ROLE OF SMALL INDUSTRIAL DEVELOPMENT BANK OF

INDIA
A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor of Banking and Insurance Studies

By

Ms. SHARMILA SURESH THANAGE

Under the Guidance of

PROF. SHREYATA SHENOY

ADARSH COLLEGE OF ARTS AND

COMMERCE KULGAON BADLAPUR (E), DIST –
THANE, 421503

University of Mumbai
2019-2020
ROLE OF SMALL INDUSTRIAL DEVELOPMENT BANK OF
INDIA
A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor of Banking and Insurance Studies

By

Ms. SHARMILA SURESH THANAGE

Under the Guidance of

PROF. SHREYATA SHENOY

ADARSH COLLEGE OF ARTS AND

COMMERCE KULGAON BADLAPUR (E), DIST –
THANE, 421503

University of Mumbai
2019-2020
 INDEX

Chapter No. I
Chapter No. II
Chapter No. III
Chapter No. IV
Chapter No. V
ROLE OF SMALL INDUSTRIAL DEVELOPMENT
BANK OF INDIA
 ADARSH COLLAGE OF ARTS AND COMMERCE
KULAGAON – BADLAPUR

CERTIFICATE
This is to certify that Ms. SHARMILA SURESH THANAGE has worked and duly
completed her project work for the degree of Bachelor of Banking and insurance studies
under the faculty of commerce in the subject of project is entitled, “ROLE OF SMALL
INDUSTRIAL DEVELOPMENT BANK OF INDIA” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been done submitted previously for any degree or diploma of any university.
It is her own work and facts reported by her personal finding and investigation.

SFC Coordinator Project Guide

(ASST. PROF. PRINCE DHARAMSHI) (PROF. SHREYATA SHENOY)

External Guide Principal

(DR.VAIDHEHI DAPTARDAR)
 DECLARATION
I the undersigned Ms. SHARMILA SURESH THANAGE here by, declare that the work
embodied in this project work titled “ROLE OF SMALL INDUSTRIAL DEVELOPMENT
BANK OF INDIA”, form my own contribution to the research work carried out under the
guidance of PROF. SHREYATA SHENOY is a result of the research work carried out under
the guidance of not been previously submitted to any other University for any other
degree/diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

MS. SHARMILA S. THANAGE

(TY-BBI)
CERTIFED BY
(PROF. SHREYATA SHENOY)
 ACKNOWLEDGMENT
To list who all have helped me is difficult they are so numerous and depth is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of the project.
I take this opportunity to thank the University Of Mumbai for giving me chance to do this
project.
I would like to thank my Principal, DR.VAIDEHI DAPTARDAR for providing the
necessary facilities required for completion of the project.
I take this opportunity to thank our coordinator ASST. PROF. PRINCE DHARAMSHI for
her moral support and guidance.
I would also like to express my sincere gratitude towards my project guide PROF.
SHREYATA SHENOY whose guidance and care made the project successful.
I would like to my College Library, for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my parents and peers who supported me throughout
my project.
INTRODUCTION

The Small Industries Development Bank of India (SIDBI)

was set up by the Government of India under special Act passed by Parliament in
October 1989 but SIDBI has been starting the work since April 2, 1990. It is the wholly-
owned subsidiary of Industrial Development Bank of India (IDBI).
SIDBI became operational on April 2, 1990. SIDBI has taken over the outstanding
portfolio of IDBI relating to Small Scale Sector worth over Rs. 4,000 Crore. The
authorized capital of SIDBI is Rs. 250 Crore which could be increased to Rs. 1,000
Crore.
SIDBFs headquarter is situated at Lucknow (Appendix III & IV). It have five
regional offices, 5 zones and 21 branch offices when it was started in SIDBI.
different parts of India but now SIDBI has 73 Branches, 5 Regional Offices across
the country.
After the establishment of Small Industries Development Bank of India
(SIDBI), all duties related to small scale enterprises which are performed by
Industrial Development Bank of India (IDBI) have been shifted to SIDBI.
The Small Scale Industries (SSIs) sector is a vibrant and dynamic sector of SIDBI.
of the Indian economy. The sector presently occupies an important place and its
contribution in terms of generation of employment, output and exports is quite
significant. The Small Scale Industries sector including tiny units comprises the
domain of SIDBI's business. Besides, the projects in the services sector with total
cost up to Rs.250 million are also taken within the area of SIDBI's operations. The
Bank also finances industrial infrastructure projects for the development of SSI
sector. The objectives of Government policy have been to impart vitality and growth
impetus to the sector by removing bottlenecks that affect the growth potential. In the
liberalized era and emerging economic scenario, the sector is assured of continued
support.
SIDBI and the others banks have embraced technology right from the inception of
their operation and therefore they have adapted themselves to the changes into the
changes in the technology easily. Whereas the public sector of SIDBI releted of
banks
banks (PSBs) and the old private sector banks have not been able to keep pace with
these developments.
SIDBI is the subsidiary bank of the IDBI, has also adopted the same strategy,
and SIDBI already transformed itself into a universal bank. Now the
process of progeny IDBI bank merging itself with the parent IDBI is underway
and is likely to be completed soon. This trend may lead logically to promote the
concept of financial super market chain and making available all types of
SIDBI.A
credit and non-ftind facilities under one roof or specialized subsidiaries which is
under one umbrella organization. There is a need to review our regulatory
framework not only in the light of the global developments that have been
mentioned, but also due to domestic compulsions.
SIDBI (Small Industries Development Bank of India) is now the

principal financial institution and for the purpose of promotion, financing and
development of small scale industries in the country. It coordinates the functions of
existing institution on engaged in similar activities.
According to SIDBI has taken over the responsibility of administering Small
Industries Development Fund (SIDF) and National equity fund (NEF) which were
earlier administered by IDBI.
As on March 31, 2008, the bank had on its rolls a total of 911 staff comprising
728 officers, 106 class III staff and 77 Subordinate Staff. Of the staff as on March 31,
2008, 168 belonged to scheduled tribes (STs) and 97 to other backward classes
(OBCs). The Staff strength was inclusive of 14 employees in Ex-servicemen and 13
employees in Physically Challenged categories. The strength of woman employees has
gone up to 186 from 159 as at the end of previous year.
As of March 31, 2008 SIDBI earned net profit of Rs. 198 crore. SIDBI
has helped a number of MFIs in developing a wide range of promised provider; SIDBI
slowed an excellence performance in micro credit opportunity to 168% in sanction &
119% in disbursements over the country.
SIDBI is committed to developing a strong, vibrant and responsive industry of SIDBI

small-scale sector. This commitment is to be achieved through a variety of means.

Principal amongst them is finance. Alongside finance, SIDBI provides appropriate
support in the form of promotional and developmental services. SIDBI has been built
up as a financially sound, vibrant, forward looking and technically oriented institution
and, it intends to sustain this orientation in future. SIDBI intends to provide qualit>'
services to its clients, devoid of any systemic and procedural difficulties.
Since in inception, SIDBI has been endeavouring to meet the diverse
needs of the Small and Medium Enterprises (SME) sectors through various tailor-
made schemes and fulfill its vision i.e. "To emerge as a single window for meeting
the financial and developmental needs of the Micro Small Medium Enterprises
(MSME) sector to make it strong, vibrant and globally competitive, to position
SIDBI Brand as the preferred and customer - friendly institution and for
enhancement of share-holder wealth and highest corporate values through modern
technology platform
SIDBI – Small Industries Development Bank of India & its Functions
SIDBI was made responsible for administering Small Industries Development Fund and
National Equity Fund that were administered by IDBI before. SIDBI is the Primary Financial
Institution for promoting, developing and financing MSME (Micro, Small and Medium
Enterprise) sector.

Besides focussing on the development of the Micro, Small and Medium Enterprise
sector, SIDBI also promotes cleaner production and energy efficiency. SIDBI helps
MSMEs in acquiring the funds they require to grow, market, develop and commercialize
their technologies and innovative products. The bank provides several schemes and also
offers financial services and products for meeting the individual’s requirement of various
businesses.
Finance Facilities Offered by SIDBI
Small Industries Development Bank of India, offers the following facilities to its customers:

1. Direct Finance
SIDBI offers Working Capital Assistance, Term Loan Assistance, Foreign Currency Loan,
Support against Receivables, equity support, Energy Saving scheme for the MSME sector,
etc.

2. Indirect Finance
SIDBI offers indirect assistance by providing Refinance to PLIs (Primary Lending
Institutions), comprising of banks, State Level Financial Institutions, etc. with an
extensive branch network across the country. The key objective of the refinancing
scheme is to raise the resource position of Primary Lending Institutions that would
ultimately enable the flow of credit to the MSME sector.
3. Micro Finance
Small Industries Development Bank of India offers microfinance to small
businessmen and entrepreneurs for establishing their business.

Functions of SIDBI (Small Industries Development Bank of India)

1. Small Industries Development Bank of India refinances loans that are extended by the
PLIs to the small-scale industrial units and also offers resources assistance to them

2. It discounts and rediscounts bills of SIDBI

3. It also helps in expanding marketing channels for the products of SSI (Small Scale
Industries) sector both in the domestic as well as international markets

4. It offers services like factoring, leasing etc. to the industrial concerns in the small-
scale sector

5. It promotes employment oriented industries particularly in semi-urban areas for

creating employment opportunities and thus checking relocation of people to the urban
areas

6. It also initiates steps for modernisation and technological up-gradation of current units

7. It also enables the timely flow of credit for working capital as well as term loans to
Small Scale Industries in cooperation with commercial banks

8. It also co-promotes state level venture funds.

Benefits of SIDBI
1. Custom-made
SIDBI policies loans as per the requirements of your businesses. If your requirement doesn’t
fall into the ordinary and usual category, Small Industries Development Bank of India would
assist funding you in the right way.

2. Dedicated Size
Credit and loans are modified as per the size of the business. So, MSMEs could avail
different types of loans custom-made for suiting their business requirement.

3. Attractive Interest Rates

It has a tie-up with several banks and financial institutions world over and could offer
concessional interest rates. The SIDBI has tie-ups with World Bank and the Japan
International Cooperation Agency.

4. Assistance
It not just give provides a loan, it also offers assistance and much-required advice. It’s
relationship managers assist entrepreneurs in making the right decisions and offering
assistance till loan process ends.

5. Security Free
Businesspersons could get up to INR 100 lakhs without providing security.

6. Capital Growth
Without tempering the ownership of a company, the entrepreneurs could acquire adequate
capital for meeting their growth requirements.

7. Equity and Venture Funding

It has a subsidiary known as SIDBI Venture Capital Limited which is wholly owned that
offers growth capital as equity through the venture capital funds which focusses on MSMEs.
8. Subsidies
SIDBI offers various schemes which have concessional interest rates and comfortable terms.
SIDBI has an in-depth knowledge and a wider understanding of schemes and loans available
alc Information Memorandum is approved by MSME entrepreneur. The accredited
consultants would then submit the Basic Information Memorandum to Small Industries
Development Bank of India.

STEPS FOR SIDBI

Step 1: In case required, the proposal would be rated by the rating agency which is approved
by the Reserve Bank of India.

Step 2: SIDBI would directly handle the below-mentioned cases:

i. SIDBI would offer equity or quasi-equity to the existing units that are growth- oriented
ii. The bank would finance units which are in the service sector
iii. It would offer credit to MSMEs for Cleaner Production Processes and Energy
Efficient.

Step 3: For other cases, the application for the loan would be submitted to the Public-Sector
Banks. SIDBI (Small Industries Development Bank of India) has an MOU (memorandum of
understanding) with the public-sector banks for the issuing loans. Small Industries
Development Bank of India would help the entrepreneur at each stage until the loan is finally
processed. MSMEs stands a better chance of availing the loan in time and also could avoid
needless delays.

ROLE OF FINANCIAL INSTITUTION :

SIDBI ABOUT SIDBI
SIDBI, a wholly owned subsidiary of Industrial Development Bank of India,
was established in April 1990 as the principal financial institution for
promotion, financing and development of SSI sector, under an Act of
Parliament namely the SIDBI Act, 1989. SIDBI also co-ordinates the functions
of other financial institutions engaged in similar kind of activities and,
therefore, it has been receiving special attention in Central
State govemmenfs policies. It has successfully completed 10 years of service to the
small-scale sector with a network of 33 branches, 5 regional offices and head
office at
The measures initiated by Government of India in August 1991 helped
SSI sector both quantitatively and qualitatively. The measures aimed at
harnessing the potential of the small-scale sector, by removing the
obstacles affecting their growth and consolidating their strengths. Around
1991, economy was passing through a restructuring phase, which necessitated
the launching of structural reforms. Government aimed at stabilisation
programme through necessary measures in the areas of industrial policy,
public sector, fiscal policy, foreign investment, trade policy, monetary and
credit policies. SIDBI has been refining its
strategies, policies and programmes from time to time for the development of
small-scale sector. SIDBI has succeeded in facing challenges while assisting the
sector and has emerged as a vibrant institution during the course of the decade of
its operations. The Bank, thus, has been rated as one ofthe top 25 Development
Banks ofthe world by ‘The Banker’, London.
The year 2000 saw delinking of SIDBI from IDBI as subsidiary. It is in
pursuance of the amendments approved by the Parliament, making it
eventually not less than 51 per cent owned by IDBI/LIC/GIC/public sector
banks and Government controlled institutions and the rest by public. The
restructuring of SIDBI is on cards, as a sequel to amendments to SIDBI Act.
The Bank has been delinked from IDBI w.e.f. March 27, 2000.
OBJECTIVES
SIBDI’s statue provides that it should serve as the principal financial
institution for:
- promoting,

- financing,
- developing the industries in the small-scale sector, and
- co-ordinating the functions of the other institutions engaged in
similar activities.

Functions
The major functions of SIDBI include :
1. Refinancing ofloans and advances (extended by PLIs);
2. Discounting and rediscounting of bills;
3. Extending seed capital / soft loan assistance under National Equity
Fund, Seed Capital under Mahila Udyam Nidhi Scheme;
4. Direct assistance and refinance for financing exports of SSI sector;

5. Providing factoring and leasing services;

6. Extending financial support to SSIDC and NSIC.
6.4 SIDBI’S STRATEGY IN DEVELOPING SSIs
SIDBI, as an apex institution, has played a proactive role in reaching out
financial and support services to SSIs with the help of credit delivery structure
and support service agencies. SIDBI has developed tailor-made schemes to cater
specific requirements of SSIs. It co-promotes new intermediaries and
strengthens the existing network of institutions engaged in development of
small-scale sector. In this manner it supplements the efforts of primary lending
institutions
ENTREPRENEURSHIP
SIDBI has operationalised a number of programmes to promote
entrepreneurship and strengthen the existing enterprises to become
competitive. It has laid emphasis on employment generation and livelihood
improvement of the rural poor by encouraging them to under take income
generating activities through self-employment ventures. To
strengthen the existing SSI enterprises, it provides financial and non financial assistance
for technological upgradation, marketing, quality
certification and human resources development.

OPERATIONS OF SIDBI
SIDBI has emerged as a major purveyor of a wide variety of financial services to
the small-scale sector. At present, the bank provides soft-loan or quasi-equity
assistance, term loan - both in rupee and foreign currencies, working capital term
loan, bills discounting for equipments and components, factoring services,
venture capital support and different
forms ofresource support to intermediaries engaged in assisting the small scale sector.

SOCIAL SECTOR FUNDING – AN EYE ON IMPACT

Impact Bonds-
As innovation continued in the segment of social sector funding, a more later entrant on
the horizon is the “Pay for Success” model in the form of Social Impact Bond (SIB) and
Development Impact Bond (DIB). Under these models, the Non-Govt investors cover the
upfront costs of the project implemented by the service provider and the Govt or a
development agency would commit to provide a return if desired outcomes are achieved.
Public funding is freed from the risk of uncertain outcomes and Govt would pay only if
the desired social outcomes are achieved. Risks are spread across investor pool. Since
returns are tagged to results, projects covered would be those where impact is clearly
measurable.
Status in India-

India has been an experimental ground for DIB. The world’s first DIB was launched in 2015
in India. The DIB was called “Educate Girls” and aimed to improve learning outcomes and
enrolment numbers for out-of-school girls. It targeted 18,260 school- going children in the
Bhilwara district of Rajasthan. UBS Optimus Foundation is the private funder and the
Children’s Investment Fund Foundation (CIFF) is the outcome payer. According to the final
evaluation report, the programme has been a success achieving more than the outcomes
prescribed.

Apart from this, another Bond was launched on November 2017 with the theme of
maternal and newborn deaths, known as the Utkrisht Impact Bond, to provide quality of
care in 440 private healthcare facilities to positively impact 600,000 pregnant women in
Rajasthan. Recently, philanthropic foundations including Tata Trust has announced a
DIB, to improve the education outcome of 3 lakh students in Delhi & Gujarat.

SIDBI Leading the way-

Leading the way, SIDBI has joined hands with World Bank & UN Women, to launch a
new SIB, exclusively for women, called Women’s Livelihood Bond (WLB), with an
initial corpus of `300 crore. The WLB will offer a fixed coupon rate of 3%. SIDBI will
act as the financial intermediary and channel the funds raised to women entrepreneurs
through participating financial intermediaries like Banks, NBFCs or MFIs, which will
on-lend to women entrepreneurs at an interest rate of around 13-14
%, as against the current lending rates of 20-24% p.a.

SIDBI’s Objectives
SIDBI majorly follows four major objectives which are development, promotion,
coordination and financing. Some of its key functions incude:

SIDBI extends financial support to Supplemental Security Income (SSIs), and other service
sectors
It provides indirect finance through banks, NBFCs, SFCs and other financial institutions
SIDBI aims to create equilibrium in the financial sector by strengthening credit flows and
promoting skill development
Products offered by SIDBI
SIDBI covers mainly 6 products under Direct Loans that are discussed below:

Direct Loans
Under Direct Loans, there are 6 main loan schemes, which are: SIDBI Make in India Soft
Loan Fund for Micro Small and Medium Enterprises (SMILE), Smile Equipment Finance
(SEF), Loans under Partnership with OEM, Working Capital (Cash Credit), SIDBI Trader
Finance Scheme (STFS) and Loan for Purchase of Equipment for Enterprise’s Development
(SPEED).

SMILE (SIDBI Make in India Soft Loan Fund for MSME): SMILE focuses on covering
the financial requirements for new enterprises which are in the manufacturing or in the
services sector. The loan amount offered under this scheme is minimum Rs. 10 lakh for
equipment finance and Rs. 25 lakh for other purposes. Repayment tenure is maximum of
10 years, including moratorium period of up to 36 months
SMILE Equipment Finance (SEF): SEF has a simplified application format with
competitive interest rate. MSME entities that want to purchase any new equipment or
need financing for the same are covered under this loan scheme. Repayment period is of
72 months and the loan amount starts from Rs. 10 lakh
Loans under Partnership with OEM (Original Equipment Manufacturer): This loan
scheme is helpful for MSMEs that can purchase machines from OEMs. Minimum 3
years of business existence is required and the repayment period is of 60 months. Loan
amount offered is maximum up to Rs. 1 crore
Working Capital (Cash Credit): Working Capital is available for MSME units. Working
Capital offers seamless approvals, as per the loan applicant’s requirement
SIDBI Trader Finance Scheme (STFS): STFS loan scheme is for MSME
Retails/Wholesalers who are in existence for at least 3 years with a satisfactory financial
position. The minimum loan amount offered is Rs. 10 lakh and maximum up to Rs. 1
crore. However, the repayment period shall depend on the cash flow and size of business
Loan for Purchase of Equipment for Enterprise’s Development (SPEED): Under this loan
scheme, SIDBI offers 100% financing with loan amount up to Rs. 1 crore for New to Bank
and Rs. 2 crore for existing customers. Minimum 3 years of operations are required to get this
loan wherein the repayment period is 2 to 5 years. Borrowers can avail this loan at an interest
rate of 9.25% to 10% per annum SIDBI venture capital.
This loan scheme covers some major initiatives which take care of start-up funding. This
includes Start-ups Lifecycle along with SIDBI’s interventions, Funds of Funds for Start-ups,
Aspire Fund and India Aspiration Fund.
Start-ups Lifecycle along with SIDBI’s interventions: There are new start-ups and
ventures in the field of business that require the right funding from time to time. This
initiative helps in providing the funds with the help of banks, NBFCs and SFBs
Funds of Funds for Start-ups: The Government of India started with this initiative to
support various Alternate Investment Funds (AIFs) with the idea that it will bring some
contribution to the start-up businesses. It aims to support the growth and development of
the enterprises which are innovation driven
Aspire Fund:Aspire fund focuses on providing financial backing to start-ups who are in
the initial stages of setting up manufacturing and services
India Aspiration Fund:With the support of RBI, India Aspiration Fund was set up in
order to promote equity and equity based investments in start-ups and the MSME sector

SIDBI’s Indirect Finance

Under Indirect Finance, there are schemes where financial assistance is provided to banks,
NBFCs and SFBs.
Assistance through Banks, NBFCs, and SFBs: Indirect Finance is provided to Banks, NBFCs,
SFBs and MSMEs
Assistance to NBFCs:NBFCs which include the loan companies as well that are
registered with RBI help in providing financial assistance to enterprises in the MSME
sector
Refinance Schemes: Assistance is provided to banks that are financially stable through
the refinance schemes
Assistance to Small Finance Banks (SFBs): In order to strengthen the SFBs equity and
resource base, this scheme was introduced. This scheme focuses on providing refinance
support to SFBs
Micro-Lending
There are three main schemes under Micro Lending namely Micro Lending Development
Department, Responsible Finance Initiatives and Beyond Microfinance
Micro-Lending Development: The mission of Micro-Lending Development is to create
an institution and provide micro financial services to the people who are economically
weak, including women responsibale finance initatives .
Responsible Finance Initiatives:In the light to promote cooperation and the right
lending practices in the financial sector, this loan scheme comes as a big support to the
banks and other financial institutions in the country
Beyond Microfinance: This loan scheme helps the entrepreneurs to graduate from micro
finance to a higher ticket size at an affordable rate.

Small Industries Development Bank of India

Small industrial Development Bank of India (SIDBI) is a development financial institution in
India, headquartered at Lucknow and having its offices all over the country. Its purpose is to
provide refinance facilities and short term lending 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 on
April 2, 1990, through an Act of Parliament. It is headquartered in Lucknow.[2] SIDBI
operates under the Department of Financial Services, Government of India.

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".
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. And by capturing the sentiment of exporters and importers, it will
also offer actionable indicators on foreign trade.[9][10]
SIDBI in association with TransUnion CIBIL launched "MSME Pulse", 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.
[11]
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.[12][13] 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. [14]

Other activities SIDBI has floated several other entities for related
activities, including:
SIDBI Venture Capital Limited (SVCL)[15] - 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)[16] to enable faster realisation of receivables by
MSMEs;
SMERA Ratings Limited (SMERA)[15] - for credit rating of MSMEs, renamed as Acuite
Ratings & Research Limited.[17];
India SME Technology Services Ltd (ISTSL)[15] - for technology advisory and consultancy
services and
India SME Asset Reconstruction Company Ltd. (ISARC)[15] 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.

Probability Analysis
The profit performance of SIDBI is measured on the basis of interest income, interest
expense, spread, non-interest income, non-interest expense, burden, total income, total
expense and net profit. In addition, profitability analysis has been made by using various
profitability and solvency ratios. The profitability ratios used are
interest income as percentage to total income, interest expense as percentage to total
expense, spread as percentage to working funds, non-interest income as percentage to total
income, non-interest expense as percentage to total expense, burden as
percentage to working funds, operating expenses as percentage to total expenses,
return on advances, return on investments, return on funds, cost of funds, return on assets and
return on equity. Further, the solvency position of the bank has been
analysed by using ratios like long-term funds as percentage to total assets, net- worth
ratio, debt-equity ratio and credit-deposit ratio. The data has been compiled from the
annual reports of SIDBI. The profitability and solvency ratios of the bank are presented in
tables given below.

GROWTH OF INTEREST INCOME, INTEREST EXPENSE AND

SPREAD
The interest income of SIDBI comprises of interest and discount on loans, advances and
bills. The bank incurs interest expenditure in the form of financial charges every year.
The difference between interest received and interest paid is known as spread. A higher
interest spread is a positive indicator for bank‟s
profitability. Table 6.1 presents interest income, interest expense and spread of SIDBI
for the period 1990-91 to 2012-13.
Table 6.1 depicts that the interest income of the bank has increased from Rs
401.79 crore in 1990-91 to Rs 4624.84 crore in 2012-13 and registered a growth rate of 11.75
per cent during the period. The interest expenses of the bank also increased from Rs 377.29
crore in 1990-91 to Rs 3039.25 crore in 2012-13 and the growth rate
was 9.95 per cent over the same period. The table further indicates that interest spread
of the bank increased from Rs 24.50 crore in 1990-91 to Rs 1585.58 crore in 2012-13 and
recorded growth of 20.87 per cent over the period. The overall average interest
income was Rs 1507.72 crore, interest expense was Rs 1047.71 crore and spread was Rs
460.01 crore respectively. Further, the interest spread showed greater degree of variation
(CV=100.9) as compared to interest income (CV=74.78) and interest
expense (CV=64.67) during the study period
MULTIVARIATE PROFITABILITY ANALYSIS OF SIDBI
An attempt has been made to evaluate the impact of different variables on the
financial performance of the bank. For this purpose, correlation analysis and step- wise
regression analysis have been applied.

CORRELATION ANALYSIS
The correlation analysis has been used to study the interdependence between two or more
variables. This relationship has been studied between the dependent
variable i.e. return on assets (Y) and sixteen independent variables, namely, interest income
as percentage to total income (X1), interest expense as percentage to total expense (X2),
spread as percentage to working funds (X3), non-interest income as
percentage to total income (X4), non-interest expense as percentage to total expense
(X5), burden as percentage to working funds (X6), operating expenses as percentage to
total expenses (X7), return on advances (X8), return on investments (X9), return on
funds (X10), cost of funds (X11), return on equity (X12), long term funds as percentage
to total assets (X13), net-worth ratio (X14), debt-equity ratio (X15) and credit-deposit
ratio (X16). The correlation coefficient matrix of SIDBI, for the period 1993-94 to
2012-13 has been given in Table 6.7.
It has been observed from the table the credit-deposit ratio (0.642) has positive
and statistically significant correlation with return on assets (Y) at 5 per cent level of
sinificance. The analysis also revealed that return on advances (0.502) and return on
funds (0.525) have also positive and statistically significant correlation with return on
assets (Y) at 1 per cent level of significance. Further, X1 (0.267), X2 (0.372), X3 (0.425),
X9 (0.222), X11 (0.172), X12 (0.252) and X14 (0.21) have also shown
position relationship with (Y). The other six variables, namely, non-interest income as
percentage to total income (-0.267), non-interest expense as percentage to total expense (-
0.372), burden as percentage to working funds (-0.077), operating
expenses
as percentage to total expenses (-0.366), long term funds as percentage to total assets
(-0.191) and debt-equity ratio (-0.333) have negative correlation with return on assets ratio of
the bank.
It has been also evident from the table, that some variables out of the sixteen independent
variables are significantly correlated with each other. Interest income as percentage to
total income has (X1) positive significant correlation with seven other variables namely,
X3, X4, X6, X8, X10, X12 and X14. Similarly, interest expense as percentage to total
expense (X2) has positively correlated with X12. Thus, it can be concluded that although
the variables are significantly correlated with each other, none of the coefficients
provides evidence of presence of multicollinearity between the independent variables
(X1 to X16).
Origin of SIDBI
In order to promote small scale industries in the country, a special Act was passed in
Parliament in April 1990 for starting of Small Industries Development Bank of India.
SIDBI is a wholly owned subsidiary of IDBI. It is providing assistance to all those
institutions which are promoting small scale industries.

Capital of SIDBI
SIDBI has an authorised capital of Rs. 1000 crores which can be increased to Rs. 1000
crores. The RBI has also allocated INR 10,000 Crores to SIDBI for various venture
capital activities and company startups in 2015. The entire operations of IDBI connected
with small scale industries are now handed over to SIDBI.
Functions of SIDBI
Coordinating and financing the various institutions involved in the development of small
industries are undertaken by SIDBI.

lts functions are

Refinance to SSI:
Refinancing loans and advances provided by commercial banks to small scale industrial
units. Different types of loans are given to small scale industries and as per the
recommendations of Nayak Committee, additional funds have been given to commercial
banks for promoting more borrowings of small scale industries. In fact, there are
commercial banks with separate branches meant exclusively for small scale industries.

Discounting the bills of SSIs:

Apart from discounting the bills of small scale industries, even hurdles arising out of
financing small scale industries are being discounted. The bank credit has gone up to Rs.
2,18,219 crores. The percentage of bank credit to SSI has gone up to 17.5.

SIDBI offers assistance to exports:

Direct assistance to export oriented units and also to import substituting units in the small
scale sector is given the highest priority. There has been a simplified procedure for the
exports of small scale industries. Products of SSI exporters are displayed in international
exhibitions with the help of SIDBI. Other export related
expenditures are borne by SIDBI. Latest packing standards and training programmes on
packing for exports are also financed by SIDBI. Trade delegations and sales and study teams
are sponsored for small scale sector under Marketing Development Assistance scheme.

ANALYSIS OF FINANCIAL POSITION OF SIDBI

As a financial analyst should not be interested in the performance
of a business enterprise during a short period of time because a
organization which is financially sound today may eventually lose
its strength in the long period if it suffers prolonged losses. In this
chapter financial position of SIDBI has been analyzed with
various angles.
1. The financial strength of SIDBI has been analyzed through
Equity Paid Up, Net worth, Reserve Funds, Capital Employed,
Gross Block, Out Standing Portfolio, and Advance / Loans Funds
(%) ratio.
2. During the study period equity paid up capital of SIDBI
remains stable.
3. Trends in the reserve surplus of SIDBI have shown an
increasing trend during the study period.
4. The average capital employed in the SIDBI was Rs. 14326.78
during the study period.
5. In the gross block of assets of SIDBI has shown fluctuating
trends.
6. Outstanding portfolio of SIDBI has shown decreasing trends
during the study period.
7. Advance / Loans Funds (%) ratio of the SIDBI for the study
period of 1999-2000 to 2003-05 was always more than 104
percent.
8. For the purpose of analysis in the present study following
ratios were used i.e., Return on Capital Employed, Return on Net
Worth, Earning Per Share and Book Value Per Share.
9. The result of analysis indicates during the study period ROCE
and RONW has shown declining trends. The average ROCE and
RONW during the study period were 7.1 percent and 5.40 percent.
10. Earning per share of SIDBI has shown decreasing trends in the
first four years of study period and it slightly increase in last year of
the study.
11. During the study period book value per share of SIDBI has
shown increasing trends in the first four years of the study
period and in last years it remains stable.
12. The analysis of activity of SIDBI has been made through
Total Income, Total Income / Capital Employed (%), Average
cost of funds (%), and Margin (%) ratio.
13. The total income trends of SIDBI has shown declining
trends during the study period.
14. The average ratio of total income to capital employed ratio of
SIDBI was 10.40 percent and shown declining trends during the
study period.
15. The average cost of funds of SIDBI was around 10 percent in the
first three years of study period and in last year it was 6.4 per cent.
16. Margin ratio of SIDBI has also shown declining trend during
the study period.
17. The assets quality of SIDBI has been analyzed with the help of
Standard Assets as percentage of Total Assets, Capital to Risk Assets
Ratio (%), and Debt-equity ratio.
18. The Standard Assets as percentage of Total Assets ratio of
SIDBI has shown declining trends during the study period and in last
year it was 92 percent which indicates the NPA has been increased
during the study period.
19. The average Capital to Risk Assets Ratio of SIDBI was 39.3
percent and shown an increasing trends during the study period which
is a good sign for SIDBI.
20. The debt equity ratio has shown declining trends during the
study period.
21. The liquidity and turn over position of SIDBI has been
analyzed through current ratio and loan turnover ratio.
22. The current ratio of SIDBI has been decreased during whole
study period but average current ratio of whole period of SIDBI
was 5.09 times indicates a satisfactory position.
23. The average loan turnover ratio of SIDBI was 0.12 times,
which was quite stable during the study period.

RIGHT TO INFORMATION ACT

RIGHT TO INFORMATION ACT (ACT NO.
22/2005) 1.ABOUT THE ACT
The Parliament has enacted The Right to Information Act, 2005 which received the
President’s assent on 15th June 2005 and was notified in Official Gazette on 21st June 2005.
It extends to the whole of India except the State of Jammu & Kashmir. Under the Act.

2. PUBLIC AUTHORITY
The expression "Public Authority" means :-
Any authority or Body or Institution of self-government established or constituted:
(a) by or under constitution, (b) by any other Law made by Parliament, (c) by any other Law
made by State Legislature, (d) by Notification issued or Order made by the appropriate
Government, etc.
3. WHAT IS RIGHT TO INFORMATION ?
The right to information includes an access to the information which is held by or under
the control of any public authority and includes the right to inspect the work, document,
records, taking notes, extracts or certified copies of documents/records and certified
samples of the materials and obtaining information which is also stored in electronic
form.

4. THE INFORMATION WHICH IS EXEMPT FROM DISCLOSURE

The Act provides under sections 8 & 9, certain categories of information that are exempt
from disclosure to the citizens.
Any person desirous of obtaining information is advised to refer to the relative sections
of the Act before submitting a request for information.

5. WHO CAN REQUEST FOR INFORMATION ?

Any citizen can request for information by making an application in writing or through
electronic means in English/Hindi/official language of the areas, in which the application
is being made together with the prescribed fees.
The application has to be sent directly to the Central Public Information Officer at
Lucknow or through Central Assistant Public Information Officer.

6. WHOM TO APPROACH FOR INFORMATION & APPEALS ?

The Bank has designated the In-charges of the respective Branches Offices as Central
Assistant Public Information Officers (CAPIOs) and a GM at HO, Lucknow as Central
Public Information Officer (CPIO), The CAPIOs will collect the requests for information
from citizens and forward the same to the CPIO for disposal as per the provisions of the
Act.
The CAPIOs will collect the requests for information from citizens and forward the same
to the CPIO for disposal as per the provisions of the Act.
It is hereby informed that any person, who does not receive a decision within the time
specified under the Act or is aggrieved by a decision of the CPIO, may within 30 days
from the expiry of such period or from receipt of such a decision prefer an appeal to the
Appellate Authority viz. Chief General Manager of the Bank.
The details of the CAPIOs, CPIO and the Appellate Authority are available at the Bank's
website.
7. HOW TO ACCESS THE BANK'S INFORMATION ?
The particulars of Organisational Structure, Bank's branch / zonal / regional office
network, products and services etc. are provided on the Bank’s website under relevant
heads.

Features of SIDBI:
Since 1992-93 SIDBI liberalized its term of assistance and amplified procedure
with a view to widen its scope for large coverage of schemes. Some of salient
features of SIDBI can be listed as follows.
(a) SIDBI has been operating Single Window Scheme (SWS) which is
enlarged to cover units in identified area. The extent of refinance
against cash credit sanctioned by banks under SWS was raised from 50
to 70 percent.
(b) SIDBI provide refinance faciHties under Automatic Refinance
Scheme (ARS). The limit of term loans under ARS was initially fixed
at RS. 10 lakhs but was raised later to Rs. 50 lakh and the extent of
refinance has been raised from 75 to 90 percent.
(c) SIDBI has introduced equipment financing for assistance to existing
well-run small-scale units for technology up gradation
modernization.
(d) SIDBI has introduced refinance scheme for resettlement of voluntary
retired worker of National Textile Corporation (NTC) and help
them to buy up to four looms.
(e) SIDBI has set up a venture capital fond to assist entrepreneurs with in a
short span of time; SIDBI has emerged as a major player in the field of
finance for the small scale sector. ^
SIDBI Plan to Develop Alternate Market for Small Scale Industries: At a
time when focus of attention is on ICE Stock information, communication and
entertainment the Small Industries Development Bank of India is making effort
to develop alternative market for small scale Industries (SSIs) in the new
millennium.
The whole idea of SIDBFs present exercise in bring about greater corporation
of SSI sector and encourage growth limited companies, which are in better
position to access funds in the form of equity debt: "SSIs are characterized by a
very low equity base and, therefore, any improvement in equity capital will bost
their capacity to withstand competition in the market source added. The report
deal with the changes required in the setting up of existing capital market to
make them accessible and suitable to SSIs and development of a alternative
markets for equity and debt tailored for the Small -Scale Sector. These
recommendations will also be useful for the Union. Finance Ministry for
framing suitable policies and bringing about modification in the existing
policies relevant to SSIs sector. According to available statistics, a large
majority SSI units (nearly 80% are
proprietorship, while 17 are partnership only 2% comprising about 60,000
units) are limited companies. Further, tentative estimates, indicate that even if these
units raised 50j percent of their capital requirement from the market, the size would
be of order of Rs. 5000 crores.

Assistance Provided by SIDBI

SIDBI provides assistance mainly to the small scale units through the
channel of assistance. SIDBI provide financial assistance to small scale
industries have three major dimension.
1- Indirect Assistance to Primary Lending Institution (PLIs).
2- Direct Assistance to small scale units and

3- Development and Support Services (DSS)

1. Indirect Assistance:
SIDBI's scheme of indirect assistance credit to small scale industries through a
large number of 913 PLIs (Primary lending institutions) spread across the country
with the branch network of over 65000. The assistance is provided by way of
refinance, bills rediscounting and resource support in form of short term loan/ line
of credit in lieu of refinance etc.

2. Direct Assistance;
The objective behind SIDBI direct assistance has been to supplement the
efforts of PLIs by identifying the gaps in existing creding delivery
mechanisms for small scale industries. Direct assistance provided under
several tailor made scheme to Small Scale Industries Development Bank of India. 41
regional branch offices spread across the country.
During 1997-98 sanctioned under direct finance product
increased by, 2.7% to Rs 2655 crore forming 35.5% of total sanctioned
for assets creadon while disbursement accounting marginally by 2%
to Rs. 7%, crores accounting for 33.8% of assistance for asset creation.
Sanctioned rupee and foreign currency loans increased .by 79.2% and 262.6%
respectively to Rs. 895 crore and Rs. 306 crore. Sanctioned under the equity
type assistance schemes viz. National Equity Fund (NEF), seed capital,
SUMFEX and Mahila Udyam Nidhi amounted Rs. 3 crore recording a growth
of 36.6 percent.

4. Development and Support Services:

The banks extends development and support services in the form of loan and
grants to different agencies working for the promotion and
development of Small Scale Industries or Tiny Industries over the year. The
Initiative of SIDBI under promodonal and developmental activities have
crystallized in to the following areas.
(i) Enterprise permotion with emphasis an rural industralised.
(ii) Human Resource Development (HRD) to suit the Small Scale
Industries sector needs.
(iii) Technology upgradation

(iv) Quantity and Environment Management.

(v) Marketing and promotion , and
(vi) Information Dissemination.

Structure of SIDBI
SIDBI attaches a great deal of importance to the cornerstones of good
corporate governance particularly the clear division of responsibility,appropriate checks and
balances. The policy and strategic decisions,
monitoring of performance and other important matters are dealt with by the' Bank
at the level of Board of Directors. As regard operational matters, the bank has
decentralized the process of decision-making with adequate delegation of powers.
SIDBI is operating through its head-office at
Lucknow, with a network of 6 regional and sixty-three branch offices in the
country. Since its inception, SIDBI is doing well in the area of financing SSIs.
Small Industries Development Bank of India Act provides for a
fifteen-member board of directors. Out of these eight members or directors are
appointed by the Central Government, three directors are nominated by the
three largest share holding institutions, banks and insurance companies owned
and controlled by Central Government, and four are elected by the public share
holders.
The Bank has constituted subcommittees of the Board namely Executive
Committee (EC), Audit Committee (AC) and Empowered
Committee on Micro Finance (ECM). Besides, there are committees of the
officials of the Bank viz. Central, Zonal Branch Credit, settlement and
promotion and development proposals. Credit proposals and other operational
matters are considered by the EC. The AC in addition to overseeing the
functioning of the Audit Department and reviewing its major observations and also
provide guidance is matters relating to finalisation of accounts of Bank and ECM
guiding the Bank in matters pertaining to micro finance.

Importance of SIDBI as a source of financing small scale industries:

SIDBI provide financial assistance in the form of:

1. Direct Assistance:
SIDBI has evolved itself to meet the various requirements of the Small &
Medium Enterprises (SME) sector by directly offering various
financial products and services. Some of the major schemes of SIDBI under
direct assistance are:

A. Term Loan Assistance

Term Loans are provided for i) setting up new projects and for technology up
gradation, diversification, expansion, etc. of existing SMEs,
ii) service sector entities like hotels, tourism related activities, entertainment
parks, hospitals/nursing homes, health & fitness centres, filling stations, retail
Chains, logistic support senices, IT & IT enabled services, etc. and
iii) infrastructure development and up gradation.
Resource Support
The Bank provides resource support to institutions/Non-Banking
Finance companies (NBFCs) to facilitate channelising assistance to a large
number of SME units and infrastructure projects having linkages to SMEs.
B. Working Capital Type Support
Working Capital Term Loan (WCTL)
The objective of the Scheme is to help SME units in starting their commercial
production without difficulty and during their up scaling of operations. All the
assisted units of SIDBI covered under the scheme are expected eventually to switch
over to commercial banks within a reasonable time frame (say, 3-5 years) for
meeting their regular working capital requirements.

Scheme for Small Enterprises Financial Centres (SEFC)

In order to meet the complete financial requirements of SME
customers, particularly working capital, the Scheme for Small Enterprises
Financial Centres (SEFC) Scheme has been operationalised to take up co-
financing or exclusive financing of term loan requirements of SME units along
with the,commercial banks and the working capital requirements of these units
will be met by the banks in identified clusters. The branches of SIDBI in the
clusters are designated as SEFCs. Under the Scheme, SIDBI has entered into
Memorandum of Understanding with 15 commercial
banks for joint/co-financing of projects including working capital and non fund based
facilities for the SME sector.

C. Support against Delayed Payments

Receivable Finance Scheme (RFS)
Receivable Finance Scheme (RFS) is intended mitigate the problem
of delayed payments to SME sellers/eligible service providers in respect of
their sales/services rendered to large purchaser companies. Under the scheme,
the Bank fixes limits to well- performing purchaser companies with sub-limits
to their SME units. The bank offers bills discounting facilities to
SMEs/eligible service sector units supplying components, parts, sub assemblies, services,
etc. so as to realise their sale precedes quickly. The
Scheme also enables manufactures-sellers in SME / service sector to offer
deferred payment terms for credit sales and realise sale proceeds by discounting
bills of exchange / promissory notes arising out of such sales. The Bank also
offers invoice-discounting facilities to the suppliers of large corporates.

Seller-wise Receivable Finance Scheme (SRFS)

Whereas under RFS, the facility is given only in respect of a single purchaser
from the SMEs, under Seller-wise Receivable Finance Scheme (SRFS), the SME
units' receivables from other purchasers are also covered to improve their cash
flow and liquidity by providing them with immediate
financial assistance against the goods sold and/or services rendered to purchaser
companies in the public /private sector with satisfactory
market standing.

D. Foreign Currency Loans

To enhance the capabilities of export oriented units, SlDBl offer pre post - shipment credit
to SME units in foreign currencies like US Dollar,
Euro, etc. Foreign currency assistance is also extended by way of term loans for
importing plant and machinery or equipments, etc. The related schemes are briefly
given below;
Pre-Shipment Credit in Foreign Currency / Rupee to enable small and
medium enterprises (SME) / Export Houses (EH) / Trading Houses (TH),
etc. to raise finance to fulfill their export commitments.
The assistance may be availed in designated foreign currencies or in rupee.
- Post-Shipment Credit by way of negotiation/purchase/discount of export
bills of eligible entities which have been sanctioned limits by SIDBI.
This facility can be availed either in foreign currency or in rupee.
- Foreign Currency Tern, Loan Scheme for setting up new projects as for
expansion, diversification, technology upgradation and modernization of existing
units,
- Opening of Foreign Letters of Credit (FLO) to enable small, and medium
enterprises (SMEs), import capital equipment for new projects, expansion,
diversion, technology upgradation and modernization. PLCs are also opened to
enable import of raw materials, consumables etc. by SME units and
Export/Trading Houses sourcing their requirements for export from SMEs.
• Booking of Forward Contracts to provide SIDB, clients with the facility of
hedging of foreign exchange risks related to their import , export
transactions. - Line of Credit in Foreign Currency to Commercial Banks for providing
resource support to institutions / banks for extending export and
domestic credit to SME units / EH / TH, etc.

Promotional and Developmental Schemes of SIDBI:

As the apex developmental financial institutions, SIDBI undertakes various
Promotional and Developmental (P&D) activities for the SME sector in India
designed to achieve two prime objectives of national importance.
Employment generation in the SME sector, 'thereby alleviating
poverty through its select programmes, such as. Rural Programme (RIP),
Vocational Training Programme (VTP) and Strengthening the existing SME
sector to face the emerging challenges of growing internationalisation and
intensifying competition through its select
programmes, such as, Cluster Development Programme (CDP), Skill cum-
Technology Upgradation Programme (STUP), Environmental
Initiatives, Marketing Assistance and Information Dissemination. Some of
the thrust areas of P&D activities are:
Rural Industries Programme (RIP): Through Rural Industries
Programme (RIP), the Bank aims at creation of rural employment through enterprise
promotion in rural and semi-urban areas, thereby addressing problems such as rural
unemployment urban mitigation, under
utilisation of know how and latent rural resources, etc. The programme provides
comprehensive Business Development Services for the rural areas which include
identifying and motivating rural entrepreneurs, identification of viable ventures
based on local skills and resources, training,
appropriate technology linkages and finance tie-up with the formal banking
sector

Entrepreneurship Development Programme (EDP):

The Bank's Entrepreneurship Development Programme (EDPs) aim at promotion
of self-employed ventures capable of generating employment targeting
opportunities, especially less privileged sections of the society like women and
SC/ST. While established EDP institutions such
as RUDSETI, Ujire and Entrepreneurship Development Institute of India
(EDII), Ahmedabad etc. are provided annual report for conducting General
EDPs, Product/Process specific EDPs, trainers training
programme, course for Development Consultants, NGO Bankers Interfaces etc.,
the stand-alone EDPs conducted by upcoming NGOs/other agencies are also
supported by the Bank, on a selective basis. The EDPs are conducted in the cluster
or for a heterogeneous group of entrepreneur.

Strengthening SME Sector:

With a view to strengthening the SME sector, the Bank support
 reputed management / technology institutions, for offering management
development programmes, viz., Skill-cum- Technology Upgradation Programme
and Small Industries Management Programme. While the former programme
aims at technology aims at enhancing technology profile of SME units, SIMAP
targets qualified unemployed as well as
industry-sponsored candidates with the overall objective of providing competent
managers to the SME sector.

Skill-cum-Technology Upgradation Programme (STUP): Skill-

cum-Technology Upgradation Programme (STUPs) are structured to
improve the performance of existing SME imits by
developing/strengthening managerial skills and technical competence of the
entrepreneurs and senior executives of small enterprises. The underlying
intention is to enable the participant entrepreneurs/senior executives to assess
their existing performance level and determine ways of enhancing it. It also
aims at creating awareness amongst the SME units on process improvements,
technological developments, etc and inducing the units to upgrade their
technological level.

Benefits of availing a loan from SIBDI

Listed below are the key benefits of availing a loan from SIBDI:
Offers loans as per the requirement of the business.
Loans are offered at attractive interest rates.
Benefit of a relationship manager to advice businessmen on the type of loan they should
apply for.
No security or collateral for loans up to Rs.1 crore.
Provides sufficient capital for the business.
Invest in venture capital funds through SIDBI Venture Capital Limited.
Avail loan subsidies.
No hidden charges, the whole loan process is transparent.
Tailor-made - SIDBI designs loans according to the needs of your enterprise. If your needs do
not fall into the usual and ordinary category, SIDBI will help fund you in the right way.
Specialised Size - Loans are altered according to the size of the enterprise. So micro, small
and medium enterprises can get different loans tailored to suit their business.
Attractive Rates - SIDBI has a tie-up with many banks and international financial
institutions and can get concessional rates of interest. The tie-ups include KfW, World
Bank and Japan International Cooperation Agency.
Assistance - SIDBI doesn’t just give you a loan, it also gives your assistance and much
needed advice. Relationship managers help entrepreneurs make the right decisions and
provide assistance till the end of the loan process.
Collateral Free - Entrepreneurs can get up to Rs. 100 lakhs without offering collateral.
This is done through the establishment of a Trust called Fund Trust for Micro and Small
Enterprises (CGTMSE).
Risk and Growth Capital - Without diluting the ownership of the company, entrepreneurs can
acquire sufficient capital to meet growth requirements.
Venture and Equity Funding - SIDBI has a wholly owned subsidiary called SIDBI Venture
Capital Limited that can provide growth capital in the form of equity through venture capital
funds that are focussed on MSMEs.
Government Subsidies - Take advantage of various schemes that have concessional rates and
relaxed terms offered by the Government. SIDBI has a wider understanding and in-depth
knowledge of loans and schemes available and can help you make the best decision for your
company.
Transparency - The process and rate structure is transparent. There are no hidden charges.
Key functions of SIDBI

Listed below are the chief functions of SIDBI:

Aid financial institutions (cooperation and commercial banks) lending to small-scale
industries in the Small and Medium Enterprises (MSME) sector to ensure their financial
health.
Offer SIBDI direct loans to companies categorised in the Small and Medium Enterprises
(MSME) sector.
Carry out marketing initiatives for small-scale industries on a global scale.
Offer venture funding possibilities for industries in the Small and Medium Enterprises
(MSME) sector.
Promotion of employment and upgradation of technology in the sector.
Offer job opportunities for individuals who wish to work in the sector. SIDBI
recruitment updates are displayed on the website -
https://www.sidbi.in/en/careers/archived
Loan offers for development and maintenance of small-scale industries in the country.
Marketing of small-scale industries on a global scale.
Promotion of employment-oriented industries in the small-scale industry sector. Ensure
technology upgradation in the small-scale industry.
Ensures the financial health of cooperation banks and commercial banks' lending to
small-scale industries.
Promotion of venture funds.

Loan Facilitation by SIDBI

SIDBI offers a loan facilitation and syndication service through partnerships with banks,
accredited consultants and rating agencies. SIDBI helps existing manufacturing and
service sector units get loans from banks through a structured mechanism. The process is
transparent and strives for timely loan sanction or consideration of these loan
applications. This initiative helps business avoid delays in the loan application process. It
enhances the flow of financial assistance to the MSME sector.
SIDBI assists enterprises in securing a loan by generating complete and accurate
applications, furnishing all documents necessary to sanction the loan.
A second check is provided through an independent validation by the accredited
consultants (ACs) of the information furnished by MSMEs in the loan applications. This
makes the information more reliable so the banks feel more comfortable accepting the
loan application.
An optional step is the rating of the loan proposal. Ratings are done by rating agencies who
will provide an independent opinion as and when needed. This helps banks consider the loan
applications promptly.

Accredited Consultants
The accredited consultants provide a number of useful services for the purpose of loans.
The ACs provide guidance to existing and new entrepreneurs.
They make the entrepreneurs aware of the different schemes available from SIDBI and
commercial banks.
They also educate MSMEs on the benefits and subsidies under Government schemes.
They provide debt counselling for loan applicants.
They prepare the Basic Information Memorandum (BIM).
They help in responding to queries raised by banks.

5 steps to apply for a loan from SIBDI

Applicants should follow the steps mentioned below to apply for a loan from
SIBDI:
Step 1: Visit the official website of SIBDI
Step 2: Click on the ‘applicant’ tab.
Step 3: Enter your username and password.

Step 4: The applicant has to then enter the desired loan amount and choose a scheme.
Step 5: The applicant has to enter personal details such as his/her name, username, email ID,
mobile number, business address, state, district, etc. Click on ‘register’ to complete the
application process.
Process of Loan Application through SIDBI
To process a loan through SIDBI, the entrepreneur will have to go through the following
process.

Step 1: Accredited consultants empanelled with SIDBI will prepare the documents required.
Based on the information and requirements indicated by the MSMEs, the ACs will draft a
Basic Information Memorandum (BIM). This document will contain all information relevant
to the banks and rating agencies.
Step 2: The BIM is approved by the MSME entrepreneur. The ACs will then submit the BIM
to SIDBI.
Step 3: If needed, the proposal will be rated by a rating agency approved by the RBI. Step 4:
SIDBI will directly handle the following cases:
SIDBI will provide equity or quasi-equity to existing units who are growth oriented. The bank
will finance units in the service sector.
It will provide credit to MSMEs for Energy Efficient and Cleaner Production Processes.
Step 5: For any other case, the loan application will be submitted to Public Sector Banks.
SIDBI has a memorandum of understanding (MOU) with public sector banks for the purpose
of loans.

SIDBI will assist the entrepreneur through every stage till the loan is processed. MSMEs have
a much better chance of getting their loan sanctioned in time and can avoid unnecessary
delays.

SIDBI’s Role
SIDBI played a major role in this project providing the following services.
Assistance for completing Energy Audits
Preparation of DPRs
Providing support in acquiring financing from the Indian local banks to ensure the
implementation of the EE measures
Support to BEE for energy efficiency implementation in additional 25 clusters.
Problems and Issues of SIDBI:
Because of their unique characteristics, SIDBI face a variety of problems. In
this section, the problems are examined in connection with two stages of
environmental performance improvement.
Environmental perfomiance improvement can be divided into two major stages,
namely, awareness raising and implementation. The awareness raising is significant
as it relates to the establishment of a solid foundation for SIDBI to move towards
environmental improvement

Lines of Credit in favour of:

-State Financial Corporations
-State Industrial Development Corporations
-State Small Industries Development Corporations for supplying raw
-material and extending marketing support to SSI units.
-Factoring Companies (to factor receivables of SMEs)
-National Small Industries Corporation Ltd.

Promotional and Developmental Schemes of SIDBI:

As the apex developmental financial institutions, SIDBI undertakes various
Promotional and Developmental (P&D) activities for the SME sector in India
designed to achieve two prime objectives of national importance.
Employment generation in the SME sector, 'thereby alleviating
poverty through its select programmes, such as. Rural Programme (RIP),
Vocational Training Programme (VTP) and Strengthening the existing SME
sector to face the emerging challenges of growing internationalisation and
intensifying competition through its select
programmes, such as, Cluster Development Programme (CDP), Skill cum-
Technology Upgradation Programme (STUP), Environmental Initiatives,

Marketing Assistance and Information Dissemination

Step By Step Guide to apply for loan from SIDBI

The application process of SIDBI is divided into a few steps that are mentioned in detail.
Here is how you can apply for loan from SIDBI –

STEP 1:
Visit www.udyamimitra.in. Here all the government based loan schemes are explained in
detail.

STEP 2:
Go to the Login section and select the tab of ‘Applicant’ under that.

Step 3:
Under the Applicant tab, click on ‘New User ’

STEP 4:
After clicking on New User, the first two options will appear asking for the expected
loan amount and the scheme you wish to apply under. There is also an option of ‘Assess
your scheme suitability’ so one can check the loan schemes under which they are eligible
for.

STEP 5:
After filling the two fields, the loan application form will expand asking for some
mandatory information including personal and business related details.

STEP 6:
After filling the application, click on Register. An account activation mail will be sent to your
email containing the username and password. Login the portal with new credentials and a
new form will appear asking information about your business .
National Small Industries Corporations:
The National Small Industries Corporations, a Government of India undertaking,
has been setup with the specific objective of developing
small Industries in the country. It aids development of small scale industries supply
to the party on hire purchase terms. Machines, both foreign and indigenous, can be
had from this source on a security deposit ranging upto 20% of the cost of the
machines.
Apart from these National and state level institutions, there are various
exclusive agencies, which assist the growth of the small-scale
industries of the state. Prominent among them are the State Small Industries Development
Corporations (SSIDC), District Industries Centres (DIG),
etc. The various terms of assistance rendered by SSIDCs and DIG to the

SSI sector ofthe UP are:

(a) Supply of machinery on higher purchase basis;
(b) Procurement and distribution of raw materials;
(c) Securing contracts from Government stores/purchasing agencies;
(d) Provisionof technical and consultancy services;
(e) Marketing assistance etc.

Commercial Banks:
Commercial banks are playing an important role in the deployment of credit to
various sectors including SSI sector. The commercial banks have indeed formed
the backbone of the financial system in the country. These banks can be broadly
divided into three categories viz. public sector banks, private sector banks and
foreign banks and have been playing a dominant
role in the mobilization of public savings and credit to various sectors of the economy.
Commercial banks were advised to make concerted efforts to provide credit
cover, on an average to atleast 5 new tiny, small and medium
enterprises at each of their semiurban/urban branches every year. They were
further advised to formulate a comprehensive and more liberal policy relating to
advances to SME sector.

Performance Highlights and working Result of SIDBI:

SIDBI play a very important role in financing small scale industries in a
developing country like India.
During the FY 2008, SIDBI recorded better operational performance
and strengthened its financial fundamentals. The Bank recorded the highest
ever sanctions and disbursements during the year with sanctions increasing by
4.5.6 percent and disbursements by 47.5 percent over the previous year.
While the Refinance support, which is a key function of Bank, was enhanced by
76.4 percent, the Direct Credit flow to MSMEs by SIDBI increased by 18.0
percent during the year under review. The aggregate outstanding portfolio of
the Bank crossed the Rs.20,000 crore mark for the first time and increased by
26.2 percent to Rs.20,226 crore as at March 31,2008. As a result, the total
assets of the Bank increased sizeably to Rs.23,887 crore at the end of FY 2008.
During the year, with focused attention on business growth and better pricing of
loan products, total
income of the Bank increased by 38% to Rs. 1,638 crore from Rs.1,187 crore
during FY 2007. However, due to treatment of earlier / current year's
cumulative contribution to the corpus of CGTMSE of Rs.317 crore as
expenditure and providing for interest expenditure of Rs.l74 xiii crore on SIDBI
Bonds held by Govt, of India which was waived in the previous year, net profit
for the current year was lower at Rs.l98 crore as against Rs.298 crore in the
previous year. The total Reserves and Funds of the Bank increased from
Rs.4,691 crore as on March 31, 2007 to Rs.4,810 crore as on
March 31, 2008 and the Capital Adequacy Ratio was higher at 41.7 percent.
Micro Finance, by reaching out to the poor, has emerged as a powerful tool for
inclusive growth, poverty alleviation and women empowerment. At the same
time, it is also a business opportunity for enlarging the credit portfolio of the
Bank. The total credit sanctions under Micro finance during FY 2008 sured by
93.8 percent to Rs. 745.95 crore and disbursements by almost 100 percent to
Rs.695.80 crore. The Micro credit outstanding as on March 31, 2008 was
Rs.950.38 crore which showed a higher growth of 73.3 percent over the
previous year. The Bank's Micro Finance support so far has benefitted more
than 50 lakh persons, mostly women.^

Strategic Business Initiatives:

Opening of Inland LC (INLC): To enable SMEs to acquire capital equipment
for new projects, expansion, diversification, technology upgradation and
modernisation, Inland Letter of Credit (INLC) facility has been introduced.
INLCs are also opened to enable purchase for raw materials, consumables etc. by SME
units.
Privileged Customer Scheme (PCS): Privileged Customer Scheme (PCS) is an
innovative scheme for extending annual credit limits to existing good customers
of the Bank for meeting their unforeseen bonafide business expenditure.
Short term Resource Support to SME intermediaries: A new MIBOR based short
term resource support product is designed for financial
intermediaries like NBFCs and Factoring Companies to augment their fund
base for further on-lending to the SME units.
SME IT Loans: A new Scheme has been launched to provide small loans to SME
units for procuring products.
Conclusion
This chapter is a study of the growth, development and role of Small Industries Development
Bank of India (SIDBI) in the Promotion of Entrepreneurship in Uttar Pradesh (U.P.). It also
highlights the functions and objectives of SIDBI and various schemes implemented by SIDBI
for the promotion of MSMEs and entrepreneurship. The next chapter deals with the problems
and prospects of development of entrepreneurship and MSMEs in Uttar Pradesh (U.P.).
SIDBI would continue to identify the gaps in the MSME clusters and address those gaps
through innovative solutions viz. loan syndication, capacity building of MSME sector,
common facility centre, cluster diagnostic studies, credit facilitation centre, credit counselling
and advisory services including market information, supporting skill development institutes,
supporting incubation and innovation centres, setting up of website to address information
asymmetry for the prospective and new entrepreneurs, coming out with various studies /
reports / web-based solutions to address information gap, etc. These developmental
initiatives would not only address the emerging needs of the sector, but also will create
employment opportunities in this productive sector of the economyIt may be stated that in the
Indian setting where poverty and unemployment are widely prevalent, the development of
broad-based entrepreneurship need not be over-emphasized. No doubt the development banks
have initiated certain measures for the development of broad-based entrepreneurship in the
country. But in a country where the industrial activity was considered as hereditary
occupation and trading and fmancing backgrounds remained for a long time almost an
exclusive source of entrepreneurship, what the development banks have been doing in the
direction of broad-based entrepreneurship development can be considered as nominal. The
development banks should identify, on their own, the individuals with entrepreneurial traits
and motivate them into entrepreneurial career by providing suitable training and other inputs
necessary to set up industrial establishments. The contribution of development banks to the
growth of small entrepreneurship in rural and backward areas has been negligible. The
entrepreneurship development programmes (EDPs) conducted by development banks are, by
and large, urban-oriented and, therefore, the entrepreneurship is still emerging from urban
and metropolitan centers. In order to foster the growth of broad-based entrepreneurship in the
country, the development banks should necessarily make a dent into the rural areas and
identify the potential entrepreneurs and develop in them the traits/abilities required for
entrepreneurial success.
Suggestions:
On the basis of empirical findings the study makes the following suggestions
having policy implications.
1. The SIDBI, banks and financial institutions should provide both the
working capital and term loans, without delay to the SSIs.
2. In sanctioning of the quantum of credit facilities, there is a tendency to cut
down the limits on an ad hoc basis on the plea that the units will require the full
credit limit only when it goes into full production. There are often delays,
subsequently for enhancing limits and the operations of the units suffer. The full
working capital should therefore be sanctioned at the outset obviating the
necessity for reference to sanctioning authority subsequently.
3. Financial guarantee to a reasonable extent may be given to small
entrepreneurs to enable them to secure contracts for supply of
goods and to cany out the work undertaken.
4. There must be accountability on the parts of District Industries
Centre (DIC) and bank officials and the special tribunal should
be established so that stringent action can be taken against the
erring officials. There should be greater coordination between
SIDBI and DIC.
5. SIDBI should follow uniform policy of providing need-based
finance to small units