THE CONTRIBUTION OF SIDBI IN DEVELOPMENT OF MSME IN INDIA: VAIBHAV SRIVASTAVA
SIDBI was established on 2nd April, 1990, under the Small Industrial Development Bank of India Act, 1988. SIDBI was initially started as a wholly owned subsidiary of IDBI. However, presently ownership of SIDBI is held by 34 Public Sector Banks. The head-office of SIDBI is located in Lucknow, Uttar Pradesh, with overall 15 Regional Offices & 84 Branches.
SIDBI coordinates with the function
of the institute engaged in development of micro, small & medium
enterprises. The main focused domain of SIDBI includes MSME(Micro, Small &
Medium Enterprises). SIDBI also performs the structural initiative to resolve
financial & non-financial hurdles of MSMEs.
What is MSME?:
The
Government of India has enacted the Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006 in terms of which the definition of micro, small
and medium enterprises is as under:[1]
Enterprises engaged in the
manufacture or production, processing or preservation of goods as specified
as, a micro enterprise is an
enterprise where investment in plant and machinery does not exceed Rs. 25 lakh;
a
small enterprise is an enterprise where the investment in plant and
machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; a
medium enterprise is an enterprise where the investment in plant and
machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
Contribution of SIDBI[2]:
A. Financial
Institutions for promotion of MSMEs: SIDBI provides short-term as well as
long-term finance to MSMEs. SIDBI coordinates with the functions of
institutions engaged in financing MSMEs.
SIDBI also refinance the Banking & Non-banking financial companies,
which is an indirect method, to increase credit supply to MSMEs. However, SIDBI
directly lends money to MSMEs.
B. Sustainable
development: SIDBI
takes initiative to enhance or to uprise the awareness regarding climate changes amongst MSME, for a
better understanding of sustainable development regarding such fields. SIDBI
focuses on lending systems in a way, to ensure the promotion of investment in
clear or high production & energy efficient technologies. Hence, SIDBI steps
forward to prevent the emission of green-house gases & to reduce the
pollution.
C. Advisory
Function: SIDBI
acts as an advisor as well as mentor for MSMEs. SIDBI also helps the MSMEs to
expand marketing channels for their products in domestic as well as
international markets. SIDBI takes various measures for modernisation &
upgradation of current units of MSMEs, in every possible manner.
D. Services to
MSMEs[3]: SIDBI provides different types of
financial & non-financial services by associates and subsidiaries. The
various subsidiaries & associates are SIDBI venture capital ltd., Credit
guarantee fund trust for MSME, SME rating agency of India ltd., India SME
technology service ltd., India SME asset reconstruction company ltd., Micro
units development & refinance agency.
E. Achievement
of National Goals: SIDBI helps in financing the MSME, which creates employment
opportunities to various people. Hence, this results in the decrease in poverty
ratio. SIDBI also focuses on the development of ‘Entrepreneurship Skills’ and a
competitive environment among MSMEs.
SIDBI also promotes & encourages, weaker sections of society as well
as works on the upliftment of women. SIDBI also finances the industries, which
are located in semi-urban areas, so that migration to urban areas can be
controlled & reduced.
F. Different
types of FInance: SIDBI provides different types of facilities to their
customers, which are classified as
- Direct Finance: SIDBI provides
finance to MSMEs to indulge in working capital, term loans, foreign
currency loans, equity support, energy saving scheme etc.
- Indirect Finance: SIDBI also
provides indirect finance to MSMEs, as refinance to banks, state level
financial institutions etc, whose branch network is spread all over the
nation.
- Micro Finance: SIDBI also
provides finance to small businessmen & entrepreneurs, to boost their
business or startup.
G. Digital
Initiative: SIDBI
has launched various digital initiatives to promote the MSMEs sector. These are
classified as:
- SIDBI Startup Mitra: It was
launched on 17th March, 2016. Its
main objective is to bring stakeholders, start-up entrepreneurs,
incubators, investors, industry bodies, advisors, mentors or banks on the
same platform. It also helps to develop & finance the start-ups. It also
works as a knowledge partner for state & central government.
- Udyami Mitra: This portal is created so that the
credits, hand holding services, assistance
can be easily granted to MSMEs. Now, the MSMEs can apply for loan
in any branch, they do not need to go physically. MSMEs can also track
their application status, upload the necessary documents.
- CHAMPIONS: CHAMPIONS which
stands for Creation and Harmonious Application of Modern Processes for
Increasing the Output and National Strength. As the name suggests,the
portal is basically for making the smaller units big by solving their
grievances, encouraging, supporting, helping and handholding.It is a real
one-stop-shop solution of MSME Ministry.
H. Nodal/Implementation
Agency: The
role of nodal agency or implementation agency is given to SIDBI by the
Government of India. Its primary objective is to implement various subsidiary
scheme[4]s of
MSMEs. These schemes in return will help
MSMEs to get upgraded, advanced, modernized & expanded.
Conclusion:
SIDBI[5] took
certain new initiatives like sanction of composite loans under ‘single window
concept’, concessional loans to state corporations for infrastructural
development and provision of factoring services etc have been introduced. Also, a Technology Development and
Modernisation Fund was created to accelerate financial and technical services
to the MSME sector by SIDBI.
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