SIDBI to Support Banks/NBFCs in MSME Refinancing, Resources

Small Industries Development Bank of India (SIDBI), the apex body for the development of MSME sector, has identified four major gaps in financing MSME sector in India that impacted the viability and sustainability of the sector. The four areas are risk capital/equity, receivable financing/factoring, service sector and sustainable financing for cleaner technology and energy efficiency.

Addressing a MSME Conference, NK Maini, DMD, SIDBI, said, “SIDBI is working on addressing identified gaps in the MSME ecosystem and develop niche products, processes and delivery channels to address various gaps, such as financing both in debt and equity funding through structured and innovative products.” He added, “We are committed to play the role of a catalyst by augment the resources of banks and NBFCs through refinance and resource support for the growth of the sector.”

SIDBI, which funded more than 8000 MSMEs, has engaged accredited consultants to work closely with MSMEs. These consultants understand the project requirements, and prepare the project report as required by banks. These project reports will be rated by accredited rating agencies. The rated project reports will then be submitted/ forwarded to banks, who may find them easier to support as these reports are prepared and rated by accredited consultants/rating agencies. This syndication process is likely to facilitate availability of credit to MSMEs in a transparent and timely manner.

Further, to address the problem of securing loans without collateral security by Micro and Small Enterprises, the Ministry of MSME and Ministry of Finance have jointly launched Credit Guarantee Fund Trust which provide guarantees for  loans  up to Rs. 1 crore. The Scheme has been running successfully over last decade and around 1 million guarantees have so far been issued.

SIDBI has embarked upon a major role in ‘Credit plus’ services to MSMEs in the country through establishing Credit Facilitation Centres (CFCs) at all major MSME focused clusters so as to extend non-financial services to existing as well as prospective entrepreneurs though systematic dissemination of information about various developmental/promotional support services available from Government agencies, banks & financial institutions. Towards this, appointment of ‘Knowledge Partners’ to operate CFCs is likely to further strengthen MSME ecosystem.