SIDBI, the principal financial institution for the micro, small and medium enterprises (MSMEs), has recently launched their loan syndication services (LSS) to facilitate flow of timely and adequate credit to MSMEs.
SIDBI, the principal financial institution for the micro, small and medium enterprises (MSMEs), has recently launched their loan syndication services (LSS) to facilitate flow of timely and adequate credit to MSMEs.
Under LSS, the bank has entered into MoUs with six leading public sectors banks (Bank of India, IDBI, Central Bank of India, Indian Overseas bank, State Bank of Bikaner & Jaipur and Dena Bank) and with six RBI approved credit rating agencies (SMERA, CARE, ICRA, CRISIL, FITCH and BrickWork Ratings) to put in place a suitable ecosystem.
M Damodaran, Ex-Chairman, SEBI, was presented at the launch of the service. He indicated that the initiative could be a game changer for flow of credit to the MSME sector in contrast to the several lip services being made to the sector. He suggested that the plethora of regulations to be complied by MSMEs be revisited and rationalised.
“I am glad to know that SIDBI has taken the initiative to set up the ecosystem to strengthen the credit flow to MSME sector by identifying and seeking to address the pain areas both for MSME customers as well as bankers,” said Anurag Jain, Joint Secretary, Department of Financial Services, Government of India.
“I also strongly feel that the process flow under the LSS would provide the much needed guidance to MSMEs for structuring their loan applications properly for bank finance so that the credit officers receive complete, validated and rated loan applications raising their confidence to lend to the sector. It would bring about the much needed transparency and information dissemination thereby improving financial inclusion particularly in the micro and small sector,” said Jain.
Sushil Muhnot, CMD, SIDBI, while giving an overall perspective of the initiative, said, "This will address the current problems, such as incomplete application and data from applicants resulting in delays in credit delivery by banks".
Muhnot also highlighted SIDBI’s niche products, such as Risk Capital to meet the equity and quasi equity requirements of MSMEs, concessional finance for sustainable development and cleaner production projects, setting up of credit advisory centres at MSME cluster level to provide hand holding, financial literacy etc. to MSMEs and capacity building of MSME sector stakeholders.
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