Small and medium enterprises can hope to tap a new avenue — the stock market — for raising resources in 2011-12.
This is in addition to the traditional sources of funding — banks and non-banking finance companies.
The Small Industries Development Bank of India (SIDBI) is planning to operationalise the SME Exchange in association with the National Stock Exchange, according to Mr Sushil Muhnot, Chairman and Managing Director, SIDBI.
Trading platform
Pointing out that a separate trading platform for the SME Exchange has already been created by the NSE, the SIDBI chief said market infrastructure in terms of attracting sponsors for initial public offers and market-makers are being tied up.
SMEs intending to mobilise up to Rs 25 crore through initial public offers can get listed on the SME Exchange.
Exit option
“Since the SME Exchange will give international and domestic venture capital funds an exit option, they will be enthused to make investments in SMEs,” said Mr Muhnot.
Another area of priority that has been identified by SIDBI is direct lending to micro, small and medium enterprises (MSMEs).
The financial institution is eyeing a 25 per cent growth in this segment in 2011-12.
Direct lending accounted for about 24 per cent (or Rs 11,000 crore) of the total outstanding credit of Rs 46,331 crore as on March-end 2011.
Refinance to banks and state finance corporations accounted for 67 per cent (or Rs 31,000 crore) of the total credit.
Financial inclusion
Achieving financial inclusion through microfinance institutions (MFIs) is another area that SIDBI will focus on this year, said Mr Muhnot.
The Lucknow-headquartered institution is looking to work closely with MFIs so that those in the un-banked areas get access to credit for productive purposes.
With the debt restructuring of six big MFIs going through, SIDBI sees the MFI sector stabilising.
It has an exposure to 150 MFIs, with loan outstanding aggregating Rs 2,700 crore.
Profits rise
Meanwhile, SIDBI has reported a 22 per cent increase in net profit at Rs 514 crore in 2010-11, against Rs 421 crore in the previous year.