The Small Industries Development Bank of India (SIDBI) plans to raise an additional Rs 17,000 crore from different lines of credit this year as part of its attempt to reposition itself in the MSME (Micro, Small and Medium Enterprises) sector. It will also focus on ‘factoring’ business and four niche areas it has identified to create an eco system for the requirement of this sector.
The apex financial institution will raise this money from budgetary sources, international and multilateral partners and market borrowings, Mr N. K. Maini, Deputy Managing Director, told newspersons here on Friday.
Factoring service
SIDBI is also creating awareness about ‘factoring’ to help MSMEs to do business in new ways and would launch new products such as ‘factoring without recourse’. Factoring is a receivable management service wherein the seller en-cashes against his credit sales.
Worldwide, factoring volumes increased from €724 billion in 2002 to €2015 billion in 2011. Asia’s factoring volume accounts for nearly 25 per cent of this, but India’s share in Asia’s factoring business is only 0.6 per cent, he said.
To fill in the gaps in the MSME ecosystem in terms of financial and developmental requirements, SIDBI is now focusing on four niche areas: facilitating equity, quasi-equity and mezannine debt, particularly for start-ups and incubatees, as a “fund of fund”; to take a lead in financing energy efficient and clean technology MSMEs; to set up a venture fund for the services sector which contributes 60 per cent of India’s GDP; and, to focus on receivable financing area.
SIDBI will hold a number of seminars across India to create awareness on these issues and focus on 400 industrial clusters this fiscal.
It plans to host a Web site, SmallB.com, to help MSME entrepreneurs set up units and provide guidance in project appraisals and disbursements. It will also set up marketing infrastructure and credit facilitation centres in various MSME clusters, Mr Maini said.
India has 30 million MSME units, which, as the second largest source of employment after agriculture, employs 70 million people. It contributes 45 per cent of manufacturing output and 40 per cent of exports, and maintains a higher growth rate of 11 per cent consistently even during crisis period.