Financial Daily from THE HINDU group of publications
Tuesday, Aug 31, 2004
Financial Daily from THE HINDU group of publications Tuesday, Aug 31, 2004 |
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Venture Capital Industry & Economy - SSI Money & Banking - Public Sector Banks Seven banks to tie up with SIDBI For VC fund, rating venture Sarbajeet K. Sen
New Delhi , Aug. 30 SEVEN of the country's leading public sector banks are set to propel the Small Industries Development Bank of India (SIDBI) to its next orbit in funding the growth of the small and medium sector. The tie-ups with the banks, which are in an advanced stage of negotiations, will help formalise a comprehensive package to boost the credit flow to the SME sector. The plans include setting up a venture capital fund (VCF), a credit rating agency (CRA) and bolstering the Credit Guarantee Fund Trust for Small Industries (CGFTSI) by more than trebling its corpus from the current Rs 800 crore. "Once the plans are set rolling, there would be enough comfort for lenders to fund units in the SME sector," the Chairman and Managing Director, SIDBI, Mr V.K. Chopra, told Business Line. The seven banks that are likely to join hands with SIDBI for the VCF and the CRA are State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Unions Bank of India, Oriental Bank of Commerce and Bank of India. SIDBI is tying up with SBI, PNB, Canara Bank, BoB and Union Bank to participate in the corpus of the proposed VCF - the SME Growth Fund. The CRA tie-ups are being formalised with PNB, Canara Bank, OBC, BoB, BoI and Union Bank. "The VCF would provide support to start-ups that have good growth and export potential. It would start with a corpus of Rs 100 crore which we plan to raise to Rs 500 crore in two to three years," Mr Chopra said. The fund, which will identify SME sector projects in areas such as agriculture, biotechnology, food processing and auto ancillaries, is to be launched in September. The CRA is expected to start operations within the current financial year. "Our board has already approved the setting up of the agency. Through scientific appraisal of the creditworthiness of units in the SSI sector, the agency would provide a great degree of comfort to the lenders," Mr Chopra said. SIDBI also plans to massively augment the cushion provided to lenders by CGFTSI, an 80:20 partnership between the Government of India and the institution. "We want to raise the corpus of the fund to Rs 2,500 crore from Rs 800 crore soon. Our effort would be increase the cover to 30,000 commercial units from the present 17,000 units within the current fiscal," Mr Chopra said.
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