ASSIGNMENT – IECONOMIC ENVIRONMENT-

SIDBI

MADE BY : RISHEBH CLEMENT BBA-IB SEMESTER II

SUBMITTED TO:

Mrs. SUPRIYA LAMBA

IntroductionIntroduction

Small Industries Development Bank of India Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, is the Principal Financial Indian Parliament, is the Principal Financial Institution for the Promotion, Financing and Institution for the Promotion, Financing and Development of the Micro, Small and Medium Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in of the functions of the institutions engaged in similar activities.similar activities.

It was incorporated initially as a wholly owned It was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of subsidiary of Industrial Development Bank of India.India.

Beginning as a refinancing agency to banks and Beginning as a refinancing agency to banks and state level financial institutions for their credit to state level financial institutions for their credit to small industries, it has expanded its activities, small industries, it has expanded its activities, including direct credit to the SME through 100 including direct credit to the SME through 100 branches in all major industrial clusters in India.branches in all major industrial clusters in India.

Recently it has opened seven branches christened Recently it has opened seven branches christened as Micro Finance branches, aimed especially at as Micro Finance branches, aimed especially at dispensing loans up to Rs. 5 lakh.dispensing loans up to Rs. 5 lakh.

It is an apex body and nodal agency for It is an apex body and nodal agency for formulating coordination and monitoring the formulating coordination and monitoring the policies and programmes for promotion and policies and programmes for promotion and development of small scale industries. development of small scale industries.

SIDBI has also floated several other entities for SIDBI has also floated several other entities for related activities. Credit Guarantee Fund Trust related activities. Credit Guarantee Fund Trust for Micro and Small Enterprises provides for Micro and Small Enterprises provides guarantees to banks for collateral-free loans guarantees to banks for collateral-free loans extended to SME. extended to SME.

Business Domain of Business Domain of SIDBISIDBI

The business domain of SIDBI consists of small The business domain of SIDBI consists of small scale industrial units, which contribute scale industrial units, which contribute significantly to the national economy in terms of significantly to the national economy in terms of production, employment and exports. production, employment and exports.

Small scale industries are the industrial units in Small scale industries are the industrial units in which the investment in plant and machinery does which the investment in plant and machinery does not exceed Rs.10 million . not exceed Rs.10 million .

About 3.1 million such units, employing 17.2 About 3.1 million such units, employing 17.2 million persons account for a share of 36 per cent million persons account for a share of 36 per cent of India's exports and 40 per cent of industrial of India's exports and 40 per cent of industrial manufacture. manufacture.

In addition, SIDBI's assistance flows to the In addition, SIDBI's assistance flows to the transport, health care and tourism sectors and transport, health care and tourism sectors and also to the professional and self-employed persons also to the professional and self-employed persons setting up small-sized professional ventures.setting up small-sized professional ventures.

AchievementsAchievements SIDBI retained its position in the top 30 Development SIDBI retained its position in the top 30 Development

Banks of the World in the latest ranking of The Banks of the World in the latest ranking of The Banker, London. Banker, London.

As per the May 2001 issue of The Banker, London, As per the May 2001 issue of The Banker, London, SIDBI ranked 25th both in terms of Capital and Assets.SIDBI ranked 25th both in terms of Capital and Assets.

Credit Guarantee Fund Trust for Micro and Small Credit Guarantee Fund Trust for Micro and Small Enterprises popularly known as CGTMSE is widely Enterprises popularly known as CGTMSE is widely being used by many PSU Banks and Private sector being used by many PSU Banks and Private sector banks to fund MSME sector. banks to fund MSME sector.

During the year 2002-03 the aggregate sanction and During the year 2002-03 the aggregate sanction and disbursements of SIDBI amounted to Rs 10904crore disbursements of SIDBI amounted to Rs 10904crore and Rs 6789crore respectively.and Rs 6789crore respectively.

Mission & VisionMission & Vision Mission:Mission: “ “To empower the Micro, Small and Medium To empower the Micro, Small and Medium

Enterprises (MSME) sector with a view to Enterprises (MSME) sector with a view to contributing to the process of economic growth, contributing to the process of economic growth, employment generation and balanced regional employment generation and balanced regional developmentdevelopment””

Vision: “ “To emerge as a single window for meeting the To emerge as a single window for meeting the

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

ObjectivesObjectives

Four basic objectives are set out in the SIDBI Four basic objectives are set out in the SIDBI Charter. They are: Charter. They are: Financing Financing Promotion Promotion Development Development Co-ordinationCo-ordination

for orderly growth of industry in the small scale sector. The for orderly growth of industry in the small scale sector. The Charter has provided SIDBI considerable flexibility in adopting Charter has provided SIDBI considerable flexibility in adopting appropriate operational strategies to meet these objectives.appropriate operational strategies to meet these objectives.

Products And ServicesProducts And Services Direct finance.Direct finance. Bills financeBills finance RefinanceRefinance International financeInternational finance Promotional & Development activities.Promotional & Development activities. Fixed deposit schemeFixed deposit scheme Technology Upgradation & Modernisation Technology Upgradation & Modernisation

Fund Scheme {TDMF}Fund Scheme {TDMF} Venture Capital Fund SchemeVenture Capital Fund Scheme Seed Money SchemesSeed Money Schemes National Equity Fund SchemeNational Equity Fund Scheme

Direct FinanceDirect Finance

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

SIDBI’s direct finance schemes are:SIDBI’s direct finance schemes are: Scheme for expansion / diversification of small Scheme for expansion / diversification of small

scale units.scale units. Scheme for specialised marketing agencies.Scheme for specialised marketing agencies. Scheme for ancilaring / subcontract units.Scheme for ancilaring / subcontract units. Scheme for existing Export Oriented Scheme for existing Export Oriented

Units(EOUs) to enable them to acquire ISO 9000 Units(EOUs) to enable them to acquire ISO 9000 series certification.series certification.

Bills Finance SchemesBills Finance Schemes

Bills Finance Scheme involves provision of medium Bills Finance Scheme involves provision of medium and short-term finance for the benefit of the small-and short-term finance for the benefit of the small-scale sector. scale sector.

Bills Finance seeks to provide finance, to Bills Finance seeks to provide finance, to manufacturers of indigenous machinery, capital manufacturers of indigenous machinery, capital equipment, components sub-assemblies etc, based equipment, components sub-assemblies etc, based on compliance to the various eligibility criteria, on compliance to the various eligibility criteria, norms etc as applicable to the respective schemes.norms etc as applicable to the respective schemes.

To be eligible under the various bills schemes, one To be eligible under the various bills schemes, one

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

Refinance SchemesRefinance Schemes Refinance scheme is introduced for catering to the Refinance scheme is introduced for catering to the

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

Under the scheme, SIDBI grants refinance against Under the scheme, SIDBI grants refinance against term loans granted by the eligible term loans granted by the eligible PLI’s to industrial to industrial concerns for setting up industrial projects in the concerns for setting up industrial projects in the small scale sector as also for their expansion / small scale sector as also for their expansion / modernization / diversification.modernization / diversification.

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

                             

International Finance International Finance Schemes Schemes

The main objective of the various International The main objective of the various International Finance schemes is to enable small-scale Finance schemes is to enable small-scale industries to raise finance at internationally industries to raise finance at internationally competitive rates to fulfill their export competitive rates to fulfill their export commitments. commitments.

The financial assistance is being offered in US The financial assistance is being offered in US Dollars and Euro currencies. Assistance in Dollars and Euro currencies. Assistance in Rupees is also provided to the needy borrowers.Rupees is also provided to the needy borrowers.

The international finance is available from pre-The international finance is available from pre-shipment & post shipment credit.shipment & post shipment credit.

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

Promotional and Promotional and Development Activities Development Activities

As an apex financial institution for promotion, As an apex financial institution for promotion, financing and development of industry in the financing and development of industry in the small scale sector, SIDBI meets the varied small scale sector, SIDBI meets the varied developmental needs of the Indian SSI sector developmental needs of the Indian SSI sector by its wide-ranging Promotional and by its wide-ranging Promotional and Developmental (P&D) activities.Developmental (P&D) activities.

The activities are as follows:The activities are as follows: Entrepreneurship Development Programmes.Entrepreneurship Development Programmes. Management Development Programmes. Management Development Programmes. Technology Upgradation Programmes.Technology Upgradation Programmes.

Fixed Deposit Scheme Fixed Deposit Scheme

Time periodTime period

Revised Annual Revised Annual Interest Rate %p.a. Interest Rate %p.a. * w.e.f August 10, * w.e.f August 10,

20092009

Interest (% p.a.)Interest (% p.a.) 12 months - 13 12 months - 13 months months

6.50 6.50

14 months - 36 14 months - 36 months months

7.00 7.00

14 months - 36 14 months - 36 months months

7.50 7.50

For Senior For Senior CitizensCitizens

7.07.0

7.57.5

8.08.0

The Interest Rate Structure for SIDBI Fixed Deposit Scheme of SIDBI are as under:

Technology Upgradation & Technology Upgradation & Modernization Fund Modernization Fund

SchemeScheme This fund was setup in the year 1996 by the SIDBI This fund was setup in the year 1996 by the SIDBI

with an initial capital of 200 million.with an initial capital of 200 million.

It was setup for the purpose of encouraging the It was setup for the purpose of encouraging the existing small scale industrial units to modernize existing small scale industrial units to modernize production facilities and adopt improved and production facilities and adopt improved and updated technology for strengthening export updated technology for strengthening export capabilities.capabilities.

For availing benefits under this scheme the unit For availing benefits under this scheme the unit have to prepare an estimate for modernization & have to prepare an estimate for modernization & submit it to SIDBI.submit it to SIDBI.

The sanction of funds is made depending upon the The sanction of funds is made depending upon the estimate submitted.estimate submitted.

Venture Capital Fund Venture Capital Fund SchemeScheme

SIDBI is participating in the Venture capital SIDBI is participating in the Venture capital fund set by public sector institutions as well as fund set by public sector institutions as well as private companies to the extent of Rs,50,00,000 private companies to the extent of Rs,50,00,000 of total capital of the fund required.of total capital of the fund required.

The fund should be dedicated to financing The fund should be dedicated to financing small industry preferably the most risky one.small industry preferably the most risky one.

Seed Money SchemesSeed Money Schemes

One of the constraints faced by Entrepreneurs One of the constraints faced by Entrepreneurs is the lack of own resources to promote the is the lack of own resources to promote the minimum promoter contribution.minimum promoter contribution.

Hence, SIDBI introduced seed money scheme Hence, SIDBI introduced seed money scheme for the benefit of entrepreneurs.for the benefit of entrepreneurs.

Seed money is available through DIC { Direct Seed money is available through DIC { Direct Industry Centre } to those entrepreneur who Industry Centre } to those entrepreneur who are technically qualified but lack of own are technically qualified but lack of own capital.capital.

National Equity Fund National Equity Fund SchemeScheme

In order to provide equity type assistance, In order to provide equity type assistance, SIDBI is operation a National Equity Fund SIDBI is operation a National Equity Fund Scheme.Scheme.

The equity capital loan to the extent of 2.5lakh The equity capital loan to the extent of 2.5lakh is sanctioned to each project provided the is sanctioned to each project provided the protect qualities under this scheme.protect qualities under this scheme.

THANK YOU