Small Industries Development Bank of India
In the field of financing of small scale industries in India, a separate apex development bank has I started its operations from April 2, 1990. The Small Industries Development Bank of India (SIDBI) has been set up under an Act of Parliament as the principal financial institution for promotion. financing and development of industry in the tiny and small scale sector. It coordinates the functions of other institutions engaged in similar activities.
The SIDBI was established as a wholly-owned subsidiary of the Industrial Development Bank of India. It has taken over IDBI's financing activities relating to the small scale sector.
The major activities undertaken by this Bank are as follows : (i) refinancing of term loans granted by I banks and other eligible financial institutions. namely the State Financial Corporations and State Industrial Development Corporations.
(ii) direct discounting' as well as re-discounting of bills arising out of sale of machinery of capital equip¬ment by manufacturers in small scale sector on deferred credit.
(ii) equity type assistance under National Equity Funds and by way of seed capital to entrepreneurs. (iv) rediscounting of short term trade bills aris¬ing out of sale of products of small scale sector.
(v) resources support to National Small Industries t Corporation and other institutions concerned with small industries.
(vi) Share capital and resources support to factor-I ing organisations.
Resources : The paid up share capital of the bank stood at Rs. 450 crore as on March 31.2000, which was wholly subSCribed by IDB!. After the enacrment of Small Industries Development Bank of India (Amendment) Act, 2000. not less than 51% of the is-sued capital of SIDBI. which has been subSCribed by IDB! shall be traT!sferred to and vested in the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned and controlled by the Central Government. The authorised capital of SInB! has been raised to Rs. 1,000 crore.
The Bank has been sanctioned limits by the Re¬serve Bank of India out of National Industrial Credit (Long-Term Operations) Fund. Government of India has also provided it long-term interest-free loan and also contributes to the National Equity Fund main¬tained the Bank. SIDB has also raised resources in foreign currencies from the following two sources :
(i) OECF, Japan, has sanctioned loans for on¬lending to small scale units through the refinance. scheme of SIDB!.
(iiJ The Asian Development Bank has sanctioned the line of credit of US $ 100 million to SIDBI for on¬lending to small scale and medium scale units, through selected SFCs. SIDBI has drawn from this line of credit against its refinance assistance to small scale units.
