1. ASSIGNMENT – I
ECONOMIC ENVIRONMENT-
SIDBI
MADE BY : RISHEBH CLEMENT
BBA-IB
SEMESTER II
SUBMITTED TO:
Mrs. SUPRIYA LAMBA

3. IntroductionIntroduction
 Small Industries Development Bank of India (SIDBI), set up onSmall Industries Development Bank of India (SIDBI), set up on
April 2, 1990 under an Act of Indian Parliament, is the PrincipalApril 2, 1990 under an Act of Indian Parliament, is the Principal
Financial Institution for the Promotion, Financing andFinancial Institution for the Promotion, Financing and
Development of the Micro, Small and Medium EnterpriseDevelopment of the Micro, Small and Medium Enterprise
(MSME) sector and for Co-ordination of the functions of the(MSME) sector and for Co-ordination of the functions of the
institutions engaged in similar activities.institutions engaged in similar activities.
 It was incorporated initially as a wholly owned subsidiary ofIt was incorporated initially as a wholly owned subsidiary of
Industrial Development Bank of India.Industrial Development Bank of India.

4.  Beginning as a refinancing agency to banks and state levelBeginning as a refinancing agency to banks and state level
financial institutions for their credit to small industries, it hasfinancial institutions for their credit to small industries, it has
expanded its activities, including direct credit to the SMEexpanded its activities, including direct credit to the SME
through 100 branches in all major industrial clusters in India.through 100 branches in all major industrial clusters in India.
 Recently it has opened seven branches christened as MicroRecently it has opened seven branches christened as Micro
Finance branches, aimed especially at dispensing loans up toFinance branches, aimed especially at dispensing loans up to
Rs. 5 lakh.Rs. 5 lakh.
 It is an apex body and nodal agency for formulatingIt is an apex body and nodal agency for formulating
coordination and monitoring the policies and programmes forcoordination and monitoring the policies and programmes for
promotion and development of small scale industries.promotion and development of small scale industries.
 SIDBI has also floated several other entities for relatedSIDBI has also floated several other entities for related
activities. Credit Guarantee Fund Trust for Micro and Smallactivities. Credit Guarantee Fund Trust for Micro and Small
Enterprises provides guarantees to banks for collateral-freeEnterprises provides guarantees to banks for collateral-free
loans extended to SME.loans extended to SME.

5. Business Domain of SIDBIBusiness Domain of SIDBI
 The business domain of SIDBI consists of small scaleThe business domain of SIDBI consists of small scale
industrial units, which contribute significantly to the nationalindustrial units, which contribute significantly to the national
economy in terms of production, employment and exports.economy in terms of production, employment and exports.
 Small scale industries are the industrial units in which theSmall scale industries are the industrial units in which the
investment in plant and machinery does not exceed Rs.10investment in plant and machinery does not exceed Rs.10
million .million .
 About 3.1 million such units, employing 17.2 million personsAbout 3.1 million such units, employing 17.2 million persons
account for a share of 36 per cent of India's exports and 40 peraccount for a share of 36 per cent of India's exports and 40 per
cent of industrial manufacture.cent of industrial manufacture.
 In addition, SIDBI's assistance flows to the transport, healthIn addition, SIDBI's assistance flows to the transport, health
care and tourism sectors and also to the professional and self-care and tourism sectors and also to the professional and self-
employed persons setting up small-sized professional ventures.employed persons setting up small-sized professional ventures.

6. AchievementsAchievements
 SIDBI retained its position in the top 30 Development BanksSIDBI retained its position in the top 30 Development Banks
of the World in the latest ranking of The Banker, London.of the World in the latest ranking of The Banker, London.
 As per the May 2001 issue of The Banker, London, SIDBIAs per the May 2001 issue of The Banker, London, SIDBI
ranked 25th both in terms of Capital and Assets.ranked 25th both in terms of Capital and Assets.
 Credit Guarantee Fund Trust for Micro and Small EnterprisesCredit Guarantee Fund Trust for Micro and Small Enterprises
popularly known as CGTMSE is widely being used by manypopularly known as CGTMSE is widely being used by many
PSU Banks and Private sector banks to fund MSME sector.PSU Banks and Private sector banks to fund MSME sector.
 During the year 2002-03 the aggregate sanction andDuring the year 2002-03 the aggregate sanction and
disbursements of SIDBI amounted to Rs 10904crore and Rsdisbursements of SIDBI amounted to Rs 10904crore and Rs
6789crore respectively.6789crore respectively.

7. Mission & VisionMission & Vision
 Mission:Mission:
““To empower the Micro, Small and MediumTo empower the Micro, Small and Medium
Enterprises (MSME) sector with a view toEnterprises (MSME) sector with a view to
contributing to the process of economic growth,contributing to the process of economic growth,
employment generation and balanced regionalemployment generation and balanced regional
developmentdevelopment””
 Vision:
““To emerge as a single window for meeting theTo emerge as a single window for meeting the
financial and developmental needs of the MSMEfinancial and developmental needs of the MSME
sector to make it strong, vibrant and globallysector to make it strong, vibrant and globally
competitive, to position SIDBI Brand as thecompetitive, to position SIDBI Brand as the
preferred and customer - friendly institution and forpreferred and customer - friendly institution and for
enhancement of share - holder wealth and highestenhancement of share - holder wealth and highest
corporate values through modern technologycorporate values through modern technology
platformplatform”

8. ObjectivesObjectives
 Four basic objectives are set out in the SIDBI Charter. They are:Four basic objectives are set out in the SIDBI Charter. They are:
 FinancingFinancing
 PromotionPromotion
 DevelopmentDevelopment
 Co-ordinationCo-ordination
for orderly growth of industry in the small scale sector. Thefor orderly growth of industry in the small scale sector. The
Charter has provided SIDBI considerable flexibility in adoptingCharter has provided SIDBI considerable flexibility in adopting
appropriate operational strategies to meet these objectives.appropriate operational strategies to meet these objectives.

9. Products And ServicesProducts And Services
 Direct finance.Direct finance.
 Bills financeBills finance
 RefinanceRefinance
 International financeInternational finance
 Promotional & Development activities.Promotional & Development activities.
 Fixed deposit schemeFixed deposit scheme
 Technology Upgradation & Modernisation Fund SchemeTechnology Upgradation & Modernisation Fund Scheme
{TDMF}{TDMF}
 Venture Capital Fund SchemeVenture Capital Fund Scheme
 Seed Money SchemesSeed Money Schemes
 National Equity Fund SchemeNational Equity Fund Scheme

10. Direct FinanceDirect Finance
 Since its beginning, SIDBI had been providing refinance toSince its beginning, SIDBI had been providing refinance to
State Level Finance Corporations / State IndustrialState Level Finance Corporations / State Industrial
Development Corporations / Banks etc., against their loansDevelopment Corporations / Banks etc., against their loans
granted to small scale units.granted to small scale units.
 SIDBI’s direct finance schemes are:SIDBI’s direct finance schemes are:
 Scheme for expansion / diversification of small scale units.Scheme for expansion / diversification of small scale units.
 Scheme for specialised marketing agencies.Scheme for specialised marketing agencies.
 Scheme for ancilaring / subcontract units.Scheme for ancilaring / subcontract units.
 Scheme for existing Export Oriented Units(EOUs) toScheme for existing Export Oriented Units(EOUs) to
enable them to acquire ISO 9000 series certification.enable them to acquire ISO 9000 series certification.

11. Bills Finance SchemesBills Finance Schemes
 Bills Finance Scheme involves provision of medium and short-Bills Finance Scheme involves provision of medium and short-
term finance for the benefit of the small-scale sector.term finance for the benefit of the small-scale sector.
 Bills Finance seeks to provide finance, to manufacturers ofBills Finance seeks to provide finance, to manufacturers of
indigenous machinery, capital equipment, components sub-indigenous machinery, capital equipment, components sub-
assemblies etc, based on compliance to the various eligibilityassemblies etc, based on compliance to the various eligibility
criteria, norms etc as applicable to the respective schemes.criteria, norms etc as applicable to the respective schemes.
 To be eligible under the various bills schemes, one of theTo be eligible under the various bills schemes, one of the
parties to the transactions to the scheme has to be an industrialparties to the transactions to the scheme has to be an industrial
unit in the small-scale sector within the meaning of Section 2(h)unit in the small-scale sector within the meaning of Section 2(h)
of the SIDBI Act, 1989.of the SIDBI Act, 1989.

12. Refinance SchemesRefinance Schemes
 Refinance scheme is introduced for catering to the need ofRefinance scheme is introduced for catering to the need of
funds of Primary Lending Institutes {PLI} for financing smallfunds of Primary Lending Institutes {PLI} for financing small
scale sector.scale sector.
 Under the scheme, SIDBI grants refinance against term loansUnder the scheme, SIDBI grants refinance against term loans
granted by the eligiblegranted by the eligible PLI’sPLI’s to industrial concerns for settingto industrial concerns for setting
up industrial projects in the small scale sector as also for theirup industrial projects in the small scale sector as also for their
expansion / modernization / diversification.expansion / modernization / diversification.
 Schemes of re-finance assistance:Schemes of re-finance assistance:
 Scheme for SC-ST & physically handicraft personsScheme for SC-ST & physically handicraft persons
 Composite loan schemeComposite loan scheme
 Equipment refinance schemes.Equipment refinance schemes.
 Schemes for small road transport operators.Schemes for small road transport operators.
 Special assistance to ex-servicemen.Special assistance to ex-servicemen.

13. International Finance SchemesInternational Finance Schemes
 The main objective of the various International FinanceThe main objective of the various International Finance
schemes is to enable small-scale industries to raise finance atschemes is to enable small-scale industries to raise finance at
internationally competitive rates to fulfill their exportinternationally competitive rates to fulfill their export
commitments.commitments.
 The financial assistance is being offered in US Dollars andThe financial assistance is being offered in US Dollars and
Euro currencies. Assistance in Rupees is also provided to theEuro currencies. Assistance in Rupees is also provided to the
needy borrowers.needy borrowers.
 The international finance is available from pre-shipment &The international finance is available from pre-shipment &
post shipment credit.post shipment credit.
 Need based limit, depending on the normal trade terms andNeed based limit, depending on the normal trade terms and
credit period given to overseas buyers by exporters notcredit period given to overseas buyers by exporters not
exceeding 180 days.exceeding 180 days.

14. Promotional and DevelopmentPromotional and Development
ActivitiesActivities
 As an apex financial institution for promotion, financing andAs an apex financial institution for promotion, financing and
development of industry in the small scale sector, SIDBI meetsdevelopment of industry in the small scale sector, SIDBI meets
the varied developmental needs of the Indian SSI sector by itsthe varied developmental needs of the Indian SSI sector by its
wide-ranging Promotional and Developmental (P&D)wide-ranging Promotional and Developmental (P&D)
activities.activities.
 The activities are as follows:The activities are as follows:
 Entrepreneurship Development Programmes.Entrepreneurship Development Programmes.
 Management Development Programmes.Management Development Programmes.
 Technology Upgradation Programmes.Technology Upgradation Programmes.

15. Fixed Deposit SchemeFixed Deposit Scheme
Time periodTime period
Revised Annual InterestRevised Annual Interest
Rate %p.a. * w.e.f AugustRate %p.a. * w.e.f August
10, 200910, 2009
Interest (% p.a.)Interest (% p.a.)
12 months - 13 months12 months - 13 months 6.506.50
14 months - 36 months14 months - 36 months 7.007.00
14 months - 36 months14 months - 36 months 7.507.50
For SeniorFor Senior
CitizensCitizens
7.07.0
7.57.5
8.08.0
The Interest Rate Structure for SIDBI Fixed Deposit Scheme
of SIDBI are as under:

16. Technology Upgradation &Technology Upgradation &
Modernization Fund SchemeModernization Fund Scheme
 This fund was setup in the year 1996 by the SIDBI with anThis fund was setup in the year 1996 by the SIDBI with an
initial capital of 200 million.initial capital of 200 million.
 It was setup for the purpose of encouraging the existing smallIt was setup for the purpose of encouraging the existing small
scale industrial units to modernize production facilities andscale industrial units to modernize production facilities and
adopt improved and updated technology for strengtheningadopt improved and updated technology for strengthening
export capabilities.export capabilities.
 For availing benefits under this scheme the unit have toFor availing benefits under this scheme the unit have to
prepare an estimate for modernization & submit it to SIDBI.prepare an estimate for modernization & submit it to SIDBI.
 The sanction of funds is made depending upon the estimateThe sanction of funds is made depending upon the estimate
submitted.submitted.

17. Venture Capital Fund SchemeVenture Capital Fund Scheme
 SIDBI is participating in the Venture capital fund set by publicSIDBI is participating in the Venture capital fund set by public
sector institutions as well as private companies to the extent ofsector institutions as well as private companies to the extent of
Rs,50,00,000 of total capital of the fund required.Rs,50,00,000 of total capital of the fund required.
 The fund should be dedicated to financing small industryThe fund should be dedicated to financing small industry
preferably the most risky one.preferably the most risky one.

18. Seed Money SchemesSeed Money Schemes
 One of the constraints faced by Entrepreneurs is the lack ofOne of the constraints faced by Entrepreneurs is the lack of
own resources to promote the minimum promoterown resources to promote the minimum promoter
contribution.contribution.
 Hence, SIDBI introduced seed money scheme for the benefitHence, SIDBI introduced seed money scheme for the benefit
of entrepreneurs.of entrepreneurs.
 Seed money is available through DIC { Direct IndustrySeed money is available through DIC { Direct Industry
Centre } to those entrepreneur who are technically qualifiedCentre } to those entrepreneur who are technically qualified
but lack of own capital.but lack of own capital.

19. National Equity Fund SchemeNational Equity Fund Scheme
 In order to provide equity type assistance, SIDBI is operation aIn order to provide equity type assistance, SIDBI is operation a
National Equity Fund Scheme.National Equity Fund Scheme.
 The equity capital loan to the extent of 2.5lakh is sanctioned toThe equity capital loan to the extent of 2.5lakh is sanctioned to
each project provided the protect qualities under this scheme.each project provided the protect qualities under this scheme.

20. THANK YOU