Financial Daily from THE HINDU group of publications
Friday, Apr 02, 2004
Financial Daily from THE HINDU group of publications Friday, Apr 02, 2004 |
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Money & Banking
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Financial Institutions SIDBI seeks RBI nod for short-term lending Our Bureau
New Delhi , April 1 THE Small Industries Development Bank of India (SIDBI) has sought the permission of the Reserve Bank of India (RBI) to offer working capital assistance to companies in the small-scale sector, its Chairman and Managing Director, Mr V.K. Chopra, has said here. SIDBI has decided to reduce the lending rate to the SME (small and medium enterprises) sector to 9.5 per cent, which was two percentage points lower than the bank's prime lending rate of 11.5 per cent. Addressing a press conference, Mr Chopra said that the bank was also waiting for clearance of the definition of medium scale industry from the Ministry of Small Scale Industries to provide finance to the sector. Currently, there is no definition of a medium scale sector industry. The SIDBI board has approved a proposal for terming an industry having an investment of up to Rs 10 crore in plant and machinery as being in the medium scale sector. The proposal has also been cleared by the Ministry of Finance. Mr Chopra said that the Rs 10,000-crore SME fund announced by the Finance Minister, Mr Jaswant Singh, in January this year had already become operational. A ssistance under the fund would be made available through either the bank's 44 branches or through the branches of State Finance Corporations (SFCs). Besides, it would also be available through the branches of commercial banks in the country. On SFCs, Mr Chopra said that a series of meeting have been held with its Chief Executive Officers to discuss and finalise strategies for improving the flow of credit to SMEs. "Arising from these deliberations, it has been decided that SFCs will be able to borrow from SIDBI under the present fund at the rate of between 7.5-8 per cent, depending on the present financial standing of SFCs, and commitment of the State Government to provide necessary equity support in this regard," Mr Chopra said. He said under the rehabilitation package already provided by SIDBI for SFCs, seven of them including the Kerala State Financial Corporation, Karnataka State Financial Corporation and the Andhra Pradesh State Financial Corporation have already signed MoU with the bank to cpmply with the financial discipline expected from them.
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