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Introduction

Small Industries Development Bank of India, more popularly known as SIDBI is a pioneer development bank of the country established with the purpose of sole focus on the MSME sector. It is a wholly owned subsidiary of IDBI (Industrial Development Bank of India) and has come into existence via a special Act in the year 1988 and operational since the year 1990.

SIDBI was formed with the aim to provide a central unit for financing, promotion as well as development of the MSME units.

It provides a huge source of finance for the development, promotion, marketing and commercializing of the MSME Sector. SIDBI has tailored made loan products and financial services that can be availed by the small businesses to satisfy their financial needs.

Objectives of SIDBI

The major objectives of SIDBI can be categorized under four aspects namely,

  • Development
  • Promotion
  • Coordination
  • Financing

Some of the key objectives of SIDBI pertaining to the above four are mentioned below.

  • SIDBI is in charge of providing indirect finance through banks, NBFCs, SFCs and other financial institutions to the MSME sector
  • SIDBI provides financial support to Supplemental Security Income (SSIs), and other service sectors
  • The loans offered by SIDBI are for the purposes of growth and development as well as sustenance of the MSME units.

Functions of SIDBI

Some of the key functions of SIDBI are highlighted below.

  • One of the key functions of SIDBI is refinancing of the financial institutions involved in the financing of the MSME sector
  • It also offers direct financing to the MSME sector under its various direct financing schemes.
  • It also provides means for marketing of the various products of the Small Scale Industries not only at the national level but also at the international level.
  • It is also tasked with the promotion of employment opportunities as well as technological upgradation in the semi-urban and rural areas.
  • It ensures the continuous source of finance for working capital needs as well as in the form of term loans for capital investments in fixed assets like plant and machinery or heavy equipment.
  • SIDBI also checks the financial health of the banks and other lending institutions that provide financial assistance to the small businesses.
  • It also offers and promotes venture funds

Benefits of SIDBI

There are various benefits of procuring a loan for MSME sector through SIDBI. Some of such benefits are listed below.

  • Loans under SIDBI are tailor made to cater to specific needs of small businesses
  • The timely availability of loans ensures smooth functioning of businesses without any liquidity issues
  • Loans are available at very reasonable rates under SIDBI as compared to other lenders
  • Security for loans up to Rs. 1,00,00,000 is not required and thus such loans are practically collateral free
  • There are no additional or hidden charges on the loan products that burden the borrowers.
  • Assistance is provided to the borrowers on every step of the way in the form of relationship managers that guide them for the best loan products according to their individual needs.
  • Borrowers can also avail many Government subsidies that are linked with SIDBI
  • Borrowers can get easy access to finance on account of wide eligibility criteria set under various schemes to ensure maximum coverage of small businesses.

Financing options provided by SIDBI

One of the primary functions being financing the MSME sectors, the financing options available to the eligible borrowers from SIDBI are mentioned below.

Direct Financing

SIDBI offers many direct financing options among others to the small businesses for their multifaceted needs like working capital requirements, term loans, combination of both, energy saving schemes, etc.

Some of the schemes under the direct financing mode of SIDBI are mentioned below,

SMILE (SIDBI Make in India Soft Loan Fund For Micro Small and Medium Enterprises)

The loan amount under this scheme is From Rs 10,00,000 Rs. to Rs. 25,00,000 primarily for financing the small and medium enterprises engaged in manufacturing or service sector for expansion/modernization/technological upgradation, etc. for a period up to 10 years including the moratorium of 36 months.

SMILE Equipment Finance (SEF)

Minimum Loans of Rs. 10,00,000  for a maximum period of 6 years for investment in Plant and Machinery/MFAs/Need Based Civil Construction for MSMEs that have been in existence for a minimum period of 3 years.

Loans under Partnership With OEM

Loans up to a maximum of Rs. 1,00,00,000 to MSMEs (that have been in existence for a minimum period of 3 years) given for investment in Plant and Machinery purchased from respective OEMs for a maximum period of 5  years.

Working Capital (Cash Credit)

Working Capital loans in the form of cash credit to the MSME units that fulfill the prescribed eligibility and financial parameters set by SIDBI in this regard.

SIDBI Trader Finance Scheme (STFS)

Eligible MSME retailers or wholesalers in existence for a minimum period of 3 years and having a maximum 10% drop in Sales in last 2 years can get loans under this scheme from Rs. 10,00,000 to Rs. 1,00,00,000 for maximum period of 5 years.

SIDBI – Loan for Purchase of Equipment Development (SPEED)

Eligible Borrowers can get 100% of the cost of machinery (up to Rs. 1,00,00,000 for new customers and Up to Rs. 2,00,00,000 for existing customers) as finance on immediate basis for eligible expenditure under the scheme for a period of 2-5 years at a rate of 9.25% to 10% per annum.

Indirect Financing

Under this type of financing, SIDBI provides refinance to the institutional lenders that are responsible to provide finance to the MSME sector. The purpose of such financing is to ensure a steady flow of credit availability to the MSME sector and thereby empowering them.

Micro Finance

The micro finance option is to provide micro financial services to the economically weaker section as well as women entrepreneurs. It also provides assistance for the entrepreneurs to grow from micro financing needs to higher needs at reasonable rates and comfortable repayment tenures.

Application Process SIDBI

The loan application process under SIDBI is mentioned below.

  • The applicant has to first visit the official website of SIDBI for registration
  • Next step is to click on the ‘Borrower’s Corner’
  • The applicant will have to enter the username and password to proceed.
  • Further, the applicant will be required to mention the details of the loan amount required, loan scheme sought, etc.
  • Along with the above details other details required to be submitted are personal details (name, address, mobile number), business details, etc.
  • After duly filling all the required details, the applicant will have to click on the register which will complete the registration process.

Contact Information of SIDBI

The contact information of SIDBI for any queries related to its products offered or eligibility there under or for any other information as required by the potential borrowers is mentioned below.

Toll Free Number – 1800 226753

Postal Address (Head Office) – SIDBI Tower, 15, Ashok Nagar, Lucknow-226001 Uttar Pradesh

Phone Number – 0522-2288546/47/48/49/0522-4259700

FAQs – SIDBI

1. What is the full form of SIDBI?

The full form of SIDBI is Small Industries Development Bank of India.

2. What is the focus or primary objective of SIDBI?

The primary objective of SIDBI is to provide financial assistance to the MSME sector along with providing developmental and promotional services to the small businesses.

3. When was SIDBI established?

SIDBI was established in the year 1988 under a special Act by Parliament and came into operation in the year 1990.

4. Which is the penultimate body for financing to the MSME sector?

SIDBI is the primary financial institution or the penultimate body to provide or look after the financing needs of the MSME sector.

5. Can SIDBI be considered as a statutory body?

Yes, as SIDBI is formed/established under a special Act by parliament, it can be considered as a statutory body.

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