Special Guidance by :

Mr. H. S. K. Tangirala Director, Udaybhansinhji Regional Institute of Cooperative Management (URICM) - Gandhinagar.

Prepared by:

Milan Dhaduk (1304) PGDM (ABM) – 2013-15

URICM - Gandhinagar.

Introduction • The Government of India set up the SIDBI under a special Act of the

Parliament in October 1989.

• SIDBI commenced its operations from April 2, 1990 with its head office in Lucknow.

• SIDBI has been setup as a wholly owned subsidiary of IDBI.

• Its authorised capital is Rs.250 cr. with an enabling provision to increase it to Rs.1000 cr.

• It is the apex institution which oversees, co-ordinates & further strengthens various arrangements for providing financial and non-financial assistance to small-scale, tiny, and cottage industries.

Mission & Vision

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 MSME 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”

Objectives

• Four basic objectives are set out in the SIDBI Charter. They are:

• Financing

• Promotion

• Development

• Co-ordination

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

Products & Services • Direct finance.

• Bills finance

• Refinance

• International finance

• Promotional & Development activities.

• Fixed deposit scheme

• Technology Up-gradation & 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.

• SIDBI’s direct finance schemes are:

o Scheme for expansion / diversification of small scale units.

o Scheme for specialised marketing agencies.

o Scheme for ancilaring / subcontract units.

o 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 Schemes

• 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 / modernisation / diversification.

• PLIs are SIDC, SFC. Banks like commercial banks, Co-operative Banks, Regional Rural Banks

• Schemes of re-finance assistence:

o Scheme for SC-ST & physically handicraft persons

o Composite loan scheme

o Equipment refinance schemes.

o Schemes for small road transport operators.

o Special assistence 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 fulfil 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.

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

Time period Revised Annual Interest Rate %p.a. * w.e.f August 10, 2009

Interest (% p.a.)

For Senior Citizens

12 months - 13 months 6.50

7.0

14 months - 36 months 7.00 7.5

14 months - 36 months

7.50 8.0

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:

o Entrepreneurship Development Programmes.

o Management Development Programmes.

o Technology Up-gradation Programmes.

Technology Up-gradation & Modernisation Fund Scheme {TDMF}

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

cr.

• It was setup for the purpose of encouraging the existing small scale industrial

units to modernise 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 modernisation & 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.

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 prefect qualities under this scheme.

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.