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Our Bureau

Mumbai , April 28

THE Reserve Bank of India is drawing up a scheme to forge a strategic alliance between the branches of different commercial banks and those of SIDBI to enhance the flow of credit to the small-scale industries (SSI).

This is part of RBI's initiative to further smoothen the flow of credit to SSIs, which primarily depend on finance from banks and other financial institutions.Under the proposed scheme, banks will be encouraged to establish mechanisms for better coordination between their branches and those of SIDBI that are located in the 50 clusters identified by the Ministry of Small Scale Industries.

The existing branches of SIDBI (re-designated as Small Enterprises Financial Centres) would take up co-financing of term loan requirements of SSI units, along with the bank branches. The banks will meet the working capital requirements of these units.

Further, the branches of commercial banks will leverage the expertise of SIDBI in appraisal of credit requirements of SSI units by payment of a nominal fee. SIDBI will help banks in simplifying the application forms, documentation and disbursement procedures.

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