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2012-11-26

SIDBI signs MoU with banks to increase MSME lending

In yet another initiative to boost lending to the MSME sector, Small Industries Development Bank of India (SIDBI) has signed a memorandum of understanding (MoU) with regional rural banks (RRB) and urban co-operative banks (UCB) in Rajasthan for increasing

In yet another initiative to boost lending to the MSME sector, Small Industries Development Bank of India (SIDBI) has signed a memorandum of understanding (MoU) with regional rural banks (RRB) and urban co-operative banks (UCB) in Rajasthan for increasing credit flow to small enterprises.

RRBs, UCBs, and district central cooperative banks (DCCBs) are well-suited to meet their requirements but presently do not have the required expertise for lending to micro enterprises. 

Considering the importance of capacity building of DCCBs, RRBs and UCBs across the country, SIDBI is extending capacity building support to select RRBs, UCBs and DCCBs for micro enterprises loans. Towards this goal, a MoU was executed on pilot basis with six RRBs and four UCBs of Rajasthan at SIDBI’s Jaipur regional office.

 It aims at training their staff on project appraisal, monitoring and collection as also providing them free access to software on Downscaling Methodology developed for lending to micro enterprises. This methodology focuses on cash flow base landing instead of the traditional security based lending adopted by banks.

It is expected that this MoU signing will strengthen relations between SIDBI, RRBs and UCBs, and also take ahead the MEL financing to the missing middle segment of economy.

The MoU was signed by Jaipur Regional Head M K Sharma in the presence of CMD of SIDBI Sushil Muhnot.

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