the marked improvement in the financial health of the commercial banks measured in terms of capital adequacy, profitability, asset quality and provisioning for the doubtful losses.



Q1) What is SIDBI?

1) Small Industries Development Bank of India

2) Industrial Development Bank of India 3) Industrial Credit and Investment Corporation of India

Q2) When was SIDBI established?

1) 1979

2) 1989

3) 1956

Q3) What is the interest rate charged?

1) 11.95% p.a. 2) 12.00% p.a. 3) 09.00% p.a.

Q4) Do you think SIDBI faces competition?





Q5) What role SIDBI plays in Small Scale Industries Sector?

1) Infrastructure development agencies for developing industrial areas. 2) Import equipment by existing export oriented SSIs and new units having definite plans for entering export markets. 3) Loans sanctioned by SIDBI to small road transport operators, qualified professionals for self employment, small hospitals and nursing homes, and to promote hotel and tourism related activities.

Q6) What are the sources of Industrial Finance by SIDBI ?

1) Technology Development and Information Company of India Ltd. (TDICI) 2) Tourism Finance Corporation of India Ltd (TFCI) 3) North Eastern Development Finance Corporation Ltd (NEDFI).

Q7) Have you ever applied for a loan before?

1) Yes, Loan Availed 2) Yes, But did not succeed 3) Did not have any loan requirement, hence not applied.

Q8) Have you been able to service loans timely?

1) Yes

2) No

Q9) What are the different schemes of SIDBI?

1) Direct Assistance Scheme 2) Indirect Assistance Scheme 3) Direct Credit Scheme


Q10) What are the SIDBI Subsidiaries ?

1) Direct Finance 2) Indirect Finance 3) Micro Finance

Conclusion :

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 on the development of the small-scale industries not to earn much profits. The maximum shares of profits of SIDBI are transferred to reserves. It can have more debt capital, hence the large portion of profits are utilized for the payment of interest to long-term securities. The activities of SIDBI, as they have evolved over the period of time, now meet almost all the requirements of small scale industries which fall into a wide spectrum constituting modern and technologically superior units at one end and traditional units at the other.


Bibliography :

http://www.sidbi.com/ http://www.sidbi.com/NOTICES/MicroFinance/TOR













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