Small Industries Development Bank of India (SIDBI) is the principal financial institution for the promotion, financing and development of the Micro, Small, and Medium Enterprise (MSME) sector and coordination of the functions of various institutions engaged in similar activities. It is the apex regulatory body for the overall licensing and regulation of MSME finance companies in India.
Overview of SIDBI
|Established||2 April 1990|
|Headquarters||Lucknow (Uttar Pradesh)|
|Jurisdiction||Ministry of Finance, Government of India|
SIDBI was established on 2 April 1990 as a statutory body under an Act of the Indian Parliament. Its headquarter is in Lucknow, having its offices all over the country. It is under the jurisdiction of the Union Ministry of Finance, Government of India.
The Shares of SIDBI are held by the Government of India and 22 other institutions/public sector banks/insurance companies owned or controlled by the Central Government.
To facilitate and strengthen credit flow to MSMEs and address the financial and developmental gaps in the MSME ecosystem.
- To emerge as a single window for meeting the financial and developmental needs of the MSME sector to make it strong, vibrant and globally competitive,
- To position SIDBI Brand as the preferred & customer-friendly institution and enhance shareholder wealth and highest corporate values through a modern technology platform.
SIDBI Vision 2.0 is a strategic initiative by SIDBI aimed at further accelerating the effort by transforming its current role to that of an All India Financial Institution that can create an integrated credit and development support ecosystem for Indian MSMEs, thus promoting their inclusive growth. The initiative is dedicated to meeting both the credit and non-credit needs of MSMEs, enabling them to be globally competitive businesses.
The SIDBI 2.0 is designed to bring about the sustainable development of the MSME sector in India, based on the Triple Ps front, namely- Profit (economic), People (Social), and Planet (Environment).
Role of SIDBI
SIDBI is mandated to serve as the primary financial institution for executing the Triple Agenda of promotion, financing and development of the MSME sector. It also coordinates the functions of institutions engaged in similar activities. SIDBI executes its mandate through:
- Indirect Lending: It is undertaken through Banks, SFBs, NBFCs, MFIs, and New Age Fintechs. Indirect lending is based on a multiplier effect/larger reach in financing the MSME sector.
- Direct Lending: It aims to fill the existing credit gaps in the MSMW sector. It is undertaken through demonstrative and innovative products, which can be further scaled up by the credit delivery ecosystem.
- Fund of Funds: It promotes entrepreneurship culture by supporting emerging startups through the Fund of Funds channel.
- Promotion and Development: It promotes entrepreneurship and handholding budding entrepreneurs for the holistic development of the MSME sector through credit-plus initiatives.
- Facilitator: It acts as a facilitator through roles like Nodal Agency for the MSME-oriented schemes of the Government.
Functions of SIDBI
SIDBI coordinates with various institutions in the country to financially assist and develop small-scale industries. Financial institutions such as commercial cooperative banks, regional rural banks, industrial development corporations, etc., function along with SIDBI to strengthen the MSME ecosystem in India.
- To increase and support the money supply to the MSME sector, SIDBI operates a refinance program known as Institutional Finance program. Under this program, SIDBI extends Term Loan assistance to Banks, Small Finance Banks and Non-Banking Financial Companies. SIDBI refinances loans made by financial institutions to small-scale industries and promotes borrowings by small business units.
- Besides the refinancing operations, SIDBI also lends directly to MSMEs (Direct Financing by way of service sector financing, receivable financing, risk capital and sustainable financing, etc.).
- SIDBI offers bill discounts and rediscounts to help small business units.
- It aids in expanding the market channels for products of the small-scale industries sector in both the domestic as well as international markets.
- It offers services like factoring, leasing, etc., to the MSMEs.
- It promotes employment-oriented industries, particularly in semi-urban areas, in order to generate job opportunities.
- It also initiates steps towards technology innovations and the modernisation of existing units.
- It enables the credit flow as working capital or term loans to small-scale industries.
- It offers capital to small-scale industries through venture capital funds, such as Aspire Funds, Fund of Funds, etc.
SIDBI is active in the growth of Micro Finance Institutions through the SIDBI Foundation for Micro Credit and assists in extending microfinance through the Micro Finance Institution (MFI) route. Its promotion and development program focuses on rural enterprises and entrepreneurship development.
SIDBI supports the Government of India in its initiatives and works as a nodal agency for some of the schemes related to the growth of MSMEs, such as Make in India and Startup India.
Financial Assistance offered by SIDBI
|Direct Finance||Working Capital.|
Term Loan Assistance.
Foreign Currency Loan.
Energy Saving Schemes for the MSMEs.
Assistance through Venture Capital Fund.
|Indirect Finance||Providing refinance to Primary Lending Institutions (PLIs), such as Banks, Non-Banking Financial Companies (NBFCs), etc., for onward lending to MSMEs.|
Offers help raise the resource position of PLIs to enable credit flow to the MSMEs.
|Micro Finance||Micro-finance to small entrepreneurs and Businessmen for establishing their businesses.|
Apart from providing financial assistance, SIDBI focuses on the “credit plus approach” under which it facilitates modernisation, technology up-gradation, enterprise development, cluster development, upgrading the skills and supporting marketing activities.
Schemes offered by SIDBI
|Loan Scheme||Eligibility Criteria||Loan Amount|
|SIDBI Make in India Soft Loan Fund for MSME (SMILE)||• New enterprises in the manufacturing as well as services sector.|
• Existing enterprises undertaking expansion.
|Minimum loan amount of INR 10 lakh for equipment finance and|
INR 25 lakh for other purposes.
|Smile Equipment Finance (SEF)||MSME entities should be in existence for at least 3 years having a satisfactory financial position.||The minimum loan amount is INR 10 lakh.|
|Loans under Partnership with OEM (Original Equipment Manufacturer)||MSME entities should be in existence for at least 3 years having a satisfactory financial position.||Generally, up to INR 1 crore. A higher loan amount can also be considered subject to the bank’s guidelines.|
|Working Capital (Cash Credit)||Should be an eligible MSME unit.|
SIDBI assistance shall be considered for any of the following categories of customers:
• Existing customers who are solely banking with SIDBI.
• Existing customers who are banking with SIDBI (also banking with other banks).
• Existing well-performing units that do not enjoy Working Capital (WC) facility with any other banks.
• New entities, where SIDBI considers term loans.
|Depending upon the financial ability of the applicant.|
|SIDBI-Loan for Purchase of Equipment for Enterprise’s Development (SPEED)||MSME units with at least 3 years of operations with stable sales and cash profits in the immediate past 2 years.||Up to 100% of the machinery cost subject to a maximum of INR 1 crore for New to Bank (NTB) customers and up to INR 2 crore for existing customers of SIDBI.|
|SIDBI-Loan for Purchase of Equipment for Enterprise’s Development Plus (SPEED PLUS)||• MSME units with at least 5 years of operations with stable sales and cash profits in the immediate past 3 years.|
• Minimum net sales of INR 5 crore and no operating loss in the immediate past two years.
|Up to 100% of the machinery cost subject to a maximum of INR 2 crore for New to SIDBI customers (based on 20%-30% FD) and up to INR 3 crore for existing customers of SIDBI (based on 15%-30% FD).|
|Top Up Loan For Immediate Purposes (TULIP)||• At least 1-year association with SIDBI with a satisfactory track record.|
• Expansion in the same line of business at the same location.
• Cash profit in last fiscal year.
|30% of existing exposure or 20% of net sales subject to a maximum of INR 2 crore.|
|SIDBI Term-Loan Assistance for Rooftop Solar PV Plants (STAR)||• Vintage New Customers – 3 years. Existing Customers – 2 years.|
• 2 years cast profits.
• Satisfactory financial records.
• For New Customer: Minimum IACR of 0.5% to 0.50% (if no CGTMSE cover).
• Only on-site projects.
• Proposed solar rooftop capacity not to exceed connected load.
• Stand-alone and Grid-connected, both covered.
• Maximum loan up to 25% of net sales.
|INR 10 lakh to INR 350 lakh.|
|SIDBI assistance to export-oriented MSMEs under UBHARTE SITAARE Programme||• New units: Promoters having sufficient experience in the proposed line of business and major projected revenue from exports.|
• Existing units: Fundamentally strong export-oriented small and mid-sized companies with satisfactory financials.
|Need-based financial assistance subject to a maximum of 80% of the project cost.|
Joint financing with EXIM Bank available.
|SIDBI and Google Partnership For Assistance To Micro Enterprises (SANGAM)||• Term loans to Micro enterprises.|
• Minimum 2 years of operations of the unit required.
• Operation profit during the past 2 years.
• Cash profit during the past 1 year.
• No default/delinquency to any bank/financial institution, etc. during the past 24 months.
|Term loan up to INR 100 lakh.|
|SIDBI’s Term Loan to Enhance Production of MSMEs (STEP)||• Existing MSMEs as per MSMED Act.|
• Minimum 3 years of operations of the unit required (2 years for existing customers of SIDBI).
• WCTL (Working Capital Term Loan) shall be provided to only those enterprises not availing WCL (Working Capital Loan) facility from any banks/financial institutions.
• Operating profit during the past 2 years (1 year for existing customers).
• Should not be in default to any bank/financial institution.
|Up to INR 300 lakh for existing customers.|
Up to INR 200 lakh for new customers.