SIDBI and its Role in Green Financing & Development

mall Industries Industrial Development assistance through the MFI Development Bank of Corporations (SIDCs),Micro route has benefited more than India (SIDBI),set up on Finance Institutions (MFIs) etc. 200 lakh persons in the rural April 2,1990 under an Act of for onward lending to MSMEs areas,mostly women. Indian Parliament,functions as and (b) direct assistance to The credit operations of the Principal Financial MSMEs which is channelised SIDBI are supplemented with Institution for the Promotion, through the Bank's network of Promotional & Developmental Financing and Development of 103 branch offices reaching out (P&D) activities,which are the Micro,Small and Medium to more than 600 MSME designed to support enterprise Enterprise (MSME) sector and clusters.As a step towards creation in the MSME sector Co-ordination of the functions financial inclusion,the micro and strengthening of the of the institutions engaged in credit programme of SIDBI existing MSMEs to meet the similar activities.Financial offers both financial and non - challenges of increasing support is provided by way of financial services and is competition and (a) refinance to eligible Primary designed with the objective of internationalisation.SIDBI has Lending Institutions (PLIs) suchreaching financial services to also been constantly working as Banks,State Financial the disadvantaged section of on building various Corporations (SFCs),State the society.SIDBI's micro credit institutional mechanisms to

cater to the emerging needs of the MSME sector and has setup various subsidiaries / associates which include SIDBI Venture Capital Ltd.(SVCL) for venture capital,Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for collateral free loans,SME Rating Agency of India Ltd.(SMERA) for credit rating,n Idia SME Technology Services Limited (ISTSL) for technology related services and India SME Asset Reconstruction Company Ltd. (ISARC) for resolution of bad debts.

SIDBI and Green MSMEs

The global emphasis on Green and clean environment encompasses MSMEs also. In India also Green growth is an adopted agenda. There has been increasing concern on environmental degradation caused by industrialisation and realisation of the need to take corrective measures to protect the environment. Apart from revisiting manufacturing processes and technologies being used by MSMEs, the focus has

thrust areas of various activities. Lack of information about availability of alternative clean technologies, lack of awareness of advantages of investing in such technologies and low skill sets of existing workforce to adapt to new technologies are major reasons for MSMEs lagging behind in upgradation and modernisation of their facilities. The sector has to be provided technological support services along with credit facility on

development of Indian MSMEs, SIDBI has since inception acted proactively in the area of sustainable development of MSME sector. Whether it involved cluster level intervention for furthering modernisation / quality improvisations or evolving technology mission for MSMEs with vision 2010 or institutionalising technology needs through a technology bank or acting as a key nodal agency for government schemes aimed at developing niche in certain sectors through technology upgradation, SIDBI has always been in forefront. A) Financing for Energy Efficiency SIDBI has taken several initiatives to promote lending for green and energy efficient technologies in MSME sector. SIDBI has been operating focused lending schemes for promoting investment in clean production and energy efficient technologies / production process under bilateral Lines of credit from KfW, Germany and JICA, Japan. These focused schemes have two pronged approach, i.e. concessional lending to encourage investment in green or energy efficient technologies and launching of cluster specific information dissemination .

shifted to adopting appropriate / alternate technologies / production processes to maximise energy conservation. Now Reduce (waste), Reuse and Recycle are emerging as

softer terms to invest in Cleaner Production (CP) options. As a principal & responsible Development Financial Institution engaged in promotion, financing &

Green Financing - SIDBI has so far provided assistance under the JICA scheme to more than 2000 MSMEs with aggregate assistance of more than Rs.800 crore for cleaner production and energy saving investments. Some of the major initiatives of SIDBI for achieving energy efficiency which has benefited a large number of MSMEs in clusters, are as under O Electronic Waste recycling facility in Bangalore - SIDBI assisted E- Parisara Pvt. Ltd., Bangalore for electronic waste recycling project. The project caters to wastes generated by IT, Telecom & Electronic industries in and around Bangalore. The advantages accruing from the project includes helping more than 100 MSMEs to become compliant with regulatory requirements / environment audit, reduction in waste treatment cost and reuse & recycling of treated metals / materials. O Common Effluent Treatment Plant (CETP) a. MSME textile dyeing & printing units in and around Surat - Gujarat Environ Protection & Infrastructure Ltd. has been assisted to set up Treatment Storage and Disposal Facilities (TSDF) in Surat to help MSME textile dyeing and printing units in proper waste disposal. Majority of 300 MSME member

units have been able to become compliant with pollution control norms. b. CETP, Bangalore- Eco Green Solution Systems (P) Ltd. has been assisted for setting up of a Treatment Storage and Disposal Facilities (TSDF) facility for toxic waste generated from the electroplating, powder coating, metal finishing industries in and around Bangalore. It has helped more than 300 MSMEs

CNG fitted Auto Rickshaws were provided assistance in Chandigarh by Delhi Finance Corporation (DFC). SIDBI provided refinance to DFC for this clean energy initiative. O Solar Lanterns - Friends of Women's World Banking (FWWB), a MFI was sanctioned assistance of Rs.10 crore for providing assistance to micro entrepreneurs for acquiring Solar Lanterns of 2 watts each. 50, 000 micro entrepreneurs are pro-

in reuse and recycling of treated effluent, reduction in waste treatment cost per unit etc. O Mumbai Taxi Financing Scheme - SIDBI has entered into arrangements with Mumbai Taxmen's Association / Union and Maruti Suzuki Ltd. for providing assistance to taxi drivers (micro entrepreneurs) to phase out their old taxis. Under the Scheme, taxi drivers have been provided assistance to buy new taxis without any collateral security under CGTMSE coverage. More than 700 Micro entrepreneurs have so far been provided finance under this arrangement. The initiative has helped in promoting clean technology thus controlling pollution. O Auto Rickshaw Financing - 600

posed to be covered under the assistance. O Rickshaw Sangh Programme SIDBI and American India Foundation (AIF) have recently signed a MoU to provide livelihood support to the low-income groups through a joint initiative called the "Rickshaw Sangh Programme", under which SIDBI has sanctioned financial assistance of Rs. 50 lakh to Bhartiya Micro Credit (BMC) under its Micro Credit Scheme for microfinance as well as for financing livelihood of programmes of BMC. Under the programme, BMC has provided 500 rickshaws to poor people residing in and around Lucknow with credit support from the SIDBI and Technical support from AIF. Under the programme, the beneficiaries

would also be provided license and Municipal permit, uniform, life insurance for client and his spouse, accident insurance etc. O Information dissemination SIDBI has organised several awareness campaigns for propagating JICA supported scheme for achieving Energy Efficiency in high energy intensive MSME clusters to create awareness about environment friendly and energy efficient technologies suitable for the respective clusters. The campaigns have received good response. In such seminars, MSMEs were given information on green technologies, better production processes, investment required and cost benefit analysis of each investment. So far 18 awareness campaigns have been organised in MSME clusters across the country. B) Furthering Green Growth with Developmental Support Under multi - activity-multi agency MSME Financing and Development Project ( MSMEFDP) being implemented by SIDBI, various initiatives are being undertaken to enable the emergence of competitive MSMEs with provision of financial and non - financial services. Credit facility (CF) has been channelized to over 2050 MSMEs spread across major cluster centres across the country. Project has adopted international best practice of Environment and Social Risk Assessment framework (E&S) in its appraisal process . More than 100 credit officials have been trained on E&S. In its cluster development initiative aimed at soft infrastructure development, the Project has adopted a long term intervention strategy. Starting with value chain mapping of a cluster, an action plan is devised, in consultation with stakeholders and is pursued with sustainability angle. Instilling Energy Efficiency (EE) in these adopted clusters has emerged as one of the cross cutting issues. The following major initiatives have been attended in EE area under MSMEFDP:O Energy efficiency initiative with Bureau of Energy Efficiency - SIDBI has entered into a Memorandum of Understanding (MoU) with the Bureau for Energy Efficiency (BEE) for creation of a shelf of energy efficient technologies for 25 MSME clusters, awareness creation and capacity building of local Business Development Services (BDS) providers for implementing energy efficient technologies. This shall be integrated with financial support to eligible proposals for

adopting energy efficient technologies & measures. O Knowledge Series - In order to attend to challenges of information asymmetry, the Project has brought out knowledge series publications on energy efficiency in Fruit & Vegetable Processing, Ceramics, Foundry and Engineering clusters. These along with a 'Tip sheet on Energy efficiency' (providing simple housekeeping) tips to MSMEs has been been widely disseminated among MSMEs. The project has supported India SME Technology Services Ltd (promoted by SIDBI and leading public sector banks) to prepare Carbon Credit Guidebook for MSMEs, update its existing basket of 800 technologies and flag them as carbon free, clean, energy efficient technologies. Project has initiated steps, in association with DSIR, Ministry of Science and Technology, to evolve policy document on ' Technology Vision for Indian MSMEs- 2020'. It is expected to be a tool, providing boost to innovative traits of Indian MSMEs. O Green Ratings - With support under MSMEFDP, SME Rating Agency (SMERA)- an associate of SIDBI, is gradually introducing rating variants and the latest is " Green Rating" model. This initiative is aimed to encourage MSMEs engaged in industrial activity to adopt better technologies and processes to prevent un-mitigated environmental damage. It will act as a risk mitigation tool for MSMEs to effectively face business continuity risks associated with rapidly changing regulatory prescriptions on environment governance & compliances.

Conclusion
The Green agenda includes challenges in strengthening MSMEs managerial capability, creation of awareness on economic values of technologies and benchmarking quality up to global standards. Towards this goal, SIDBI has been engaging with several international partners and has been proactive in assimilating international best practices in green financing. Considering SIDBI's apex role in promotion, financing and development of MSME sector, the Bank would continue to play an active role of a change agent and engage in activities aligned to government's national priorities and Millennium Development Goals with overall emphasis on three Ps of People, Planet and Profit.