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The Small scale Industrial Development Bank of India (SIDBI) was set up in

October 1989 under the Act of parliament as a wholly owned subsidiary of
the IDBI. It is the central or apex or principal institution which oversees, co-
ordinates and further strengthens various arrangements for providing
financial and non-financial assistance to small-scale, tiny, and cottage

SIDBI objectives are:

* To initiate steps for technological up gradation and modernization of
existing units

* To expand channels for marketing of SSI sector products in India and

* To promote employment-oriented industries in semi-urban areas and to
check migration of population to big cities.

It operates two funds: Small Industries Development Fund and Small
Industries Development Assistance Fund. The operation of the former and of
National Equity Fund which were earlier looked by IDBI is now handled by the
SIDBI. Its financial assistance is channeled through the existing credit
delivery system comprising NSIC, SFCs, SIDCs, SSIDCs, commercial banks, co-
operative banks and RRBs. The total number of institutions eligible for
assistance from SIDBI is 900. It discounts and rediscounts bills arising from
the sale of machinery to small units; extends seed capital/soft loan assistance
through National Equity Fund and through seed capital schemes of
specialized lending institutions; refinance loans; and provide services like
factoring, Leasing and so on.

The union budget 1996-97 envisaged a number of measures to develop
small-scale sector with SIDBI as the focal point. They include:

* SIDBI will now refinance the SFCs and commercial banks for
modernization projects up to Rs 50 lakhs from unutilized corpus of about Rs
75 crore;

* SIDBI’s refinance ceiling of Rs 50 lakhs for single window scheme of SFCs

village. domestic and foreign currency term loans. diversifications. for composite loans will be doubled to Rs 100 lakhs * SIDBI will participate in venture capital funds set up by public sector institutions as well as private companies up to 50 percent of the total corpus of the fund. etc. governmental agencies. * SIDBI will provide refinance lending institutions which are now permitted to lend to SSI units seeking ISO certification of quality. Since its inception SIDBI has provided assistance to the entire SSIs sector including tiny. R&D institutions. modernization. expansions.etc. provided such fund is dedicated to the financing of small-scale industry. SIDBI has entered into MOU with many banks. and rehabilitation. and industry associations for developing SSIs. working capital finance. international agencies. . It has provided equity capital. and cottage industries through suitable schemes tailored to meet the requirement of setting up of new products.