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SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)
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SIDBI was set up by an Act of Parliament, as an apex institution for promotion, financing and development of industries in small scale sector and for coordinating the functions of other institutions engaged in similar activities. It commenced operations on April 2, 1990 by Government of India, as a wholly owned subsidiary of IDBI.
It was delinked from IDBI w.e.f. March 27, 2000. It is the principal financial institution for promotion, financing and development of industry in the small scale sector.
SIDBI is headed by the Chairman & Managing Director. The SIDBI is operating different programmes and schemes through 5 Regional Offices and 33 Branch Offices.
SIDBI extends direct/indirect financial assistance to SSIs, assisting the entire spectrum of small and tiny sector industries on All India basis.
The range of assistance comprising financing, extension support and promotional, are made available through appropriate schemes of direct and indirect assistance for the following purposes:-
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Setting up of new projects
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Expansion, diversification, modernisation, technology upgradation, quality improvement, rehabilitation of existing units
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Strengthening of marketing capabilities of SSI units.
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Development of infrastructure for SSIs and
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Export promotion.
DIRECT ASSISTANCE SCHEMES
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SIDBI directly assists SSIs under
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Project Finance Scheme
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Equipment Finance Scheme
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Marketing Scheme
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Vendor Development Scheme
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Infrastructural Development Scheme
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ISO-9000
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Technology Development & Modernisation Fund
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Venture Capital Scheme
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Assistance for leasing to NBFCs, SFCs, SIDCs and
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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
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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 net work 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.
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 organising Entrepreneurship Development Programmes, Technology Upgradation & Modernisation 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.
A. |
Refinance against term loans in respect of projects/activities eligible for assistance under the Scheme |
Interest on term loans for fixed asets and working capital advances (excluding interest tax) (% p.a.) |
Interest on Refinance (% p.a.) |
(i) |
Upto and inclusive of Rs. 25,000 |
12.0 |
9.0 |
(ii) |
Over Rs. 25,000 and upto Rs. 2 lakh |
Not exceeding 13.5 |
10.5 |
B. |
Refinance against term loans in respect of projects/activities eligible for assistance under TDMF and ISO 9000 Schemes (Applicable to all eligible institutions) (except RRBs) |
Interest on term loans (excluding interest tax) (% p.a.) |
Interest on Refinance (% p.a.) |
(i) |
Upto and inclusive of Rs. 25,000 |
12.0 |
9.0 |
(ii) |
Over Rs. 25,000 and up to Rs. 2 lakh |
Not exceeding 13.5 |
10.5 |
(iii) |
Over Rs. 2 lakh |
Not exceeding 14.0* |
12.0 |
SIDBI's ASSISTANCE
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(i) Tiny Units - about 89.2 per cent of the number of projects assisted under Refinance Scheme during 1996-97 were tiny, receiving assistance upto Rs. 5 lakh per project. The sanctions for such projects accounted for 39.6% of the total amount of sanctions in 1996-97 as against 36.0% during the previous year.
(ii) Women entrepreneurs - under various schemes assistance amounting to Rs. 19.07 crores was given to 1067 women entrepreneurs during 1996-97.
(iii) Backward areas - during 1996-97, projects emanating from backward areas received assistance to the tune of Rs. 775 crores of sanction which accounted for 37% of total assistance under Refinance Scheme of SIDBI.
Measures to simplify Rules/Regulations
To fill the gaps in the existing structure of credit delivery mechanism to the small scale sector, Small Industries Development Bank of India (SIDBI) keeps on effecting simplification of procedures, liberalisation of new schemes and introduction of new schemes.
- Endeavour of SIDBI is to ensure that no worthwhile proposal is denied credit for want of funds.
- Norms laid down by Reserve Bank of India and Government of India are followed by SIDBI for granting assistance to SSI units.
Liberalisation effected
(i) Enhancement in the ceiling on loan amount of the Composite Loan Scheme to Rs. 2 lakh from the earlier ceiling of Rs. 50,000/- to ensure timely availability of term loan and working capital to the small units. The scheme was also liberalised to include units in all areas other than metropolitan areas.
(ii) Scope of Technology Development & Modernisation Fund Scheme and Refinance Scheme for Technology Development & Modernisation has been expanded to cover non-exporting SSIs/ancillary units graduating out of SSI sector for assistance under the scheme.
(iii) Scope of Single Window Scheme has been enlarged to cover modernisation, technology upgradation in addition to new SSI units. Project outlay under the scheme has been gradually raised from s. 30 lakhs to Rs. 100 lakhs. Simultaneously, the sub-limits for working capital and term loan components has been done away with.
MAIN SCHEMES OF SIDBI
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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
(i) To enhance the export capabilities of SSI units.
(ii) Scheme for Marketing Assistance.
(iii) Infrastructure Development Scheme.
(iv) Scheme for acquisition of ISO 9000 certification.
(v) Factoring Services and
(vi) Bills Re-discounting Scheme against inland supply bills of SSIs.
MAJOR SCHEME
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Technology Development & Modernisation Fund
SIDBI has set 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 scheme is available for meeting the expenditure on purchase of capital equipment acquisition of technical know-how, upgradation of process technology and products with thrust on quality improvement, improvement in packaging and cost of TQM and acquisition of ISO-9000 series certification.
SIDBI in July 1996 had permitted SFCs and promotional banks to 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 sector are now eligible to avail assistance under this scheme.
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/modernisation/technology upgradation or diversification or rehabilitation should not exceed Rs. 10 lakh per project.
(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.
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Source: http://exim.indiamart.com/ssi-finance/sidbi.html
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