All about SIDBI!

Small Industries Development Bank of India was incorporated 30 years ago on 2nd April 1992 by a special act of Parliament. It is a development Financial Institution having its headquarter at Lucknow and has 73 branches and five regional offices all over the country. SIDBI is one of the four all India financial institutions the other three are EXIM Bank (export and import Bank), NABARD (National bank for agriculture and rural development), and NHB (national housing Bank) regulated and supervised by RBI (Reserve Bank of India).

Operating under the Department of Financial Services, Government of India SIDBI provides refinance and short term lending facilities to Micro Small and Medium Enterprises. SIDBI is a wholly-owned subsidiary of IDBI. It is responsible for administering the National equity fund and Small Industries Development fund. The main objective of SIDBI is to facilitate and strengthen the flow of credit to MSMEs and to address both financial and development gaps in the ecosystem of micro small and medium enterprises. SIDBI aims to have a single window for meeting both the developmental and financial needs of the MSME sector.

71% of the shares of SIDBI are held by the Government of India and the remaining 29% are held by public sector banks, insurance companies and other Institutions owned or controlled by the central government.

The various function of Small Industries Development Bank of India are:-

  • Service life factoring, leasing, hire-purchasing etc are offered to small scale industrial concerns.
  • SIDBI discounts and rediscount bills.
  • It refinances loans and also offers resource assistance to small industrial units.
  • Marketing channel expands both in domestic and as well as in international markets for SSI’s products.
  • It encourages state-level venture funds.
  • It undertakes initiatives for modernizing and up-gradation of technologies.
  • In semi-urban areas, it promotes employment-oriented industry for creating better employment opportunities.
  • It provides a timely flow of credit for both working capitals and as well as for term loan is to SSI.
  • By strengthening MSMEs it takes initiative to create a balance in the financial sector.
  • It keeps the check on urban migration.

SIDBI acts as a boon for MSMEs as:-

  • It assists small scale industries in funding in the right way. SIDBI provides loans as per their business requirements.
  • Custom made loans are made available, that is loans and credit are modified as per the size of the business for suiting SSI’s business requirements.
  • Loans at concessional rate of interest are provided as it has tie-up with several financial institutions of all over the world. Did you know SIDBI even has tie-ups with Japan International Cooperation Agency and with the World Bank?
  • Micro Small and Medium enterprises can get a loan up to INR 100 lakh without providing any kind of security.
  • Small Industries Development Bank of India not only provides loans but also offers assistance to its customers till the loan is processed and a piece of advice by relationship managers so as the customers take the right decisions.
  • There are no hidden charges and even the processes and the rate structure of SIDBI are transparent.

SIDBI offers three finance facilities to the customers for up-gradation of technology, have growth, improve production, etc.

The finance facilities that are offered by SIDBI are:-

  • Micro Finance

Small entrepreneurs and businessmen are offered financial assistance by SIDBI in the form of microfinance for establishing their business. The various microfinance schemes offered by Small Industries Development Bank of India are Micro-Lending development, Responsible  Finance initiatives and Beyond microfinance 

  • Indirect Finance

Indirect assistance is offered by SIDBI by providing refinance to Primary Lending Institutions (PLIs) comprehending State Level Financial Institutions, banks, etc. The main objective of this refinancing scheme is to improve the resource position of PLIs to enable the adequate flow of credit to the MSME sector.

  • Direct Finance

SIDBI offers direct assistance to the MSMEs by various schemes like SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises(SMILE), SMILE equipment finance, Working Capital Finance, Loan under partnership with original equipment manufacturer (OEM), SIDBI Trader Finance Scheme (STFS), Loan for Purchase of equipment for Enterprise Development (SPEED), Retail Loan Scheme for Trade Finance (RLS), Term-Loan Assistance for Rooftop solar PV Plants (STAR), Top-up loan for immediate purposes (TULIP), and Loan for purchase of Equipment for enterprises development Plus (SPEED Plus).

 

Loan Product Maximum Time Amount
•SMILE      10 yrs. 10L-25L
•SMILE Equipment 72 mths. 10L
Finance    
•OEM 60 mths upto 1cr
•STFS 60 mths. 10L-1cr
•SPEED 2-5 yrs upto 1cr for new customer upto 2 cr for the existing customers
•SPEED Plus 2-5 yrs. upto 2cr for new and upto 3cr for the existing customers
•RLS 36-60mths 10L-1cr
•TULIP 5 yrs. Max 2cr
•STAR 5 yrs. 10L-2.50cr

                                        

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

SMILE scheme was launched to provide aid to both existing as well as to new enterprises by Mr. Arun Jaitley on 18th August 2015. This scheme is intended to take forward the ‘Make in India’ campaign of the government. This scheme is expected to benefit approximately 13,000 businesses and provide employment to nearly 2 lakh persons. There are two types of assistance provided under this schemes they are:-

  • Soft Loan like equity.
  • Term loan. 

Key Benefits

The key benefits of this scheme are:-

  • Attractive interest rates.
  • Long repayment period.
  • Quick dispensation of financial assistance. 
  • Speedy dispensation of machinery loan. through a contactless platform.
  • Funding of part promoters by way of soft loans.

Eligibility Criteria

The eligibility criteria of SMILE is:-

  • The main emphasis is on newly emerged manufacturing Enterprises and the service sector.
  • SMILE emphasises to provide finance to the MSMEs.
  • This scheme benefits the existing enterprises as it provides funds for modernization, up-gradation of technologies, techniques and for expansion.
  • MSME’s should be in existence for at least three years and should have a sound financial position if they want to apply for the SMILE scheme.
  • Maximum size of the loan is Rs. 10 lakh for equipment finance and Rs. 25 lakh for others.

Tenure

  • The repayment tenure of the loan under this scheme is up to 10 years including atleast 36 months of the moratorium period.
  • The minimum amount of promoter contribution of 15% subjected to maximum Debt equity ratio of 3:1

Targeted Sectors

The main focus of SMILE is identified on 25 Make in India sectors. They are:-

  • Automobiles and Automobile Components
  • Aviation
  • Bio-Technology and Chemicals
  • Constructions, IT and BPM
  • Electrical Machinery and Electronic Systems
  • Defense Manufacturing
  • Food Processing
  • Leather and Mining
  • Media & Entertainment
  • Oil & gas
  • Pharmaceuticals
  • Railways
  • Ports & Shipping
  • Renewable Energy
  • Roads & Highways
  • Space and Thermal Power
  • Textiles & Garments
  • Tourism & Hospitality
  • Wellness Sectors

Documents Required

The various documents required for applying for this scheme are undermentioned:-

  • Profile of company or firm.
  • Profile of the promoters or Guarantors
  • Address proof of the business– As per SIDBI’s KYC application form for Non- Individuals
  • Identity Proof: Passport, Driving License, Voter’s ID Card, PAN Card and Signature identification from present bankers of the proprietor, partner or director.
  • Address Proof: Recent telephone bills, property tax receipt, electricity bill, Voter’s ID Card of Proprietor, Partner or of the Director.
  • Memorandum and articles of association of the Company and Partnership Deed of the company.
  • Incorporation certificate from the ROC to establish whether majority stakeholding of the company is in the hands of the person who belongs to SC, ST or Woman category. 
  • Manufacturing process details, if applicable.
  • Rental Agreement and clearance from the pollution control board if applicable.
  • Udyog Aadhar Memorandum (UAM) registration.
  • Projected balance sheets of the next three years in case of term loan.
  • The balance sheet of the last three years of the Associate and Group Companies.
  • Detailed Project Report
  • Net Worth Statement of promoters and guarantors.
  • Latest income tax returns.
  • Photocopies of lease deeds and title deeds of all the properties being offered as primary and collateral securities.
  • Documents to prove whether the applicants belong to SC or ST Category.

Security

In case of term loan

  • First charge on all the assets created under the project. Personal guarantee of promoters.
  • When the term loan is up to ₹ 2 crore it may be covered under Credit Guarantee Scheme of (CGTMSE).

In case of soft loan

  • Residual charge over the entire assets and personal Guarantee of the Promoters.
  • SIDBI is making impeccable initiatives to strengthen MSMEs, this would in turn help to flourish the economy of the country.

 

  • By Vanshika Tandon

Leave a Reply

Your email address will not be published. Required fields are marked *