Brief Profile of SIDBI
Small Industries Development Bank of India (SIDBI) set up on April 2, 1990 under an Act of Indian Parliament, acts as the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the function of the institutions engaged in similar activities.
Risk Capital Assistance
SIDBI offers special financial assistance to bridge the gap between the two chief sources of finance viz. bank loans (senior debt) and promoter’s capital. SIDBI offers this assistance in form of mezzanine/ convertible instruments, subordinated debt and equity (in deserving cases). This quasi-assistance is collateral free, has higher moratorium on repayment and a flexible structuring.
Asset backing / security is not a pre-requisite under the scheme. The assistance is provided on the basis of cash flows of the enterprise rather than security cover. Risk based returns possible – fixed coupon rate + participation (equity rights / royalty on sales, etc). option to convert into equity based on a pre-decided methodology.
Growth Capital & Equity assistance Scheme
Provide financial assistance to bridge the gap between the two chief sources of finance viz. bank loans (senior debt) and promoter’s capital.
Target customers: Growing & profitable units. Sound corporate governance / financial discipline, track record with banks / assisted by reputed PE/VC funds, positive industry prospects / new economy business, etc.
Assistance is through Mezzanine debt and equity
a) Subordinate debt-accepted as quasi-equity by SIDBI.
b) Participative Debt-debt with equity options, royalty or any other participation mechanism, etc.
c) Equity / Convertible preference equity – selectively to companies having innovative / scalable business models.
Startup Assistance Scheme
Objective: To financially assist start-ups and early stage businesses.
Innovative business models/ new economy business backed by strong management team, business assisted by reputed VC funds, positive industry prospects, etc.
a) For startups and early stage enterprises set up by promoters experienced in the line/ backed by strong management team.
b) The assistance is provided for stabilization and scaling up of start-up business which have crossed the ‘Proof of concept’ stage and started generating revenues.
c) The assistance could be up to Rs. 100 lakh with structured flexibly to support stabilization of business.
SIDBI promotes sustainable finance by providing loans to MSMEs for improving energy efficiency, protecting environment and maintaining social standards under different bilateral / multilateral lines of credit (LoC) as given below:
SIDBI-JICA Financing Scheme
Objective : The objectives of the Line is to promote energy saving in MSMEs in India, by providing financial assistance to MSMEs, by way of direct assistance through the branch network of SIDBI as well as through refinance to Primary Lending Institutions (PLls) and Non-Banking Financial Companies (NBFCs), and by providing technical assistance to these financial institutions, thereby contributing to environmental improvement and economic development in the country and control of climate change on the earth. Under this scheme, investments are channelized to those equipment / machinery which have energy saving potential of minimum 10%.
SIDBI-KfW Financing Scheme
Objective: The Overall Objective of the Programme is to reduce the emission of greenhouse gases, especially Carbon Dioxide (CO2) and thus to contribute towards climate change mitigation. A special condition is to ensure reduction of minimum 3 ton CO2 per lakh of investment.
SIDBI-KfW Financing Scheme for Cleaner Production Measures in the MSME Sector
Objective : The objective of the Line is to achieve a reduction avoidance of emissions and pollution through the introduction of financial products, enabling climate and environmental friendly investments. Specially, it seeks to: (a) increase he volume of MSMEs investments in cleaner production, (b) raise the contribution of MSMEs to ecologically sustainable economic development and (c) strengthen SIDBI’s financial instruments.
Sustainable Finance Scheme
There are certain projects which may not meet the eligibility norms set by the international donor agencies but considering the fact that these projects also result in energy efficiency improvements in the MSMEs and result in abatement of Green House Gas (GHG) emissions that harms the environment. A separate scheme, viz. “Sustainable Finance Scheme (SFS) has been created to finance such projects, for example: Renewable energy projects, green, energy efficient buildings, waste management, Expenditure on energy audit / environment compliance audit / pollution control & management consultancy services, Expenditure on green rating, BEE star rating of its product, eco-friendly labeling, ISO 50001 / 14000 or other accredited environmental certification, etc.
Receivable Finance Scheme
Objective: To enable MSMEs selling components, parts, sub-assemblies, services, etc. to Medium & Large scale units realize their sale proceeds quickly
Annual limits are sanctioned to either well performing large purchaser corporate or MSME vendors covering discounting of bills of exchange / invoices arising out of sale of indigenous components / parts / sub-assemblies / accessories / intermediates / provision of services by MSMEs including service sectors enterprises.
· MSME suppliers draw Bills of Exchange on Purchase companies against supplies made/ services provided by them and the Bills of Exchange are accepted by the Purchase companies.
· Wherever Bill of Exchange is not available / accepted by the large Corporates, discounting is also made based on Invoices accompanied by proof of delivery in the form of deliver challan or Goods Receipt Note as per agreed terms between the Corporates and SIDBI.
· Limits backed by LCs / guarantees established by Scheduled Commercial banks are considered at competitive terms.
· Limits extended to large Corporates at competitive rate of interest, benefits the MSME suppliers with effective discounting besides quicker realization of realization of receivables resulting in better liquidity management.
· Besides less administrative and processing costs in handling payments to SIDBI in place of large no. of MSME suppliers, large Corporates/purchaser companies can also negotiate better terms with Suppliers.
Objective: To provide financial assistance to existing and new MSMEs in the Service Sector. Though all types of projects under the sector may be considered for assistance, the Bank will focus on select segments, such as, Budget Hotels, Small Hospitals, Restaurants/ Restaurant Chains, Auto Dealers/ Workshops, Transport Services, Logistic Services, Franchising, IT and IT Enabled Services, etc.
Eligible borrowers: * New/Existing Services Sectors MSMEs with satisfactory track record of past performance and sound financial position * New Service Sector MSMEs promoted by well established promoters * Service Sector MSME s associated with established brands under franchising.
Service Sector projects within the ambit of Section 2 (h) of SIDBI Act/as per guidelines approved by the Board of the Bank are eligible.
Term loan and working capital assistance.
Investment products such as equity, debentures, optionally convertible cumulative preference shares, zero coupon bonds, etc. can also be considered on the merits of the case.
Benefits: The Bank adopts a liberal approach regarding moratorium for repayment of assistance, repayment period, security / collaterals and other terms. Eligible projects may also be covered under CGTMSE scheme.
Assistance is provided at competitive rates.
International Finance Schemes
Objective: To offer forex services to MSME customers out of the foreign currency resources raised from various multilateral agencies.
Benefits: Eligible MSMEs are provided with the option of availing Foreign Currency Term Loans (FCTL) denominated in USD and EUR which are linked to LIBOR or EURIBOR rates of interest. This allows the MSME customers to borrow in Foreign Currency at competitive rates of interest. However, the risk involved in availing such foreign currency loans would be borne by the MSMEs. To this extent MSME customers are expected to have a natural hedge or adopt suitable hedging mechanism to cover foreign currency risks.
To facilitate import of machinery / raw materials, Foreign Letters of Credit (FLCs) / Inward Remittances are also offered as additional services at the request of the MSME customers.
Association of Development Financing Institution in Asia and the Pacific (ADFIAP) – a DFI fraternity with membership of 131 institutions from 45 countries, honored SIDBI with two awards in 2012 for “Taxi Financing Scheme”; “Auto Rickshaw Financing”, and, “Energy Efficiency Lines of Credit” under Environmental Development Category and for development and application of “Code of Conduct assessment (COCA) Tool” under Corporate Governance category.
SME Development Centre C-11 G-Block,
Bandra-Kurla Complex, Bandra(E),
Mumbai – 400051, Maharashtra
Phone No. 022-67531208
Contact id : ROMumbai@sidbi.in