SIDBI plans to fill the gaps in financing faced by micro, small and medium enterprises (MSMEs).

“We want to play a complementary role to banks and financial institutions. We will focus on giving term loans to MSMEs in the electronics, information technology, defence, food processing and services sectors,” Mr N.K. Maini, Deputy Managing Director, SIDBI, said on the sidelines of a seminar jointly organised with the World Bank.

The Lucknow-based development bank will provide loan syndication facility to MSMEs. By applying for a loan to SIDBI through a network of accredited agencies, the loan processing fee for MSMEs will reduce to about 2 per cent of the total loan against a much higher cost at present, said Mr Maini.

SIDBI aims to set up credit facilitation and rehabilitation centres for the MSMEs under crises. The problems and challenges of the MSMEs will be addressed by a retired professional banker appointed by SIDBI. Clusters of 100 MSMEs have been identified for setting up these centres.

SIDBI envisages playing the role of direct financier to start-up entrepreneurs by giving growth equity to projects of up to Rs 1,000 crore.

“We plan to utilise the Rs 5,000 crore allotted to us (in Union Budget 2009) in the next four years, Mr Maini said. Of this, SIDBI has provided Rs 600 crore through venture capital funding.

Microfinance Sector

Currently, SIDBI’s micro finance portfolio is at Rs 2,000 crore. Its loans to microfinance institutions in Andhra Pradesh, which stood at Rs 800 crore, have been restructured.

Despite the ongoing restructuring, SIDBI’s funding to MFIs operating in Tier-II and -III cities, largely outside Andhra Pradesh, continues via microfinance equity fund.

“Going forward, consolidation is required among smaller MFIs,” Mr Maini said.

SIDBI’s loan book increased by Rs 40,000 crore in FY12 to Rs 2.40 lakh crore as on March-end 2012.

(This article was published on June 26, 2012)
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