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lndustrial Promotion Agencies or Support Institutions can be
defined as agencies formed and reared mainly by any
Government - Local, State orland Central - for the initiation,
promotion and development of industrial enterprises - small
scale, medium scale and large scale - with the ultimate object of

Industrial Support institutions

extend various sorts of
assistance to the
entrepreneurs-present and
Directorate of Industries and Commerce

❖ Coordinates industrial development activity in various

sectors .- tiny, small, medium and large - throughout
the State.

❖ Helps the entrepreneurs to acquire the required

infrastructure and provides financial incentives and
concessions on industrial investments.
A. To provide competitive, cost effective and fast services to
the industry.
B. To have an industry base that is recognized for
environmental friendly and cost effective quality.
C. To plug the information gaps.
D. Provide facilitation forums for resolving industrial problems
and thus stimulate the growth of the industrial environment
in the economy.
1. Coordinates all industrial activities of the State.
2. Implements schemes as envisaged in the Industrial Policy
3. Develops small scale industries in a planned manner.
4. Acts as an interface between small scale industrialists and
5. Monitors the implementations of plan schemes executed by
the General Manager- of the District Industries Centres.
6. Organises technology clinics, entrepreneurship development
7. Participates in fairs, exhibitions etc., for exhibiting the
products of small scale units.
▪ Started in 1978 by the central government
▪ Objective of providing a focal point for promoting small, tiny,
cottage and village industries in a particular area
▪ To make available to them all necessary services and facilities
at one place.
▪ The General Manager is the head of the District Industries
Centre, who is assisted by the Manager (Credit), Manager
(Economic Investigation), Manager (Development), Manager
(Handloom) and an Administrative Assistant.
• Functioning and achievement is monitored by the Additional
Chief Secretary (Industries) and Director Of Industries &
{The Review of the General Managers is organized frequently to
evaluate the performance and also help in resolving difficulties in
implementation of different schemes.}
• For purpose of allotment of land, work sheds, raw materials
etc., DICs functions under the 'Directorate of Industries'.
• The finances for setting up DICs in a state are contributed
equally by the particular state government and the central
Activities of District Industries Centre
i. Economic Investigation
ii. Plant and Machinery
iii. Research, education
& training
iv. Raw materials
v. Credit facilities
vi. Marketing assistance
vii. Cottage industries
Objectives of District Industries Centre

➔ Accelerate the overall efforts for

industrialisation of the district.
➔ Rural industrialisation and development of
rural industries and handicrafts.
➔ Attainment of economic equality in various
regions of the district.
iv. Providing the benefit of the government
schemes to the new entrepreneurs.

v. Centralisation of procedures required to start

a new industrial unit and minimisation- of the
efforts and time required to obtain various
permissions, licenses, registrations, subsidies
Functions of District Industries Centre
• Assessment of availability of infrastructure facilities like
quality testing, research and development, transport,
prototype development, warehouse etc.

• Organises entrepreneurship development training programs.

• Provides information about various government schemes,

subsidies, grants and assistance available from the other
corporations set up for promotion of industries.
• Prepares techno-economic feasibility report.
• Advices the entrepreneurs on investments.
• Acts as a link between the entrepreneurs and the lead bank of
the district.
• Implements government sponsored schemes for educated
unemployed people like PMRY scheme, Jawahar Rojgar
Yojana, etc.
• Helps entrepreneurs in obtaining licenses from the Electricity
Board, Water Supply Board, No Objection Certificates etc.
• Assist the entrepreneur to procure imported machinery and
raw materials organises marketing outlets in liaison with
other government agencies.
Small Industry Development Corporation

•Small Industries Development Corporations (SIDCO)

are state-owned companies or agencies in the
states of India which were established at various
times under the policy of Government of India for
the promotion of small scale industries.
•Established under Companies Act 1956
•Designed to cater needs of small and village
Objectives of SIDCO

The following are the major objectives of SIDCO:-

• The main objective of SIDCO is to stimulate the growth of industries

in the small scale sector
• To provide infrastructure facilities like roads, drainage, electricity,
water supply, etc is one of the primary objective of SIDCO.
• To Promote industrial estates which will provide industrial sheds of
different sizes with all basic infrastructure facilities.
• To Provide technical assistance through training facilities to the
• To Promote skilled labor through the setting up of industrial training
Functions of SIDCO

SIDCO supplies raw materials to small industries

• To assess the requirements of indigenous and imported raw
materials and components for the small scale sector and to arrange
their supplies
• It has a number of raw material depots and these depots are
procuring various scarce raw materials, as per the requirements of
small scale industries in the state.
• provides marketing assistance:
In order to provide an efficient marketing support to small scale industries,
the corporation has taken up various schemes. In fact, the corporation
participates in the tenders floated by the state government departments and
also with the DGS & D (Director General of Supplies and Disposal). SIDCO makes
advance payments for obtaining orders and distribute them among the various
small scale units. SIDCO also arranges for buyer — seller meets frequently.

• assists in Bills discounting:

When small scale units supply goods to government departments, there is a
delay in receiving payments. In such a situation, the bills drawn on government
departments will be discounted by SIDCO and up to 80% of the bill value is given
to the supplier. This helps the SSI units in solving their working capital crisis.
• provides Export marketing assistance:
To promote export marketing among the small scale industries, SIDCO
has developed websites because of which it is able to display the products
of the small scale industries in foreign markets and obtain export orders.
Once an export order is obtained, the Common export manager of SIDCO
will make arrangements for extending various services for export of the
product. SIDCO also helps in the small scale units taking part in the
international trade fair at New Delhi, Pragati Maidan so that the products
of small scale industries of Tamilnadu are displayed.

• promotes skill development centres:

In an effort to supply skilled laborers to various small scale industries,
skill development centres are being set up in various industrial estates
which will be training workers in varied industrial activities and they will be
trained in modern skill.
• Set up Captive power plants:
In order to provide uninterrupted and good quality power supply, SIDCO
has taken up a plan to set up captive power plants in major industrial estates.
It is now planning to set up these plants in 10 industrial estates.

• Promotes women entrepreneurs:

In addition to the above, in order to promote women entrepreneurs, a
separate industrial estate for women has been set up at Tirumullaivoyal, near
Chennai, where women entrepreneurs are trained in various fields of small
scale industries.

In addition to SIDCO, there are various corporations that assists in the

promotion of small scale industries such as, Small Industries Promotion
Corporation of Tamil Nadu (SIPCOT), Tamil Nadu Small Industries Corporation
(TANSI), Industrial and Technical Consultancy Organization of Tamil Nadu
(ITCOT) and Tamil Nadu Industries Investment Corporation (TIIC).

• Small & medium Enterprises are the back bone of Industrial

• Ministry of Micro Small & Medium Enterprises Contributes
Nearly 8% in GDP, 40% in Manufacturing output & 45% in
• They provide the largest share of employment after
• They have emerged as a dynamic and vibrant sector of
• They are widely dispersed across the country and produces a
diverse range of product and service.
Classification of Small Industries as per
MSME Development Act,2006
• Micro enterprise generally refers to a small business employing 10 people or less
• It is an enterprise in which investments in plant and machinery is between 5lakh to 25
• These enterprises works and operates not by choice but out of necessity
• Small enterprise generally refers to a business employing 50 persons or less
• It is an enterprise in which investments in plant and machinery is between 25 lakh to 5
• These enterprise works and operates to earn a small amount of profit.
• Medium enterprise refers to a business employing maximum to 250 employees
• It is an enterprise in which investment in plant and machinery is between 5 crores to 10
• These enterprises works and operates to earn a fair amount of profits to increase their
standard of living.
Service Enterprises

•An enterprise in which investment in plant and machinery is
up to 10 lakhs
•An enterprise in which investment in plant and machinery is
from 10 lakhs to 2 crores
•An enterprise in which investment in plant and machinery is
from 2crores to 5 crores.

Importance of the MSME sector

• The contribution of micro, small and medium enterprises

(MSME) sector to manufacturing output, employment and
exports of the country is quite significant.
• The MSME sector employs about 42 million persons in over
13 million units throughout the country.
• There are more than 6000 products, ranging from
traditional to high-tech items, which are being manufactured
by the Indian MSMEs.
Contribution and performance of MSME
Specific policy measures initiated for
boosting MSMES
• Reservation of items for exclusive manufacturing in small sector.
• Preferential credit support measures.
• Fiscal concessions.
• Infrastructural development like development of industrial estates,
testing labs, common facility centres.
• Entrepreneurship development
Challenges before MSMEs

• Problem of skilled manpower.

• Inadequate credit assistance.
• Irregular supply of raw material.
• Absence of organized marketing.
• Lack of machinery and equipment.
• Absence of adequate infrastructure.
• Competition from large-scale units and imported articles.
• Other problems like poor project planning, managerial
inadequacies, old and orthodox designs, high degree of
obsolescence and huge number of bogus concerns etc.

Office of Development Commissioner operates a number of

schemes for the MSME sector. These schemes are

• National Manufacturing Competitiveness Programme

• Micro & Small Enterprises - Cluster Development Programme
• Credit Linked Capital Subsidy Scheme for Technology Upgradation
• Credit Guarantee Fund Scheme for Micro and Small Enterprises
• Market Development Assistance Scheme for Micro/ Small
manufacturing enterprises/ Small & Micro exporters (SSI-MDA)
• Scheme of Micro Finance Programme
National Manufacturing Competitiveness
The National Manufacturing Competitiveness Programme (NMCP)
is a program launched by the Government of India to
improve global competitiveness among the Indian MSMEs.
The main objectives of the NMCP are:
•Focus on improving competitiveness dealing with MSME sector
•Key initiative for survival of MSMEs in domestic or international
•A catalyst approach or create role models
•Implementation with Public Private Partnership
•Challenges for execution
•Essentially a Supply side initiative
•Fear of MSMEs in revealing data.
•MSMEs are uncertain in investing their contribution
Target areas of NMCP

This programme targets at developing the complete value chain of the

MSME sector by means of the following components:
•Lean Manufacturing Competitiveness Scheme related to MSMEs;
•Technology and Quality Upgradation Support related to MSMEs;
•Design Clinics scheme related to MSMEs;
•Promotion of Information & Communication Tools (ICT) in the
MSME sector;
•Enabling Manufacturing Sector to be rendered competitive through
Quality Management Standards (QMS) and Quality Technology
Tools (QTT);
•Marketing Assistance and Technology Up Gradation Scheme
relevant for MSMEs;
Micro & Small Enterprises - Cluster
Development Programme (MSE-CDP)

The Ministry of Micro, Small and Medium Enterprises (MSME),

Government of India (GoI) has adopted the Cluster Development
approach as a key strategy for enhancing the productivity and
competitiveness as well as capacity building of Micro and Small
Enterprises (MSEs) and their collectives in the country.

A cluster is a group of enterprises located within an identifiable

and as far as practicable, contiguous area and producing same /
similar products / services. The essential characteristics of
enterprises in a cluster are
Objectives of the Scheme:

(i) To support the sustainability and growth of MSEs by addressing

common issues such as improvement of technology, skills and
quality, market access, access to capital, etc.

ii) To build capacity of MSEs for common supportive action through

formation of self help groups, consortia, upgradation of associations,

To create/upgrade infrastructural facilities in the new/existing
industrial areas/ clusters of MSEs, including setting up of Flatted
Factory Complexes.

(iv) To set up common facility centres (for testing, training centre,

raw material depot, effluent treatment, complementing production
processes, etc.)
Credit Linked Capital Subsidy Scheme for
Technology Upgradation
•The objective of the Scheme is to facilitate technology up-gradation in
MSEs by providing an upfront capital subsidy of 15 per cent (on
institutional finance of upto Rs 1 crore availed by them) for induction
of well-established and improved technology in the specified 51
sub-sectors/products approved. In other words the major objective is
to upgrade their plant & machinery with state-of-the-art technology,
with or without expansion and also for new MSEs which have set up
their facilities with appropriate eligible and proven technology duly
approved under scheme guidelines.
•The Scheme is a demand driven one without any upper limit on overall
annual spending on the subsidy disbursal.
Nature of assistance:
•The revised scheme aims at facilitating technology
up-gradation by providing 15% up front capital subsidy to
MSEs, including tiny, khadi, village and coir industrial units,
on institutional finance availed by them for induction of well
established and improved technologies in specified
sub-sectors/products approved under the scheme.

Who can be benefitted:

•Micro and Small Enterprises (MSEs) having a valid UAM
Credit Guarantee Fund Scheme for Micro and
Small Enterprises
The Credit Guarantee Fund Scheme for Micro and Small Enterprises
(CGS) was launched by the Government of India (GoI) to make available
collateral-free credit to the micro and small enterprise sector. Both the
existing and the new enterprises are eligible to be covered under the

Eligible Lending Institutions

The Banks / Financial Institutions, which are eligible under the scheme,
are scheduled commercial banks (Public Sector Banks/Private Sector
Banks/Foreign Banks) and select Regional Rural Banks (which have been
classified under 'Sustainable Viable' category by NABARD).
Eligible Credit Facility
The credit facilities which are eligible to be covered under
the scheme are both term loans and/or working capital
facility up to Rs.100 lakh per borrowing unit, extended
without any collateral security and / or third party
guarantee, to a new or existing micro and small enterprise.
For those units covered under the guarantee scheme,
which may become sick owing to factors beyond the
control of management, rehabilitation assistance extended
by the lender could also be covered under the guarantee
Guarantee Cover
The guarantee cover available under the scheme is to the extent of
maximum 85% of the sanctioned amount of the credit facility. The
guarantee cover provided is up to 75% of the credit facility up to Rs.50
lakh (85% for loans up to Rs. 5 lakh provided to micro enterprises, 80%
for MSEs owned/ operated by women and all loans to NER with a
uniform guarantee at 50% for the entire amount if the credit exposure
is above Rs.50 lakh and up to Rs.100 lakh. In case of default, Trust
settles the claim up to 75% (or 85% / 80% / 50% wherever applicable) of
the amount in default of the credit facility extended by the lending

Tenure of Guarantee
The Guarantee cover under the scheme is for the agreed tenure of the
term loan/composite credit. In case of working capital, the guarantee
cover is of 5 years or block of 5 years.
Market Development Assistance Scheme for
Micro/ Small manufacturing enterprises/ Small &
Micro exporters (SSI-MDA)
The scheme offers funding for:
1. Participation by manufacturing Small & Micro Enterprises in
International Trade Fairs/ Exhibitions under MSME India
2. Sector specific market studies by Industry Associations/
Export Promotion Councils/ Federation of Indian Export
3. Initiating/ contesting anti-dumping cases by SSI
Associations and
4. Reimbursement of 75% of one time registration fee and
75% of annual fees paid to GSI by Small & Micro units
for the first three years for bar code
•To encourage Small & Micro exporters in their efforts at
tapping and developing overseas markets.
•To increase participation of representatives of small/ micro
manufacturing enterprises under MSME India stall at
International Fairs/ Exhibitions.
•To enhance export from the small/ micro manufacturing
•To popularise the adoption of Bar Coding on a large scale
Scheme of Micro Finance Programme
•The Government launched a Scheme of Micro Finance Programme in
2003-04. The scheme has been tied up with the existing programme of
SIDBI by way of contributing towards security deposits required from
the MFIs/NGOs to get loan from SIDBI. The scheme is being operated
in underserved States and underserved pockets/ districts of other
•The Government of India provide funds for Micro-Finance Programme
to SIDBI, which is called ‘Portfolio Risk Fund’ (PRF). At present SIDBI
takes fixed deposit equal to 10% of the loan amount. The share of
MFIs/NGOs is 2.5% of the loan amount (i.e. 25% of security deposit)
and balance 7.5% (i.e. 75% of security deposit) is adjusted from the
funds provided by the Government of India.
•The SIDBI (Small Industries Development Bank of India) is a wholly
owned subsidiary of IDBI (Industrial Development Bank of India),
established under the special Act of the Parliament 1988 which
became operative from April 2, 1990.
•Small Industries Development Bank of India (SIDBI) is a development
financial institution , headquartered at Lucknow and having its offices
all over the country.
• Its purpose is to provide refinance facilities and short term lending to
industries, and serves as the principal financial institution in the Micro,
Small and Medium Enterprises (MSME) sector.
•SIDBI also coordinates the functions of institutions engaged in similar
Finance Facilities Offered by SIDBI
SIDBI offers the following facilities to its customers:

•Direct Finance: SIDBI offers Working Capital Assistance, Term Loan

Assistance, Foreign Currency Loan, Support against Receivables,
equity support, Energy Saving scheme for MSME sector, etc.
•Indirect Finance: SIDBI offers indirect assistance by providing
Refinance to PLIs (Primary Lending Institutions), comprising of banks,
State Level Financial Institutions, etc. with an extensive branch
network across the country. The key objective of the refinancing
scheme is to raise the resource position of Primary Lending
Institutions that would ultimately enable the flow of credit to the
MSME sector.
•Micro Finance: SIDBI offers microfinance to small businessmen and
entrepreneurs for establishing their business.
Functions of SIDBI
•Small Industries Development Bank of India refinances loans that are
extended by the PLIs to the small-scale industrial units and also offers
resources assistance to them.
•It discounts and rediscounts bills
•It also helps in expanding marketing channels for the products of SSI
(Small Scale Industries) sector both in the domestic as well as
international markets.
•It offers services like factoring, leasing etc. to the industrial concerns in
the small-scale sector.
•It promotes employment oriented industries particularly in semi-urban
areas for creating employment opportunities and thus checking
relocation of people to the urban areas.
Benefits of SIDBI
•Custom-made: SIDBI policies loans as per the requirements of your
businesses. If your requirement doesn’t fall into the ordinary and usual
category, SIDBI would assist funding you in the right way.
•Dedicated Size : Credit and loans are modified as per the size of the
business. So, MSMEs could avail different types of loans custom-made
for suiting their business requirement.
•Attractive Interest Rates: It has a tie-up with several banks and
financial institutions world over and could offer concessional interest
rates. The SIDBI has tie-ups with World Bank and the Japan
International Cooperation Agency.
•Assistance: It not just give provides a loan, it also offers assistance and
much-required advice. It’s relationship managers assist entrepreneurs
in making the right decisions and offering assistance till loan process
• Security Free: Businesspersons could get up to INR 100 lakhs without
providing security.
• Capital Growth: Without tempering the ownership of a company, the
entrepreneurs could acquire adequate capital for meeting their
growth requirements.
• Equity and Venture Funding: It has a subsidiary known as SIDBI
Venture Capital Limited which is wholly owned that offers growth
capital as equity through the venture capital funds which focusses on
• Subsidies: SIDBI offers various schemes which have concessional
interest rates and comfortable terms. SIDBI has an in-depth
knowledge and a wider understanding of schemes and loans available
and could help enterprises in making the best decision for their
• Transparency: Its processes and the rate structure are transparent.
There aren’t any hidden charges.

• The National Small Industries Corporation Ltd.,

(NSIC),is an ISO 9001 certified company.

• Established in 1955

• Objective :- To fulfill its mission of promoting, aiding

and fostering the growth of small and medium
enterprises in the country.

To enhance the competitiveness of micro, small and
medium enterprises, NSIC provides integrated support
services under
Marketing Support

• Consortia and Tender Marketing : To remove the

problem of execution of large tenders
• Exhibitions and Technology Fairs: To showcase the
competencies of Indian SSIs and to capture market
opportunities, NSIC participates in select International
and National Exhibitions and Trade Fairs every year.
--facilitates the participation of the small enterprises by
providing concessions in rental etc.
• Buyer-Seller meets : Bulk and departmental buyers such
as the Railways, Defence, and large companies are
invited to participate in buyer-seller meets to enrich
small enterprises knowledge regarding terms and
conditions, quality standards, etc required by the buyer..
Credit Support

• Tie-up arrangements with Banks : In order to ensure

smooth credit flow to small enterprises, NSIC is entering
into strategic alliances with commercial banks to
facilitate long term / working capital financing.

• Financing for Procurement of Raw Material (short

term) : NSIC procures raw material from bulk producers
and distributes the same in the requisite small quantities.

• Financing for Marketing Activities (Short term) : NSIC

facilitates financing for marketing actives such as Internal
Marketing, Exports and Bill Discounting.
Technology Support
• NSIC offers small enterprises the following support services
through its Technical Services Centres and Extension
Centres :
• Advise on application of new techniques
• Material testing facilities through accredited laboratories
• Product design including CAD
• Classroom and practical training for skill upgradation
• Software Technology Cum Business Parks :
NSIC has established Software Technology cum Business
Parks at New Delhi and Chennai for providing the space to
small and medium enterprises in software development.
Training-cum-incubation- Centres( TICS)
• provide an opportunity to first generation entrepreneurs to
acquire skill for enterprise building
• Incubating them to become successful small business

• At these centres, exposure in all areas of business

operations - business skills development, identification of
appropriate technology, hands on experience on working
project / product selection, opportunity guidance including
commercial aspects of business.
• In addition, low cost project technologies required for
setting up new small business enterprises are being
displayed in working condition.
• Launched B2C e-commerce portal

• Aims to help MSMEs sell their products online

• Low-cost marketing platform

• NSIC CMD HP Kumar mentions - will also provide necessary facilities to

prospective entrepreneurs and startups to learn processes in
technology development, business development and online product
purchase among others.
➢ The National Institute for Entrepreneurship and Small
Business Development is a premier organisation of
the Ministry of Skill Development and Entrepreneurship,
engaged in training, consultancy, research, etc. in order to
promote entrepreneurship.
➢ The major activities of the Institute are Training of Trainers,
Management Development Programmes,
Entrepreneurship-cum-Skill Development Programmes,
Entrepreneurship Development Programmes and Cluster
➢ NIESBUD has provided training to 10,94,529 persons as of
March 31, 2017 through 41,483 different training
programmes since inception. This includes 4,080 international
participants hailing from more than 141 countries throughout
the globe.
The Objectives are as follows:-
• To evolve standardised materials and processes for selection,
training, support and sustenance of entrepreneurs, potential
and existing.
• To help/support and affiliate institutions/organisations in
carrying out training and other entrepreneurship
development related activities.
• To serve as an apex national level resource institute for
accelerating the process of entrepreneurship development
ensuring its impact across the country and among all strata of
the society.
• To provide vital information and support to trainers,
promoters and entrepreneurs by organising research and
documentation activities relevant to entrepreneurship
development .
• Trainers' Training Programmes
• Small Business Promoters' Programmes
• Development Officers' Orientation
• Continuing Education Programmes For SSI
• International Training Programmes
• Entrepreneurship Development Programmes
▪ Assisting/Supporting EDP's.
▪ Training Of Trainers'/Promoters'
▪ Research & Publications
▪ Creation & Capacity Building Of EDP Institutions
▪ Small Business In Focus
▪ National/International Forum For Exchange Of Ideas &
▪ Developing Entrepreneurial Culture
▪ Services To Affiliate Members
▪ Sustaining Entrepreneurship
State Financial Corporation
•State Financial Corporations (SFCs) are the State level financial
institutions which play a vital role in the growth of small &
medium enterprises in the concerned States. They offer financial
assistance in the form of direct subscription to
debentures/equity, term loans, guarantees, discounting of bills
of exchange & seed/ special capital, etc.
•They have also started offering assistance to newer types of
business activities like tissue culture, floriculture, poultry
farming, services related to engineering, marketing and
commercial complexes. In India, there are 18 State Financial
Corporations (SFCs).

• To establish uniformity in regional industries.

• To provide incentives to new industries.
• To bring efficiency in regional industrial units.
• To provide finance to small scale, medium sized and cottage
industries in the state.
• To develop regional financial resources.
•State Financial Corporations of every state is Governed by a
board of directors consisting of 18 directors in all, duly elected
and nominated.

•SHARE CAPITAL: The SFCs can have share capital ranging from
Rs. 50 lakhs to Rs. 5 crores. It can be increased up to Rs. 10
crores with the prior sanction of the Central Government.

•BONDS AND DEBENTUREs: The SFCs can issue bonds and

debentures to a maximum of ten times the amount of its
paid-up capital and reserve fund.
Functions of SFC

The important functions of State Finance Corporations are:

• The SFCs grant loans mainly for acquisition of fixed assets like
land, building, plant and machinery.
• The SFCs provide financial assistance to industrial units whose
paid-up capital and reserves do not exceed Rs. 3 crore (or such
higher limit up to Rs. 30 crore as may be specified by the central
• The SFCs underwrite new stocks, shares, debentures etc., of
industrial concerns.
• The SFCs provide guarantee loans raised in the capital market by
scheduled banks, industrial concerns, and state co-operative
banks to be repayable within 20 years.
Working of SFCs

• The government of India passed the State Financial Corporation Act in

1951 and made it applicable to all the States. The authorised Capital of a
State Financial Corporation is fixed by the State government within the
minimum and maximum limits of Rs. 50 lakh and Rs. 5 crore and is
divided into shares of equal value which were taken by the respective
State Governments, the Reserve Bank of India, scheduled banks,
co-operative banks, other financial institutions such as insurance
companies, investment trusts and private parties.
• The shares are guaranteed by the State Government. The SFCs can
augment its fund through issue and sale of bonds and debentures, which
should not exceed five times the capital and reserves at Rs. 10 Lakh.
Financial Resources Of The Sfc’s

The SFC’s mobilize their financial resources from the following

1.Their own Share capital
2.Income from investment and repayment of loans
3.Sale of bonds
4.Loans from the IDBI ( To some extent )
5.Borrowings from the Reserve Bank of India
6.Deposits from the Public
7.Loans from State Governments.
Critical Reviews

It has been alleged that the SFCs are not working in

accordance with the financial needs of the small scale,
medium sizes and cottage industries. The main arguments
against their working are-
•Inadequate assistance.
•Undue delay in sanctioning and disbursing loans.
•Indifferent a Absence of financial technical experts.
•Speed of progress is quite low.
Case Study :WBFC Role in development of
•The West Bengal Financial Corporation (WBFC) is a state
level financial institution established in 1954.
• Policy statement of WBFC
"WBFC is committed to help genuine entrepreneurs in the micro, small,
and medium sector enterprises in achieving their goals in setting up new
manufacturing and service industries or modernizing and or/expanding
their existing units, by providing timely financial inputs at reasonable
interest rates. It also helps such entrepreneurs to receive assistance from
other departments of the central and state governments in obtaining
allied services for realization of their dreams. And, is also committed in
continually improving its internal processes and systems."
Need identified for WBFC
•The principal areas of concern affecting the development of
the MSMEs sector of West Bengal identified by various studies
• Limited access and cost of finance;
• Lack of marketing skills and market knowledge;
• Inadequate management and entrepreneurial skills;
• Lack of access to infrastructure;
• Lack of access to land;
• Inappropriate technology;
• Lack of information, and
• A hostile regulatory environment.
Over the time WBFC is offering based on the needs of MSMEs,
types schemes for different categories of enterprises which
are summarized in Exhibit 2.

•Finally, the WBFC is offering financial assistance in the

following purposes to MSMEs:
•New projects
• Expansion of the existing projects
• Diversification of activities
• Rehabilitation
• Modernization
• It offers long and medium-term which is repayable ordinarily
within a period not exceeding 20 years.
Some of financial Schemes by WBFC
Name Of scheme Eligible Sector Purpose of scheme Amount of Loan

General Scheme Tiny, small scale ,medium For acquiring fixed and/or For proprietary
small scale Industries and current assests for setting up of firm/parternship firm may get
service industries new or existing industrial unit Rs 2 crore (may raise upto 8

Scheme for small road Service Sector For acquring new passesnger 75% of project cost (Max 20
transport operations commercial Vehicles vehicles )

Equipment Refinance Tiny Sector ,SSI And MSI Acquisition of Same as General Scheme
Scheme machinery/Equipment Including
which are not related to project
Non-financial Assistance provided by WBFC
• Some of the services mentioned below:
• Project advisory and investment appraisal of small scale units;
• Project conceptualization and related services. It includes the followings-
(i) guidance in relation to selection of projects;
(ii) preparation of feasibility studies, capital structuring,
techno-economic feasibility, financial engineering, project management
design etc.
• Provides guarantee for loans raised by industrial units from commercial
banks and state cooperative banks.
• Subscribe the shares, bonds and debentures of industrial concerns but
not of any company having limited liability. + Underwrite the issue of
shares, bonds and debentures of industrial concerns. + Documentation of
various project documents
• Placement of debt-equity including (i) design of the structure of
instruments (ii) placement of instruments with financial institutions, bank
Conclusion and Suggestions
• State Financial Corporations are playing an active role for promoting
and developing of MSMEs throughout the country. The activity of
WBFC towards the development of MSMEs within its limited financial
capacity is also praiseworthy. WBFC is also continuously trying to
reach more and more small scale units in the state of West Bengal.
Its increasing rate of loan assistance brings MSMEs form sick units to
a viable one in so many cases.
• WBFC should arrange some short·term courses for entrepreneur,
relating to training and other technical issues. To make an effective
promoter of the MSMEs sector, it may also offer awareness training
programmes to the potential small entrepreneurs even with the
help of District Industries Centre (DIC) and also organize to assist
special type soft loan for the MSMEs so that inclusive growth would
be achieved. Their loan payment procedures also require making
someway easy so that lhe small entrepreneur can understand and
access financial and other assistance.