PRESENTION ON SIDBI

SUBMITTED TO:
Dr. J.K. Chandel

SUBMITTED BY:
Amit
7th Sem.
Roll No. 06

INTRODUCTION
Small Industries Development Bank of India (SIDBI), set up on April
2, 1990 under an Act of Indian Parliament, 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 was incorporated initially as a wholly owned subsidiary of Industrial
Development Bank of India.
It is an apex body and nodal agency for formulating coordination and
monitoring the policies and programmes for promotion and
development of small scale industries.

AIMS OF SIDBI

Expansion of small scale sector and increase its share in

industrial output.

Development of rural areas where more than 70%of the

population resides.

Increase the efficiency of SSIs.

Increase the contribution of SSIs in export.

More employment generation in rural areas of rural

India.

ROLE OF SIDBI
Direct Financial Assistances

Venture capital/development scheme

Equipment Finance Scheme

Integrated Infrastructural Development Scheme

Project Finance Scheme

Schemes related to Marketing of SSI's Product

ISO 9000 Scheme

Short term & long term loan schemes

Direct Discounting of bill

Pre & Post shipment financial assistance scheme Export

INDIRECT FINANCE BY SIDBI

Refinance Assistance

a)Composite loan scheme for cottage, Village & tiny Industries

b)Scheme for women entrepreneurs Mahila Udyam Nidhi

c)Scheme for ST/SC & Physically Challenged

Other support through various institutions

a) SFC's, SIDC, SSIDC, Bank to Intermediacies

b) To leasing / hire purchase companies.

c) To factoring companies

d) To special corporate entities and institutions which are

engaged in the business of development of SSIs

FUNCTION

SIDBI refinances loans extended by the primary lending institutions to

small scale industrial units, and also provides resources support to them.

SIDBI discounts and rediscounts bills arising from sale of machinery to or

manufactured by industrial units in the small scale sector.

To expand the channels for marketing the products of Small Scale

Industries (SSI) sector in domestic and international markets.

It provides services like leasing, factoring etc. to industrial concerns in the

small scale sector.

To promote employment oriented industries especially in semi-urban areas

to create more employment opportunities and thereby checking migration
of people to urban areas.

To initiate steps for technological up-gradation and modernisation of

existing units.

CONT...

SIDBI facilitates timely flow of credit for both term loans and
working capital to SSI in collaboration with commercial banks.

SIDBI Co-Promotes state level venture funds in association with

respective state government.

It grants direct assistance and refinance loans extended by primary

lending institutions for financing exports of products manufactured
by small scale units

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

provided to Primary Lending 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: SIDBI provides micro finance i.e. credit to small

entrepreneurs and businessmen for establish their business.

 Mission: To empower the Micro, Small and Medium

Enterprises (MSME) sector with a view to contributing to the

process of economic growth, employment generation and
balanced regional development.

Vision: To emerge as a single window for meeting the

financial and developmental needs of the small scale sector to

make it strong, vibrant and globally competitive, to position
SIDBI Brand as the preferred and customer - friendly institution
and for
enhancement of share - holder wealth and highest corporate
values through modern technology platform.

STRATEGIC POLICY INITIATIVES BY

SIDBI
Commensurate with the changing needs of the small scale industry sector
SIDBI has been reorienting its strategies of operation by modifying the
existing schemes as well as floating new schemes. A three-pronged
strategy evolved includes addition, expansion and simplification of
schemes to enhance the flow of credit to the SSI sector. The important
policy initiatives taken in 1999-2000 are highlighted below :

The National Venture Fund for Software and IT industry was set up at
the national level by SIDBI in association with Ministry of Information
Technology, Government of India and IDBI with an initial corpus of Rs.
1 billion.
In order to enable the small scale and tiny units (including SRTOs)
affected by recent cyclone in Orissa to restart their operations, a 100 per
cent refinance on liberal terms is being provided by SIDBI to all eligible
PLIs against term loans extended by them in respect of the fresh loans
granted to affected units in the SSI sector (including SRTOs) situated in
the areas as notified by the Government of Orissa.
SIDBI Venture Capital Limited, a wholly owned subsidiary of SIDBI,
was formed to manage the NFSIT.

CONT
Coverage of the Financial support (Short Term Loans) to Banks scheme
was further enlarged by extending the facility to those banks also whose
net worth was Rs. 500 million and above. Three-tier interest rate band
for loans with different maturities was introduced.
With a view to increasing the flow of assistance, modifications were
made in Direct Factoring Scheme of the Bank in order to impart a
renewed thrust to the scheme.
The scope of the Refinance Scheme for Acquisition of ISO-9000 Series
Certification by SSI units was enlarged by allowing coverage of
non-exporting SSI units. Further, the criterion relating to the period of
operation of the unit was relaxed from four to two years.
A new simplified scheme to provide short term loans to State Electricity
Boards (SEBs) and Central / State power generation, transmission
and/or distribution corporations/ companies, to facilitate their purchases
from SSIs and effect payments in time, was launched.

THE 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 Indias exports
and 40 per cent of industrial manufacture.
SIDBI's assistance flows to the transport, health care and
tourism sectors and also to the professional and selfemployed persons setting up small-sized professional
ventures.

PRODUCTS AND SERVICES

Direct finance
Bills finance
Refinance
International finance
Promotional & Development activities.
Technology Upgradation & Modernisation Fund Scheme
{TDMF}
Venture Capital Fund Scheme
Seed Money Schemes
National Equity Fund Scheme

DIRECT FINANCE

Since its beginning, SIDBI had been providing refinance to State Level
Finance Corporations / State Industrial Development Corporations /
Banks etc., against their loans granted to small scale units.

SIDBIs direct finance schemes are:

Scheme

for expansion / diversification of small scale units.

Scheme

for specialised marketing agencies.

Scheme

for ancilaring / subcontract units.

Scheme

for existing Export Oriented Units(EOUs) to enable them to

acquire ISO 9000 series certification.

BILLS FINANCE SCHEMES

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.

REFINANCE SCHEME

Refinance scheme is introduced for catering to the need of

funds of Primary Lending Institutes {PLI} for financing small
scale sector.

Under the scheme, SIDBI grants refinance against term loans

granted by the eligible PLIs to industrial concerns for setting
up industrial projects in the small scale sector as also for their
expansion / modernization / diversification.

Schemes of re-finance assistance:

Scheme for SC-ST & physically handicraft persons
Composite loan scheme
Equipment refinance schemes.
Schemes for small road transport operators.
Special assistance to ex-servicemen.

INTERNATIONAL FINANCE SCHEMES

The main objective of the various International Finance schemes is to

enable small-scale industries to raise finance at internationally
competitive rates to fulfill their export commitments.

The financial assistance is being offered in US Dollars and Euro

currencies. Assistance in Rupees is also provided to the needy
borrowers.

The international finance is available from pre-shipment & post

shipment credit.

Need based limit, depending on the normal trade terms and credit
period given to overseas buyers by exporters not exceeding 180 days.

PROMOTIONAL AND
DEVELOPMENT ACTIVITIES

As an apex financial institution for promotion, financing and

development of industry in the small scale sector, SIDBI
meets the varied developmental needs of the Indian SSI
sector by its wide-ranging Promotional and Developmental
(P&D) activities.

The activities are as follows:

Entrepreneurship Development Programmes.
Management Development Programmes.
Technology Upgradation Programmes.

TECHNOLOGY UPGRADATION
& MODERNIZATION FUND
SCHEME

This fund was setup in the year 1996 by the SIDBI with an
initial capital of 200 million.

It was setup for the purpose of encouraging the existing

small scale industrial units to modernize production
facilities and adopt improved and updated technology for
strengthening export capabilities.

For availing benefits under this scheme the unit have to

prepare an estimate for modernization & submit it to SIDBI.

The sanction of funds is made depending upon the estimate

submitted.

VENTURE CAPITAL FUND SCHEME

SIDBI is participating in the Venture capital fund set by

public sector institutions as well as private companies to
the extent of Rs,50,00,000 of total capital of the fund
required.

The fund should be dedicated to financing small industry

preferably the most risky one.

SEED MONEY SCHEMES

One of the constraints faced by Entrepreneurs is the lack

of own resources to promote the minimum promoter
contribution.

Hence, SIDBI introduced seed money scheme for the

benefit of entrepreneurs.

Seed money is available through DIC { Direct Industry

Centre } to those entrepreneur who are technically
qualified but lack of own capital.

NATIONAL EQUITY FUND

SCHEME

In order to provide equity type assistance, SIDBI is

operation a National Equity Fund Scheme.

The equity capital loan to the extent of 2.5lakh is

sanctioned to each project provided the protect qualities
under this scheme.