B.

Voc Sem III

BVB 302 Paper: IFS Topic: SIDBI

Dr. Jivan Kumar Chowdhury

 Introduction
• Small Industries Development Bank of India (SIDBI) offers a wide
range of finance schemes to the Micro, Small, and Medium
Enterprises (MSME) industry. Loan amounts can range from Rs.10
lakh to Rs.25 crore. Loan repayment tenures can go up to 10 years.
These loans, which are offered at attractive interest rates, help
provide necessary capital for the growth and expansion of MSMEs.
Loans above Rs.1 crore can be availed without any collateral
required. Loan subsidies are also available.
• Objective of SIDBI
• The main objective of SIDBI is to offer loans to MSMEs to help in
addressing the development and financial gaps in the ecosystem of
MSMEs. The company aims to ensure that the MSME sector is
globally competitive, vibrant, and strong.
• Products offered under SIDBI:
• 1. SIDBI Make in India Soft Loan Fund For Micro Small and
Medium Enterprises (SMILE)
• The repayment tenure of the loan is up to 10 years (inclusive
of moratorium period of 36 months).
• Attractive interest rates are offered.
• Priority will be given to services and manufacturing sectors.
• In the case of loans of up to Rs.2 crore, cover may be provided
under the Credit Guarantee Scheme.
•SMILE Equipment Finance (SEF)
•The minimum loan that will be provided is Rs.10 lakh.
•Attractive interest rates are offered.
•The repayment tenure of the loan is up to 72 months (inclusive of moratorium period).
•Loans are provided to MSMEs that have been running for a minimum of 3 years. The
MSMEs must be financially stable as well.
•Loans under partnership with OEM
•The maximum loan that may be offered may be up to Rs.1 crore.
•Loans are provided to MSMEs that have been running for a minimum of 3 years. The
MSMEs must be financially stable as well.
•The loan that is provided must be used for investment in Plant and Machinery.
•The repayment tenure of the loan is up to 60 months (inclusive of moratorium period).
•Attractive interest rates are offered.
• SIDBI – Loan For Purchase of Equipment For Enterprise's Development
(SPEED Plus)
• SIDBI has recently launched the new scheme called SIDBI – Loan for Purchase
of Equipment for Enterprise’s Development Plus(SPEED Plus) for machinery
purchase from Original Equipment Manufacturers (OEMs) on competitive rate
of interest.
• Up to 100% financing may be provided for purchase of high-end machineries.
Up to 3 Crores are provided.
• Quick disbursal.
• Loans are provided to MSMEs that have been running for a minimum of 3
years. The MSMEs must be financially stable as well.
• The repayment tenure of the loan ranges between 2 years and 5 years
(inclusive of moratorium period of 3 months to 6 months).
• The interest rate ranges between 8.80% p.a. and 10.50% p.a.
• Top up Loan For Immediate Purposes (TULIP)
• The loan gets sanctioned within 7 days.
• No collateral needs to be provided.
• SIDBI offers an interest rate about 10.00% p.a. and 11.00%
p.a. along with the flexible payment options.
• The repayment tenure of the loan is up to 60 months
(inclusive of a moratorium period of 6 months).
• SIDBI Term-loan Assistance For Rooftop Solar PV Plants
(STAR)
• Loans are provided to MSMEs to help in reducing the power
bill.
• The loan amount may range between Rs.10 lakh and Rs.2.5
crore.
• The interest rate ranges between 9.10% p.a. and 10.20% p.a.
• The repayment tenure of the loan is up to 60 months
(inclusive of a moratorium period that ranges between 3
months and 6 months).
• SIDBI ASSISTANCE TO HEALTHCARE SECTOR IN WAR AGAINST SECOND WAVE
OF COVID19(SHWAS)
• 100% finance may be provided.
• Competitive interest rates are offered.
• No processing fee is levied.
• SIDBI proveds loans to MSEs at a low rate of interest ranges between 4.50%
p.a. and 5.00% p.a. within 48 hours, making it easier for them to facilitate
tasks that can help tackle the pandemic i.e. manufacturing of medical oxygen
products related to fighting against the novel Coronavirus.
• The maximum loan amount that is provided is Rs.200 lakh in the form of Term
Loan or Working Capital Term.
• Repayment period for the Term is 60 months including a 1 year moratorium
and working Capital Term Loan that need to be repaid within 18 months
including suitable moratorium.
• SIDBI ASSISTANCE TO MSMES FOR RECOVERY & ORGANIC GROWTH DURING
COVID19 PANDEMIC(AROG)
• 100% finance may be provided.
• Competitive interest rates are offered.
• Low collateral needs to be provided.
• No processing fee is levied.
• The interest rate ranges between 5.50% p.a. and 6.00% p.a.
• The maximum loan amount that is provided is Rs.2 lakh.
• TIMELY WORKING CAPITAL ASSISTANCE TO REVITALISE INDUSTRIES IN TIMES OF
CORONA CRISIS (TWARIT)
• The interest rate is 8.25% p.a.
• The repayment tenure of the loan is up to 48 months (inclusive of a moratorium
period of 12 months).
• No prepayment penalty is levied.
• Direct Loan Scheme offered by SIDBI:
• SMILE Equipment Finance up to 72 months
• Minimum loan amount of Rs. 10 lakh can be availed
• Should have 3 yrs experience in the financial business sectors
• SIDBI make in India Soft Loan Fund for MSME(SMILE) up to 10
yrs including 3 yrs moratorium between 10 lakhs to 25 lakhs
Top Up Loan For Immediate Purpose(TULIP)
• Loan with OEM (Original Equipment Manufacturer)
•Indirect Loan Schemes Offered under SIDBI
•SIDBI also offers indirect loans to various banks, NBFCs, and other types of financial entities.
The indirect loans that a financial body can avail from SIDBI are given below:
•Assistance to NBFCs
•Non-Banking Financial Companies (NBFCs), Asset Loan Companies, or any finance company
which is registered with RBI and are engaged in providing finance enterprise in the MSME
sector can apply for a loan under SIDBI. The eligibility criteria will depend on a lender to
lender.
•Refinance Scheme
•SIDBI will provide financial assistance to scheduled banks under various refinance schemes.
Schedule banks with strong financials are eligible for loans under SIDBI.
•Assistance to Small Finance Banks (SFBs)
•SIDBI provides assistance to those banks by providing equity investments for capitalisation
of SFBs to meet their equity gap. SIDBI has also been providing refinance support to MFIs
and NBFCs post their transformation to SBFs.
• Key functions of SIDBI:
• Listed below are the chief functions of SIDBI:
• Aid financial institutions (cooperation and commercial banks) lending to
small-scale industries in the Small and Medium Enterprises (MSME)
sector to ensure their financial health.
• Offer SIBDI direct loans to companies categorised in the Small and
Medium Enterprises (MSME) sector.
• Carry out marketing initiatives for small-scale industries on a global scale.
• Offer venture funding possibilities for industries in the Small and Medium
Enterprises (MSME) sector.
• Promotion of employment and upgradation of technology in the sector.
• Offer job opportunities for individuals who wish to work in the sector. 
• Loan offers for development and maintenance of small-scale
industries in the country.
• Marketing of small-scale industries on a global scale.
• Promotion of employment-oriented industries in the small-
scale industry sector.
• Ensure technology upgradation in the small-scale industry.
• Ensures the financial health of cooperation banks and
commercial banks' lending to small-scale industries.
• Promotion of venture funds.
• Benefits of availing a loan from SIBDI
• Listed below are the key benefits of availing a loan from SIBDI:
• Tailor-made - SIDBI designs loans according to the needs of your enterprise. If
your needs do not fall into the usual and ordinary category, SIDBI will help fund
you in the right way.
• Specialised Size - Loans are altered according to the size of the enterprise. So
micro, small and medium enterprises can get different loans tailored to suit their
business.
• Attractive Rates - SIDBI has a tie-up with many banks and international financial
institutions and can get concessional rates of interest. The tie-ups include World
Bank and Japan International Cooperation Agency.
• Assistance - SIDBI doesn’t just give you a loan, it also gives your assistance
and much needed advice. Relationship managers help entrepreneurs make
the right decisions and provide assistance till the end of the loan process.
• Collateral Free - Entrepreneurs can get up to Rs. 100 lakhs without
offering collateral. This is done through the establishment of a Trust called
Fund Trust for Micro and Small Enterprises (CGTMSE).
• Risk and Growth Capital - Without diluting the ownership of the company,
entrepreneurs can acquire sufficient capital to meet growth requirements.
• Venture and Equity Funding - SIDBI has a wholly owned subsidiary called
SIDBI Venture Capital Limited that can provide growth capital in the form
of equity through venture capital funds that are focussed on MSMEs.
• Government Subsidies - Take advantage of various schemes that have
concessional rates and relaxed terms offered by the Government. SIDBI
has a wider understanding and in-depth knowledge of loans and schemes
available and can help you make the best decision for your company.
• Transparency - The process and rate structure is transparent. There are no
hidden charges.
• FAQs on Small Industries Development Bank of India:
• Are MUDRA loans offered by SIBDI? Yes, MUDRA loan is one of the loan
products offered by SIBDI.
• What documents should I submit if I wish to apply for a SIDBI direct loan?
Applicants for the SIBDI direct loan should submit proof of identity and
address, PAN card, documents proving their business, etc.
• Is the credit score of the individual taken into consideration when applying
for a SIBDI loan? No, the credit score of the individual or partners are not
taken into consideration.
• What the types of finance offered by SIBDI?SIDBI offers direct finance, in-
direct finance and Micro Finance.
• Is SIBDI a subsidiary of the Reserve Bank of India? No, it is not a subsidiary
of the RBI. Shares of SIDBI are owned by the Government of India and other
institutions which are owned or controlled by the Central Government.
• On 18 November 2021, Small Industries Development Bank of
India (SIDBI) informed that it has collaborated with Google
India Pvt. Ltd. (GIPL) to provide Micro, Small and Medium
Enterprises (MSMEs) with financial assistance. Under this
lending program, MEMEs (having turnover up to Rs.5 crore)
would be getting loans ranging between Rs. 25 lakh to Rs.1
crore.
In a release, SIDBI Chairman and Managing Director
Sivasubramanian Ramann said that the move is taken to
expand the sector’s access to credit and hopes to see a
constructive impact.