Small Industries Development Bank of India (SIDBI)

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

Regional Office, IDBI Building, G.S. Road, Guwahati - 781005

Role of SIDBI in North Eastern Region - An Overview:

Established on April 2, 1990 by an Act of Parliament, i.e. SIDBI Act 1989, role of Small Industries Development Bank of India (SIDBI) is envisaged as "the principal financial institution for the promotion, financing and development of industry in the Small Scale Sector and to coordinate the functions of the Institutions engaged in similar activities. SIDBI is headquartered at Lucknow with networking of 5 Zonal Offices, 1 Regional office and 59 Branch offices covering all the states and important industrial locations in the country. SIDBI looks after the interests of NER through its Regional office at Guwahati and Branch Offices in all the states of the Region. In line with the international concept of Small and Medium Enterprises (SMEs), Government of India has permitted SIDBI to extend assistance to medium enterprises, in addition to the SSls and service enterprises served hitherto. SIDBI, as a part of its operational strategy, has been emphasising on increasing the flow of financial assistance to SMEs and enhancement in the capabilities of SMEs at all levels, with focus on adoption of improved and modern technology. As a matter of policy, SIDBI has tried to identify the gaps in the credit delivery system so as to fill them through appropriate new Schemes. Over the years, SIDBI has been continuously expanding its credit horizon and is assisting enterprises in the sectors like Tiny, Small Scale, Medium, Service and Micro-Finance Sector. In order to improve the flow of credit to small and medium enterprise sector, strategic business initiatives were taken by the Bank by broad basing certain schemes in line with the changing requirements of the sector. Steps were taken to enhance the scale of operations under direct finance schemes, in addition to refinance activities. Greater emphasis was laid on liberalizing the schemes as well as simplifying the systems and procedures and increasing the retail portfolio of the Bank. Some of the major contributions are launching of Small and Medium Enterprises Rating Agency (SMERA) for credit rating of SMEs, launching of SME Growth Fund of Rs 500 Crore, launching SME Fund for providing Credit to SMEs at concessional rate of interest, a tie up with lOBI for providing working capital facilities and signing of MoUs with commercial banks for joint lending/co-financing of SME projects.

2. SIDBI's Assistance in NER

The cumulative sanctions and disbursement of financial/non-financial assistance by SIDBI in NER since its inception amounted to Rs 152.67 crore and Rs 137.72 crore respectively as on 31/03/ 2006.

3. Assistance to State-level Institution in the NER

The financial health of the State Level Financial Institutions i.e. State Financial Corporations (SFCs), State Industrial Development Corporations (SIDCs) and Twin Functional Industrial Developmental Corporations (TFIDCs) have been engaging the attention of the Bank. As pro-active measure to strengthen the SFC/SIDCS/TFIDCs and to help them to come out of their financial constraints, SIDBI has been giving need based relief and concessions over the years.

4. Micro-Finance:

In order to create a national network of strong, viable and sustainable Micro Finance Institutions (MFls) from the informal and formal financial sector to provide micro finance services to the poor, especially women, SIDBl Foundation for Micro Credit (SFMC) was launched by the Bank in January 1999. Its objective is not merely to extend financial services to the MFls, but more importantly to facilitate the development/mobilization of required infrastructure/resources for enabling smooth and orderly growth of the micro finance sector.

The efforts made by SFMC during the last couple of years have resulted in significant growth of the micro finance sector. wherein MFls are evolving towards more formal, regulated and sustainable entities. SFMC has also helped in the development of entire range of service providers viz. training institutions, management institutes, rating service providers, consultants, software service providers, market researchers etc. and has advocated growth oriented policies for the development of the sector.

SIDBI's Assistance in NER under SFMC:

While the cumulative micro credit provided in NER stood at Rs 903 lakh at the end of FY 06, the table below reflects the spurt in this activity in the last three years:

(Rs. Lakh)

The above assistance was routed through nineteen MFls with around 60,000 beneficiaries. In addition to the above disbursement, a grant support of Rs 155.25 lakh has been sanctioned to select MFls for developing their institutional capacities and bringing about financial sustainability.

5. Promotional and Developmental (P&D) Initiatives:

As an apex institution for the small scale sector, SIDBI also plays a major role in meeting the varied developmental needs of the Indian SSI sector. The P&D initiatives of the Bank aim at improving the inherent strength of the small scale sector so as to enable it to face the emerging challenges of globalization as also economic development of poor through enterprise promotion resulting in self employment and creation of additional employment.

SIDBI has sanctioned grants to various organizations like TCOs, Industry Associations, reputed NGOs and other agencies to conduct topical seminars and EDPs, and also sponsored the participation of SSI units in exhibitions at subsidised rates to enable them to market their products. In pursuance of its multifaceted P&D activity, synergistic with its business activities aimed at development of the small industries, SIDBI looks forward to a partnership with NGOs, associate financial institutions, corporate bodies, R&D laboratories, marketing agencies, etc., for national level programmes. The sanction and disbursement of grant under P & 0 activities in NER during the last three financial years amounted to Rs 125 lakh and Rs 92 lakh respectively.

Rural Industries Programme

Besides P&D activities, SIDBI has been providing a cohesive and integrated package of basic inputs like information, motivation, training and credit, backed by appropriate technology and market linkages for the purpose of enterprise promotion under its Rural Industries Programme (RIP). RIP is an unique approach for rural industrialization where the emphasis is on stimulating and helping the potential entrepreneurs to set up small enterprises through a consultancy outfit positioned by SIDBI. The prime objectives of RIP are development of viable and self-sustaining tiny/small enterprises in rural and semi urban India by harnessing local entrepreneurial talent. The programme attempts to address the problems such as rural unemployment, urban migration and under-utilization of local skills and resources, and is designed as a comprehensive Business Development Services programme. SIDBI has so far promoted 720 units in the various districts in North Eastern Region viz., Assam [332 units], Meghalaya [72 units], Manipur [91 units], Mizoram [71 units], Arunachal Pradesh [48 units], Tripura [61 units] and Nagaland [45 units]. Two more RIPs, one each in Assam (Jorhat district} and Meghalaya (Ri-Bhoi district) have been recently launched.

6. CGTSI Coverage in NER

The Ministry of Small Scale Industry, Gol, and SIDBI have set up the Credit Guarantee Fund Trust for Small Industries (CGTSI), to help small scale/tiny units in accessing institutional credit, both term loan and working capital, for their viable projects without arranging for collateral security and/or third party guarantee. As on August 30,2006 banks/institutions have availed of CGTSI guarantee in NER in respect of 1147 units covering aggregate assistance of Rs 2718 lakh in NER.

7. SMERA Coverage in NER

As a part of SIDBI's thrust towards emerging as one step shop to serve the SME sector, the SME Rating Agency of India Ltd. (SMERA) was launched as country's first and only rating agency dedicated to the SME segment. A joint initiative of SIDBI, Dun & Bradstreet Information Services India Pvt. Ltd., Credit Information Bureau (India) Ltd and banks, SMERA's primary objective is to provide ratings that are comprehensive, transparent and reliable and which would enable the rated units to borrow at competitive rates of interest. SIDBI calls upon the existing SMEs in NER to get them rated by SMERA in order to have competitive edge in availing credit at lower rates.

8. Cell for Development of NER

With a view to give further impetus to the implementation of various development programmes in North-eastern region SIDBI has created a special cell for development of North Eastern Region at Guwahati Regional Office. The cell will interact with other development agencies in NER and chalk out definite action plan for implementation of development programmes. Some of the thrust areas which will receive the focussed attention of the Cell will include cluster development of handloom & handicrafts, cane & bamboo, improvement in design and establishing market linkages of SME products, improvement of infrastructure facilities for SMEs, ancillarisation of down stream units in the oil sector.

9. Conclusion

Through the above initiatives, SIDBI has been increasingly able to reach out to the micro, tiny and SME sector. The Bank is trying to further extend its reach through new schemes for financing viable projects preferably on cluster basis. These efforts, coupled with the thrust on direct finance, micro credit and rural industrialization, as highlighted in the foregoing paragraphs, would help SIDBI to effectively serve the sector in the North Eastern Region of the country.

SIDBI’s main purveyor in term financing to the small scale sector in the country. Small scale industrial units, artisans, village and cottage industrial units in the tiny sector, financial assistance is given mainly by way of refinance, through primary lending and institutions.

All projects in the SSI units normally eligible for assistance. The minimum promoters contribution prescribed under the schemes generally varies between 10% - 28%.
 

Data source : SIDBI, Guwahati