The SIDBI (Small Industries Development Bank of India) is a wholly-owned subsidiary of IDBI (Industrial Development Bank of India), established under the special Act of the Parliament 1988 which became operative from April 2, 1990.
SIDBI was made responsible for administering Small Industries Development Fund and National Equity Fund that were administered by IDBI before. SIDBI is the Primary Financial Institution for promoting, developing and financing MSME (Micro, Small and Medium Enterprise) sector. Besides focussing on the development of the Micro, Small and Medium Enterprise sector, SIDBI also promotes cleaner production and energy efficiency.
SIDBI helps MSMEs in acquiring the funds they require to grow, market, develop and commercialize their technologies and innovative products. The bank provides several schemes and also offers financial services and products for meeting the individual’s requirement of various businesses.
Finance Facilities Offered by SIDBI
Small Industries Development Bank of India, offers the following facilities to its customers:
Direct Finance
SIDBI offers Working Capital Assistance, Term Loan Assistance, Foreign Currency Loan, Support against Receivables, equity support, Energy Saving scheme for the MSME sector, etc. under its various direct finance loan schemes.
Indirect Finance
SIDBI offers indirect assistance by providing Refinance to PLIs (Primary Lending Institutions), comprising of banks, State Level Financial Institutions, etc. with an extensive branch network across the country. The key objective of the refinancing scheme is to raise the resource position of Primary Lending Institutions that would ultimately enable the flow of credit to the MSME sector.
Micro Finance
Small Industries Development Bank of India offers microfinance to small businessmen and entrepreneurs for establishing their business.
Functions of SIDBI
- Small Industries Development Bank of India refinances loans that are extended by the PLIs to the small-scale industrial units and also offers resources assistance to them.
- It discounts and rediscounts bills.
- It also helps in expanding marketing channels for the products of SSI (Small Scale Industries) sector both in the domestic as well as international markets.
- It offers services like factoring, leasing etc. to the industrial concerns in the small-scale sector.
- It promotes employment-oriented industries particularly in semi-urban areas for creating employment opportunities and thus checking the relocation of people to the urban areas.
- It also initiates steps for modernisation and technological up-gradation of current units.
- It also enables the timely flow of credit for working capital as well as term loans to Small Scale Industries in cooperation with commercial banks.
- It also co-promotes state-level venture funds.
Benefits of SIDBI
Custom-made
SIDBI policies loans as per the requirements of your businesses. If your requirement doesn’t fall into the ordinary and usual category, Small Industries Development Bank of India would assist in funding you in the right way.
Dedicated Size
Credit and loans are modified as per the size of the business. So, MSMEs could avail different types of loans custom-made for suiting their business requirement.
Attractive Interest Rates
It has a tie-up with several banks and financial institutions over the world and could offer concessional interest rates. The SIDBI has tie-ups with World Bank and the Japan International Cooperation Agency.
Assistance
It does not just provide a loan, it also offers assistance and much-required advice. Its relationship managers assist entrepreneurs in making the right decisions and offering assistance till the loan process ends.
Security Free
Businesspersons could get up to Rs.100 lakhs without providing security.
Capital Growth
Without tempering the ownership of a company, the entrepreneurs could acquire adequate capital for meeting their growth requirements.
Equity and Venture Funding
It has a subsidiary known as SIDBI Venture Capital Limited which is wholly owned that offers growth capital as equity through venture capital funds that focusses on MSMEs.
Subsidies
SIDBI offers various schemes which have concessional interest rates and comfortable terms. SIDBI has in-depth knowledge and a wider understanding of schemes and loans available and could help enterprises in making the best decision for their businesses.
Transparency
Its processes and the rate structure are transparent. There aren’t any hidden charges.
Direct Finance Loan Schemes Offered by SIDBI
| Loan Scheme | Loan Amount | Loan Tenure | Eligibility Criteria |
| SIDBI Make in India Soft Loan Fund for MSME (SMILE) | Minimum loan size – Rs.10 lakh for Equipment Finance and Minimum Loan Size for Others – Rs.25 lakh. | Up to 10 years, including 3-year moratorium | New enterprises in the manufacturing and services sector and existing enterprises undertaking expansion. |
| Smile Equipment Finance (SEF) | Minimum loan amount is Rs.10 lakh | Up to 72 months | MSMEs in existence for at least 3 years and having satisfactory financial position. |
| Loans under partnership with OEM (Original Equipment Manufacturer) | Up to Rs.1 crore | Up to 5 years | MSMEs in existence for at least 3 years and having satisfactory financial position. |
| Working Capital (Cash Credit) | Depends upon the financial ability of the applicant | As per the terms and conditions | MSME units which are existing customers under SIBDI or of other banks. |
| SIDBI – Loan for Purchase of Equipment for Enterprise’s Development (SPEED) | Up to 100% of the machinery cost subject to maximum of Rs.1 crore for New to Bank (NTB) customers and up to Rs.2 crore for existing customers of SIDBI. | Up to 2-5 years including moratorium of up to 3-6 months | MSME units with at least 3 years operations with stable sales and cash profits in immediate past 2 years. |
| SIDBI-Loan for Purchase of Equipment for Enterprise’s Development Plus (SPEED PLUS) | Up to 100% of the machinery cost subject to maximum of Rs.2 crore for New to SIDBI customers and up to Rs.3 crore for existing customers of SIDBI. | Up to 2-5 years including moratorium of up to 3-6 months | MSME units with at least 5 years operations with stable sales and cash profits in immediate past 3 years. |
| Top Up Loan For Immediate Purposes (TULIP) | 30% of existing exposure or 20% of net sales subject to maximum of Rs.2 crore | Up to 5 years including 6-month moratorium | At least 1-year association with SIDBI |
| SIDBI Term-Loan Assistance for Rooftop Solar PV Plants (STAR) | Rs.10 lakh to Rs.2.5 crore | Up to 5 years including 3-6 months moratorium | Proof of 2 years of cash profit and satisfactory financial records |
| SIDBI Assistance to Facilitate Emergency Response Against Coronavirus (SAFE) | Up to Rs.50 lakh | Up to 5 years | For New to bank customer – At least two years of cash profits and account and For existing bank customer – Cash profit in last audited balance sheet and account |
| SIDBI Assistance to Facilitate Emergency Response Against Coronavirus Plus (SAFE PLUS) | Up to Rs.100 lakh | Repayable over 4-month cycle | For New to bank customer – At least two years of cash profits and account and For existing bank customer – Cash profit in last audited balance sheet and account |
| Timely Working Capital Assistance To Revitalise Industries In Times Of Corona Crisis (TWARIT) | Up to 20% of total outstanding loans with SIDBI up to Rs.25 crore as of February 29, 2020 | Up to 4 years including 1 month moratorium | All existing borrower accounts with combined outstanding credit facilities up to Rs.25 crore as of 29.2.2020. |
How to apply for loan through SIDBI
For processing a loan through the Small Industries Development Bank of India, an entrepreneur would have to go through the below-mentioned process:
Step 1:Recognized consultants empanelled with the SIDBI would prepare the documents needed. Depending on the requirements and information specified by the MSMEs, the consultants would prepare a BIM (Basic Information Memorandum). This document would include all the information related to the rating agencies and banks.
Step 2:The Basic Information Memorandum is approved by MSME entrepreneur. The accredited consultants would then submit the Basic Information Memorandum to Small Industries Development Bank of India.
Step 3:In case required, the proposal would be rated by the rating agency which is approved by the Reserve Bank of India.
Step 4:SIDBI would directly handle the below-mentioned cases:
- SIDBI would offer equity or quasi-equity to the existing units that are growth-oriented.
- The bank would finance units that are in the service sector.
- It would offer credit to MSMEs for Cleaner Production Processes and Energy Efficient.
Step 5: For other cases, the application for the loan would be submitted to the Public-Sector Banks. SIDBI (Small Industries Development Bank of India) has an MOU (memorandum of understanding) with the public-sector banks for issuing loans.
Small Industries Development Bank of India would help the entrepreneur at each stage until the loan is finally processed. MSMEs stands a better chance of availing the loan in time, raise capital and also could avoid needless delays.
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