Small Industries Development Bank Of India (SIDBI)
SIDBI mandate is to work for technology up-gradation in small and medium enterprises. The work started in 1991 and SIDBI has intervened in around 30 clusters. According to SIDBI The competitiveness of the products of SSI units both in the domestic and international markets is dependent to a large extent on their productivity levels, price factors and quality characteristics. SIDBI's technology upgardation and modernisation program is aimed at improving the technical capabilities and competitiveness of SSI units in clusters by introducing commercially proven technologies which will result in significant improvement in quality, productivity, bring about cost reduction, saving of energy and raw materials and reduction in the level of pollution.
The objectives of the program are-Creation of awareness on new product / process technologies, skill up gradation, development of technology related common facilities for the cluster, provision of unit-specific modernisation package, energy conservation and introduction of environment friendly technologies and quality up gradation in terms of systems and products. SIDBI intervenes in clusters that have certain homogeneity in terms of status of technology, products, production levels, trade practices, and capacity to absorb improved technology. The clusters are geographically and sectorally concentrated. But the mandate is not concerned with network creation or network development per se. Still for technology development SIDBI has co-ordinated with local institutions to come up with solutions.
SIDBI is implementing a World Bank-led multi agency / multi activity Project for Financing and Development of SMEs starting 2007 to 2010. The Project is aimed at making SME lending an attractive and viable financing option as also facilitate increased turnover and employment in the sector. In order to achieve its aims, the Project, besides upgrading direct flow of credit to SMEs, addresses demand side issues of credit and streamlining access to qualitative financial and non-financial enterprise oriented services. This is being done with support of Technical Assistance to be utilised for strengthening the credit information system, credit rating, credit scoring, structuring of innovative products, capacity building of the participating banks, policy and regulatory issues and promotion of market oriented business development services for the sector.
The Technical Assistance (TA) component is a cornerstone of the Project and will help address the medium term policy, regulatory and institutional constraints that hamper the efficiency of the SME credit markets in India. The TA covers the following:
Strengthening the policy/legal/regulatory framework and its enforcement : It aims at preparing and implementing a time bound action plan for key policy, legal and regulatory measures that are critical to establishing a more efficient framework underpinning SME financing and development.
Improving credit information (positive and negative information) on SMEs: It mainly aims at assisting SIDBI and the PFIs to collate historic data on SMEs with a view to strengthening credit information building and its dissemination, capacity building of credit information agencies so as to enable them to provide SME credit histories and develop credit-scoring products, develop a dedicated rating agency for SMEs and a framework that encourages banks/ financial institutions to make use of ratings.
Building institutional capacity within the participating banks to reduce banks' transactions costs and reduce/manage risks related to SME lending : It aims at assisting banks (including SIDBI) in implementing credit scoring systems and cluster financing approaches, training of bankers in the relevant fields as also broad-basing knowledge, delivering a targeted study to augment the current understanding of the participating banks with respect to SME clusters and a knowledge transfer program with respect to global best-practices in servicing the SME segments. It shall also aim at introduction of new and innovative products and delivery mechanisms so that the PFIs can increase their overall business in the SME segment profitably.
Business Development Services (BDS) for SMEs: This is designed to strengthen SMEs' access to BDS, to facilitate designing & implementing strategies to foster BDS market development, strengthening BDS in select 25-30 SME clusters and develop them as "Role Models", with a strong demonstration effect.
Institutional support to Project Management Division (PMD) and Monitoring and Evaluation (M&E): It will provide focussed support to SIDBI's PMD and to build up its capacity in the areas of Project management, implementation and monitoring. The M&E envisages monitoring the impact of the Project on SMEs relating to Project goals and objectives.
Source: www.sidbi.com