The Hindu Business Line : ‘Cost of SIDBI’s refinance will come down’

Chennai, March 1 Armed with Rs 2,000-crore of low cost funds from the Government, the Small Industries Development Bank of India (SIDBI) believes its would be able to provide refinance to banks and other small industry financiers at better rates.

SIDBI’s Chairman and Managing Director, Mr R.M. Malla, told Business Line that the Government’s promise of infusion of funds has come at an appropriate time, when the “great Indian SME story” needs additional funding.

While the rates of interest at which SIDBI would get the Rs 2,000-crore from the Government is not yet known, but Mr Malla said he was sure that the development bank would get the funds at an attractive rate.

SIDBI has a loan book of about Rs 20,000 crore, of which about Rs 12,000 crore consists of refinance provided to banks and the various state finance corporations (SFCs). Its outstanding loans to banks is about Rs 3,000 crore.

The Budget today promised to create “two funds of Rs 2,000 crore each in SIDBI – one for risk capital financing and the other for enhancing (SIDBI’s) refinancing capability to the MSME sector.”

Mr Malla said that the fund meant for providing ‘risk capital financing’ to help in SIDBI’s efforts to provide equity capital to micro, small and medium enterprises.

Incidentally, SIDBI itself has a venture capital subsidiary, SIDBI Ventures. Mr Malla indicated that the subsidiary could also benefit from the fund that was announced in the Budget today.

Apart from SIDBI Ventures, SIDBI itself has recently announced the setting up of a Rs 100-crore fund for equity financing. In a recent chat with Business Line, Mr Malla had said that SIDBI would write to various IITs and engineering colleges inviting students into entrepreneurship, with financial assistance from SIDBI.

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