SIDBI – Small Industries Development Bank of India

Small Industries Development Bank of India (SIDBI) is the apex regulatory body for micro, small, and medium enterprise finance in India. Its mission is to enhance credit flow and address gaps in the MSME ecosystem. It aims to create a competitive industry while utilizing modern technology.

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Table of Content

• What is Small Industries Development Bank of India (SIDBI)?
• Historical Background
• Role of SIDBI
• Functions of SIDBI
• Conclusion
• Frequently Asked Questions (FAQs)

What is Small Industries Development Bank of India (SIDBI)?

• The Small Industries Development Bank of India (SIDBI) serves as the apex regulatory body for overseeing and regulating micro, small, and medium enterprise finance companies in India.
• It operates under the Ministry of Finance.
• Its headquarters is located in Lucknow and offices are spread across the country.
• Mission: to facilitate and strengthen the flow of credit to MSMEs (Micro, Small, and Medium Enterprises) while addressing financial and developmental gaps within the MSME ecosystem.
• Vision: to become a comprehensive solution provider for the financial and developmental needs of the MSME sector, SIDBI aims to create a strong, vibrant, and globally competitive industry.
  • It also seeks to establish itself as a customer-friendly institution, utilizing modern technology platforms, and enhancing shareholder wealth and corporate values.
• SIDBI is among the four All India Financial Institutions that are regulated and supervised by the Reserve Bank of India.
  • The other three institutions are India Exim Bank, NABARD, and NHB.

Historical Background

• On April 2, 1990, the Government of India founded the SIDBI as a fully-owned subsidiary ofIDBI Bank.
  • However, it became independent from IDBI on March 27, 2000.
• Shareholding: The ownership of SIDBI’s shares is divided between the Government of India and twenty-two other institutions.
  • These institutions are public sector banks and insurance companies that are either owned or controlled by the Central Government.

Role of SIDBI

• Indirect Financing: SIDBI collaborates with Banks, SFBs, NBFCs, MFIs, and Fintech companies to provide wider access to finance for the MSME sector, leveraging the multiplier effect.
• Direct Lending: SIDBI addresses existing credit gaps in the MSME sector by offering innovative and scalable lending products, demonstrating their commitment to empowering businesses.
• Fund of Funds: SIDBI supports emerging startups by providing funding through the Fund of Funds channel, fostering entrepreneurship and fueling growth.
• Promotion and Development: SIDBI encourages entrepreneurship and facilitates the holistic development of the MSME sector through credit-plus initiatives, nurturing aspiring entrepreneurs.
• Facilitator Role: SIDBI serves as the Nodal Agency for various MSME-oriented schemes initiated by the government, furthering its role in supporting and empowering the sector.

Functions of SIDBI

• The SIDBI provides refinancing for loans given by PLIs (Primary Lending Institutions) to small-scale industrial units and offers them resource assistance.
• It engages in the discounting and rediscounting of bills.
• It plays a role in expanding marketing channels for products from the Small-Scale Industries (SSI) sector, both domestically and internationally.
• It offers services like factoring and leasing to industrial concerns in the small-scale sector.
• It promotes employment-oriented industries, especially in semi-urban areas, to generate job opportunities and prevent migration to urban areas.
• It takes initiatives for the modernization and technological up-gradation of existing units.
• It facilitates the timely availability of working capital and term loans for Small Scale Industries by collaborating with commercial banks.
• It also co-promotes venture funds at the state level.

Conclusion

SIDBI was founded in 1990. It operates independently from IDBI Bank. It serves as a comprehensive solution provider for the financial and developmental needs of the MSME sector. With a range of functions and initiatives, SIDBI collaborates with various institutions. It plays a pivotal role in promoting entrepreneurship, employment, and technological upgradation for small-scale industries.

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FAQs(Frequently Asked Questions)