SIDBI

Small Industries Development Bank of India

Small Industries Development Bank of India

Regulatory Body

Small Industries Development Bank of India (SIDBI) is the apex regulatory body for overall licensing and regulation of micro, small and medium enterprise finance companies in India. It is under the jurisdiction of Ministry of Finance , Government of India headquartered at Lucknow and having its offices all over the country.The SIDBI was established on April 2, 1990, by Government of India, as a wholly owned subsidiary of IDBI Bank . It was delinked from IDBI w.e.f. March 27, 2000. Its purpose is to provide refinance facilities to banks and financial institutions and engage in term lending and working capital finance to industries, and serves as the principal financial institution in the Micro, Small and Medium Enterprises (MSME) sector. SIDBI also coordinates the functions of institutions engaged in similar activities. It was established in 1990,[2] through an Act of Parliament.[3]

Quick Facts Agency overview, Formed ...

SIDBI is one of the five All India Financial Institutions regulated and supervised by the Reserve Bank of India; other four are Exim Bank Of India, NABARD,NABFID and NHB. But recently NHB came under government control by taking more than 51% stake. They play a statutory role in the financial markets through credit extension and refinancing operation activities and cater to the long-term financing needs of the industrial sector.[4]

SIDBI is active in the development of Micro Finance Institutions through SIDBI Foundation for Micro Credit, and assists in extending microfinance through the Micro Finance Institution (MFI) route.[5] Its promotion & development program focuses on rural enterprises promotion and entrepreneurship development.[6][7]

In order to increase and support money supply to the MSE sector, it operates a refinance program known as Institutional Finance program. Under this program, SIDBI extends Term Loan assistance to Banks, Small Finance Banks and Non-Banking Financial Companies. Besides the refinance operations, SIDBI also lends directly to MSMEs.[8][9]

Non-Financial Intervention

As part of non-financial intervention in the MSME sector, SIDBI had also undertaken various measures in the past. Recently, in association with credit rating agency CRISIL and Credit Information Company TransUnion CIBIL it has introduced "CriSidEx" and "MSME Pulse".[10]

CriSidEx, India's first sentiment index for micro and small enterprises (MSEs) has been developed jointly by CRISIL & SIDBI. It is a composite index based on a diffusion index of 8 parameters and measures MSE business sentiment on a scale of 0 (extremely negative) to 200 (extremely positive). The crucial benefit of CriSidEx is that its readings will flag potential headwinds and changes in production cycles and thus help improve market efficiencies.[11] And by capturing the sentiment of exporters and importers, it will also offer actionable indicators on foreign trade.[12][13]

SIDBI in association with TransUnion CIBIL launched "MSME Pulse" and Microfinance Pulse launched by Equifax, a quarterly report on MSME credit activity, for closely tracking and monitoring the MSME segment in the country. The report is based on a study done on over five million active MSMEs who have access to formal credit, with live credit facilities in the Indian banking system.[14]

SIDBI has launched the ‘Udyami Mitra’ Portal to improve accessibility of credit and handholding services to MSMEs. They can select and apply for preferred banks through this portal. Under the portal entrepreneurs can apply for loan without physically visiting any bank branches and can select from over 1 lakh bank branches, track their application status and avail multiple loan benefits. It also has facility for uploading all necessary documents. Through the portal the MSMEs can also seek handholding support for getting finance.[15][16] SIDBI has also entered into an arrangement with CSC e-governance Services (CSCeGS) to take Udyami Mitra portal to the unserved and the underserved MSMEs. CSCeGS is a special purpose vehicle (SPV) set up by ministry of electronics and IT ( MeitY) which acts as connect point for various digitally aligned services to villages in the country.[17]

Other activities

SIDBI has floated several other entities for related activities, including:

  • The SIDBI Foundation for Microcredit
  • SIDBI Venture Capital Limited (SVCL)[18] - for providing Venture Capital (VC) assistance to MSMEs;
  • Micro Units Development & Refinance Agency (MUDRA) - for ‘funding the unfunded’ micro enterprises in the country;
  • Receivable Exchange of India Ltd. (RXIL)[19] to enable faster realisation of receivables by MSMEs;
  • SMERA Ratings Limited (SMERA)[18] - for credit rating of MSMEs, renamed as Acuite Ratings & Research Limited.;[20]
  • India SME Technology Services Ltd (ISTSL)[18] - for technology advisory and consultancy services and
  • India SME Asset Reconstruction Company Ltd. (ISARC)[18] for speedier resolution of Non-Performing Assets (NPA) in the MSME sector.

SIDBI supports the Government of India in its initiatives and work as a nodal agency for some of the schemes related to development of MSMEs, such as Make in India and Startup India.

References

  1. [1]
    . Accessed December 2020.
  2. [2]
    https://legislative.gov.in/sites/default/files/A1989-39.pdf [bare URL PDF]
  3. [3]
    "Small Industries Development Bank of India(SIDBI) | Department of Financial Services | Ministry of Finance | Government of India". Financialservices.gov.in. Retrieved 14 October 2018.
  4. [4]
    "Reserve Bank of India - Publications". Rbi.org.in. Retrieved 14 October 2018.
  5. [5]
    "IDFC". www.idfc.org.
  6. [6]
    "SIDBI's Financial Inclusion Program covers 'Poorest of the Poor' - ADFIAP".
  7. [7]
    "Poorest States Inclusive Growth Programme - SIDBI UKAID DFID RFP". indiamicrofinance.com. 5 November 2022.
  8. [8]
    "Establishment of Fund of Funds for funding support to Start-ups". pib.nic.in.
  9. [9]
    "Shareholding :: Small Industries Development Bank of India". www.sidbi.in.
  10. [10]
    "Fixed Deposits, MSME borrowing becomes easier in Indian Overseas Bank; here's how". Zee Business. 7 April 2018. Retrieved 17 March 2023.
  11. [11]
    "Privacy Policy". 27 January 2023. Retrieved 17 March 2023.
  12. [12]
    Gupta, Komal (3 February 2018). "Jaitley launches CriSidEx, says economy witnessing a phase of consolidation".
  13. [13]
    "CRISIL, SIDBI Launch India's First MSE Sentiment Index". pib.nic.in.
  14. [14]
    "MSME's most attractive segment in commercial credit with fastest growth, low NPAs: Report". The Economic Times. 12 March 2018.
  15. [15]
    "Udyami Mitra Portal".
  16. [16]
    Network, Knn India - Knowledge & News. "SIDBI launches 'Udyami Mitra' portal to improve accessibility of credit for MSMEs". knnindia.co.in.
  17. [17]
    "Sidbi, CSC partner to offer MSMEs better credit access". Press Trust of India. 6 March 2018 – via Business Standard.
  18. [18]
    "Small Industries Development Bank of India(SIDBI) | Department of Financial Services | Ministry of Finance | Government of India". financialservices.gov.in. Retrieved 17 February 2018.
  19. [19]
    "Guidelines for setting up of and operating the Trade Receivables Discounting System (TReDS)" (PDF). Guidelines for Setting up of and Operating the Trade Receivables Discounting System (TReDS).
  20. [20]
    "Acuité Ratings & Research". www.acuite.in.
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