What is Small Industries Development Bank of India| SIDBI - Introduction | Features | Objectives | Functions
Small Industries Development Bank of India (SIDBI) set up on 2nd April 1990 under an Act of Indian Parliament, acts as the Principal Financial Institution for Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector as well as for co-ordination of functions of institutions engaged in similar activities
The most effective way to improve the rural economy is to increase employment by dispersing various industrial activities so that backward areas can develop while people’s living standards improve. Small-scale industry, which accounts for nearly 40% of the country’s manufacturing sector, could easily achieve the above goal by promoting it.
Small-scale industry contributed INR 5,38,357 crores to India’s economy in 1998–99, compared to INR 4,65,171 crores in 1997–98. SSI increased by 8.43% in the last year. It has a 171.58 lakh job opening. As a result, it’s critical to establish a central bank that can finance small businesses.
Features of SIDBI
- Financial Institute for Promotion of SIDBI
- Sustainable Development
- Advisory Function
- Services to MSMEs
- Achievement of National Goals
- Different forms of Finance
- Digital Initiatives
-SIDBI Startup Mitra
- Nodal/Implementing Agency
Financial Institute for Promotion of SIDBI
SIDBI is established to provide short term and long term finance to the MSMEs. It provides refinance to Banking and Non-banking Financial Companies to increase the supply of credit to MSMEs. SIDBI cater to the specific needs of Indian MSMEs that are not fulfilled through traditional sources of finance.
SIDBI is working towards the sustainable development of MSMEs in India. It helps MSMEs in the creation of economic wealth while preventing the ecological wealth of the country. It promotes a culture of energy-efficient and sustainable finance. It helps to reduce the emission of greenhouse gases to contribute to a reduction in pollution.
SIDBI also works as an advisor and mentor for MSMEs. It helps MSMEs in expanding marketing channels for the products both in the domestic as well as international markets. It also initiates steps for modernization and technological up-gradation of current units.
Services to MSMEs
SIDBI provides different types of financial and non-financial services through its associates and subsidiaries. These associates and subsidiaries are as follows:
• SIDBI Ventures Capital Ltd.
• Credit Guarantee Fund Trust for Micro and Small Enterprises.
•SME Rating Agency of India Ltd.
• India SME Technology Services Limited
• India SME Asset Reconstruction Company Ltd.
• Micro Units Development & Refinance Agency
Achievement of National Goals
SIDBI helps in poverty alleviation and employment generation by financing MSMES. It promotes entrepreneurship and fosters competitiveness in the MSME sector. It promotes entrepreneurship among women and the economically weaker sections of society.
Different forms of Finance
SIDBI offers the following facilities to its customers:
(a) Direct Finance,
(b) Indirect Finance,
© Micro Finance
(a) SIDBI Startup Mitra: It brings together all stakeholders, start-up entrepreneurs, incubators, investors, industry bodies, mentors and advisors, and banks at one platform. It helps in financing and development of new entrepreneurs It also works as a knowledge partner for State and Central Government.
(b) Udyami Mitra: This is the portal launched by SIDBI to improve the accessibility of credit and handholding services to MSME’s. Under this portal, entrepreneurs can apply for a loan without physically visiting any bank branches. The entrepreneurs can select and apply for preferred banks, they can select a suitable branch, track their application status an avail multiple loan benefits.
SIDBI has been assigned the role of nodal agency by the Government of India. It helps in implementing various subsidy schemes for MSMEs. These schemes help in up-gradation, modernization, and expansion of the business.
Objectives of SIDBI
- To Understand the Performance of the MSME Sector.
- To Study the role played by SIDBI in developing the MSME Sector from various angles.
- To Understand the problems of MSMEs and suggestions for the mitigation of the same.
- To upgrade technology and also undertaking modernization of small scale units.
- To encourage employment oriented industries.
Functions of SIDBI
- To ensure the financial health of small-scale industries in the Small and Medium Enterprises (MSME) sector, aid financial institutions (cooperation and commercial banks) lending to them.
- SIBDI direct loans are available to companies classified as Small and Medium Enterprises (MSME).
- On a global scale, carry out marketing initiatives for small-scale industries.
Provide opportunities for venture funding for industries in the Small and Medium Enterprises (SME) sector.
- Promotion of employment and technological advancement in the sector.
- Provide job opportunities for people who want to work in the industry.
- Loans are available for the development and upkeep of small-scale industries in the country.
- Small-scale industry marketing on a global scale.
- Promotion of job-creating industries in the small-scale manufacturing sector.
- Ensure that the small-scale industry is technologically advanced.
- Ensures the financial stability of cooperative and commercial banks that lend to small businesses.
- The promotion of venture capital funds.