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G. Gurumurthy

Coimbatore , June 13

SMALL Industries Development Bank of India, which has sent its proposal to the Government for change of its business model from a refinance institution to a fullfledged financial institution, hopes to get early ratification from Parliament.

"The change of SIDBI's business model, dictated by the changing environment in the financial market, needs to be approved by Parliament, which has to ratify the amendment to the SIDBI Act. We hope the Bill would be passed in the coming monsoon session of the House," Mr N. Balasubramanian, Chairman and Managing Director, SIDBI, told Business Line.

SIDBI and Bank of India formally launched their alliance here today to fund the small and medium enterprises (SME) projects, with a view to speeding up the process of funding greenfield projects in the sector.

Mr M. Balachandran, Chairman and Managing Director, Bank of India, said Coimbatore and Tirupur formed two of the country's vibrant SME clusters.

Talking at the sidelines of the inauguration of the business alliance, the SIDBI chairman said his bank had enunciated a new business model as its present structure as a refinancing agency, with its limitation of providing only loan and bill discounting, would not be sufficient to undertake the full range of services for SMEs.

Direct lending apart, it has also envisaged a bigger role in developing micro-credit institutions.

To meet the credit dispersal needs, now SIDBI has to work out tie-ups with commercial banks for working capital sanctions.

With several overseas private funds looking to invest in India, SIDBI is also getting enquiries from some of the funds to enter into a partnership, said Mr Balasubramanian.

SIDBI, which has launched a Rs 500-crore SME growth fund, is also in the process of setting up a risk-sharing facility in partnership with the Swiss-based co-operative institution SECO, with a contributory fund base of $5 billion each by both institutions.

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