SIDBI was established in 1989 to promote and finance small scale industries. It provides direct financing, refinancing, bill financing, and international financing. It also offers promotional services like entrepreneurship training. SIDBI operates schemes to support technology upgrades, provide venture capital and equity funding, and offers seed money for new entrepreneurs through DICs. It aims to empower small and medium enterprises through financial and developmental assistance.

1. Special Guidance by :
Mr. H. S. K. Tangirala
Director, Udaybhansinhji Regional Institute of
Cooperative Management (URICM) - Gandhinagar.
Prepared by:
Milan Dhaduk (1304)
PGDM (ABM) – 2013-15
URICM - Gandhinagar.

2. Introduction
• The Government of India set up the SIDBI under a special Act of the
Parliament in October 1989.
• SIDBI commenced its operations from April 2, 1990 with its head
office in Lucknow.
• SIDBI has been setup as a wholly owned subsidiary of IDBI.
• Its authorised capital is Rs.250 cr. with an enabling provision to increase
it to Rs.1000 cr.
• It is the apex institution which oversees, co-ordinates & further
strengthens various arrangements for providing financial and non-
financial assistance to small-scale, tiny, and cottage industries.

3. Mission & Vision
Mission:
“ To empower the Micro, Small and Medium Enterprises (MSME) sector with a view to contributing to the
process of economic growth, employment generation and balanced regional development”
Vision:
“ To emerge as a single window for meeting the financial and developmental needs of the MSME sector to
make it strong, vibrant and globally competitive, to position SIDBI Brand as the preferred and customer -
friendly institution and for enhancement of share - holder wealth and highest corporate values through
modern technology platform”

4. Objectives
• Four basic objectives are set out in the SIDBI Charter. They are:
•Financing
•Promotion
•Development
•Co-ordination
• for orderly growth of industry in the small scale sector. The Charter has
provided SIDBI considerable flexibility in adopting appropriate operational
strategies to meet these objectives.

5. Products & Services
• Direct finance.
• Bills finance
• Refinance
• International finance
• Promotional & Development activities.
• Fixed deposit scheme
• Technology Up-gradation & Modernisation Fund Scheme {TDMF}
• Venture Capital Fund Scheme
• Seed Money Schemes
• National Equity Fund Scheme

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

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

8. Refinance Schemes
• Refinance scheme is introduced for catering to the need of funds of Primary Lending
Institutes {PLI} for financing small scale sector.
• Under the scheme, SIDBI grants refinance against term loans granted by the eligible PLIs to
industrial concerns for setting up industrial projects in the small scale sector as also for
their expansion / modernisation / diversification.
• PLIs are SIDC, SFC. Banks like commercial banks, Co-operative Banks, Regional Rural Banks
• Schemes of re-finance assistence:
o Scheme for SC-ST & physically handicraft persons
o Composite loan scheme
o Equipment refinance schemes.
o Schemes for small road transport operators.
o Special assistence to ex-servicemen.

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

10. Fixed Deposit Scheme
The Interest Rate Structure for SIDBI Fixed Deposit Scheme of SIDBI are as under:
Time period Revised Annual Interest Rate
%p.a. * w.e.f August 10, 2009
Interest (% p.a.)
For Senior Citizens
12 months - 13 months 6.50 7.0
14 months - 36 months 7.00 7.5
14 months - 36 months 7.50 8.0

11. Promotional and Development Activities
• As an apex financial institution for promotion, financing and development of
industry in the small scale sector, SIDBI meets the varied developmental needs of
the Indian SSI sector by its wide-ranging Promotional and Developmental (P&D)
activities.
• The activities are as follows:
o Entrepreneurship Development Programmes.
o Management Development Programmes.
o Technology Up-gradation Programmes.

12. Technology Up-gradation & Modernisation Fund Scheme {TDMF}
• This fund was setup in the year 1996 by the SIDBI with an initial capital of 200
cr.
• It was setup for the purpose of encouraging the existing small scale industrial
units to modernise production facilities and adopt improved and updated
technology for strengthening export capabilities.
• For availing benefits under this scheme the unit have to prepare an estimate
for modernisation & submit it to SIDBI.
• The sanction of funds is made depending upon the estimate submitted.

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

14. National Equity Fund Scheme
• In order to provide equity type assistance, SIDBI is
operation a National Equity Fund Scheme.
• The equity capital loan to the extent of 2.5lakh is
sanctioned to each project provided the prefect
qualities under this scheme.

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