Financial Daily from THE HINDU group of publications
Sunday, May 23, 2004
Financial Daily from THE HINDU group of publications Sunday, May 23, 2004 |
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Investment World
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Fixed Deposits Money & Banking - Financial Institutions Columns - FD Watch SIDBI: Interesting offer G. Madhan
Investors with a portfolio of FD investments can consider this option as a measure of diversifying risk. Longer tenures, however, can be avoided to review the investment on a later date.
Scheme and features
SIDBI offers cumulative and non-cumulative fixed deposit schemes. The interest rate (see table) for all schemes is the same. Under the non-cumulative scheme, quarterly and monthly options are available. Under the cumulative scheme, the interest is compounded at quarterly rests and the yields are 5.61 per cent, 5.75 per cent and 6 per cent for one, two and three years respectively. The minimum deposit amount for the monthly option is Rs 17,000; and for all others, Rs 10,000. Details can be had from the head office at SIDBI Tower, 15, Ashok Marg, Lucknow 226001.
Business and financial performance
State-owned SIDBI provides financial assistance to units in the small-scale sector. SIDBI provides refinance against term loans granted by banks to SSIs, equity assistance, bills financing, project financing and resource support to institutions that are engaged in the development of SSIs. It provides assistance to wide-range of industrial sectors including transport, health care, hotel and tourism and infrastructure. It also provides funds to the professional and self-employed persons setting up small-sized professional ventures. The company's operating income has been declining over the last three years. During the year ending 2003-04, the income from operations fell by 18.7 per cent to Rs 1,138 crore, over the previous year. The net profit, however, was up by 17.4 per cent to Rs 243 crore. Profit margins at the net level rose to 21.4 per cent from 14.8 per cent earlier. At the operating level, margins fell by 1.8 percentage points to 91.6 per cent. SIDBI's profit has risen mainly on account of restructuring of its liabilities. The company has prepaid high-cost borrowings and renegotiated the rates of interest on some others. It is also the effect of a 33 per cent decline in the interest expenses. SIDBI's net NPAs to net advances was down to 2.38 per cent down from 3.84 per cent.
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