SIDBI and its Functions

Introduction to SIDBI:

          SIDBI commonly known as the Small Industries Development Bank of India, was established as a statutory body in 1988 under a special Act of the Indian Parliament and which came into force on April 2, 1990. SIDBI has set up its headquarters in Lucknow; Uttar Pradesh. It is one of the four All-India Institutions, the others being NABARD; EXIM; and NHB.

          Initially, SIDBI was fully involved in industrial development activities in the country by managing SIDF (Small Industries Development Fund) and NEF (National Equity Fund) and was the financial base for funding the MSME (Micro, Small, and Medium enterprises) sector. SIDBI was owned by a consortium of SBI as a share with 15.65 %, LIC as a share with 13.33 %, the Government of India as a share with 20.85 %, NABARD as a share with 9.36 %, and other public financial institutions as share with 40.81 %.

          SIDBI assists around Rs 5.45 lakh crore to the MSME sector in the country to expand the market and develop its innovative thoughts and technologies to help to produce profitable products. SIDBI aims to work with and reinforce the flow of credit to MSMEs and address monetary, formative, and developmental gaps in the MSMEs industry zones across the country. 

           SIDBI is mainly focusing on establishing more than 55% of MSMEs located in the rural areas of the country. In 2013, the Government of India set up a committee called R.S. Gujaral’s committee of financial exports to boost the MSME sector. To minimize human interaction in the MOU process Government of India has implemented a module called “E-biz”  under the National E-governance plan by the DIPP (Department of Industrial Policy and Promotion).

Functions of SIDBI:

• SIDBI emerged as a single window operation to meet its financial and improvement needs as well as to make the MSME sector strong, vibrant, and globally competitive.
• SIDBI helps financial institutions in lending to small-scale industries so that they have a healthy financial position and also provides non-financial assistance to business owners by helping them procure raw materials.
• SIDBI engages commercial banks and other financial institutions to grant credit to small-scale industries and encourage credit by small independent company business units and also provide resource assistance to them.
• SIDBI also provides venture capital assistance through Venture Capital Fund, and it also co-promotes state-level venture funds.
• SIDBI conducts surveys in specific geographical locations to determine the potential of developing MSMEs in the specific area where it is found.
• SIDBI helps in expanding business areas for small-scale industry sector products in domestic and international markets in partnership with commercial banks.
• SIDBI also aims to enhance shareholder wealth through modern technologies and innovative ideas by providing a digital platform. It also provides services like factoring and leasing to domestic independent company business units in the small-scale sector.
• SIDBI also provides an additionally timely flow of credit for working capital as well as term loans to small-scale enterprises in collaboration with commercial banks.
• SIDBI takes initiatives for modernization and technological upgradation of existing industrial units to become future units that generate more wealth and employment.
• SIDBI also acts as a nodal agency for various ministries of the Government of India :

1. Ministry of MSME.
2. Ministry of commerce and industry.
3. Ministry of Textiles.
4. Ministry of food processing industry,

Schemes offered by SIDBI in MSME Sector:

• Direct Financing: which offers working capital as assistance, term loans foreign currency loans
• Indirect Finance: assistance by providing refinance, comprising banks.
• Micro Finance: which offers small-scale credit loans on immediate bases.
• STFS (SIDBI Trader Finance Scheme): this scheme offers wholesale retailers who have running a business for at least 3 years.
• SEF (SMILE equipment Finance): Helps MSMEs to buy new equipment for them.
• TULIP (Top-Up Loan for Immediate Purpose): This loan will provide within 7 days.
• SPEED: Loan for Purchase of Equipment for Enterprises development
• Loans under a partnership with OEM (Original Equipment Manufacturer).
• Working Capital Cash Credit Scheme: which provides instant loans.

Frequently Asked Questions and Answers:

Q1. Briefly describe SIDBI.

Ans: SIDBI commonly known as the Small Industries Development Bank of India, was established as a statutory body in 1988 under a special Act of the Indian Parliament and which came into force on April 2, 1990. SIDBI has set up its headquarters in Lucknow; Uttar Pradesh. It is one of the four All-India Institutions, the others being NABARD; EXIM; and NHB. Initially, SIDBI was fully involved in industrial development activities in the country by managing SIDF (Small Industries Development Fund) and NEF (National Equity Fund) and was the financial base for funding the MSME (Micro, Small, and Medium enterprises) sector.

Q2. List any four Financial Institutions in India.

Ans: four financial institutions in India are SIDBI; NABARD; EXIM; and NHB.

Q3. Write the Ministries under which SIDBI works as a nodal agency for the Government of India.

Ans:

• Ministry of MSME.
• Ministry of commerce and industry.
• Ministry of Textiles.
• Ministry of the food processing industry.

Q4. Write the list of schemes offered by SIDBI in the MSME sector.

Ans:

• STFS (SIDBI Trader Finance Scheme): this scheme offers wholesale retailers who have running a business for at least 3 years.
• SEF (SMILE equipment Finance): Helps MSMEs to buy new equipment for them.
• TULIP (Top-Up Loan for Immediate Purpose): This loan will provide within 7 days.
• SPEED (Loan for Purchase of Equipment for Enterprises development).
• Loans under a partnership with OEM (Original Equipment Manufacturer).
• Working Capital Cash Credit Scheme: which provides instant loans.

My Personal Notes arrow_drop_up

Save