The SIDBI (Small Industries Development Bank of India) is a subsidiary of IDBI (Industrial Development Bank of India), that was established under the special Act of the Parliament 1988. It became operative on April 2, 1990.

SIDBI is responsible for managing the Small Industries Development Fund and National Equity Fund, that were previously managed by IDBI Bank. Its primary functions are to promote, develop and finance the MSMEs, and help them grow and market their products. It also helps MSMEs ensure energy efficiency and cleaner production of goods.

Functions

  • SIDBI provides small businesses with additional services such as leasing, factoring, etc
  • The timely flow of credit is ensured by SIDBI so that SMEs always have adequate working capital
  • If a small scale industry needs to modernise its technology to attain better efficiency and products, SIDBI assists
  • SIDBI assists organisations like Mahila Udyam Nidhi, National Equity fund, etc. with starting capital and working capital, loans, advances, etc

Benefits

  • When a private bank or lending institution provides loans to small businesses, SIDBI will refinance such loans
  • SIDBI offers custom loans, that is, credit and loans are modified on the basis of requirements of the businesses
  • Attractive interest rates can be availed via SIDBI, as it has associations with several banks and lending institutions, including the World Bank and the Japan International Cooperation Agency
  • MSMEs can avail a collateral-free loan of up to ₹100 lakh
  • SIDBI is into equity and venture funding through its wholly-owned subsidiary – SIDBI Venture Capital Limited. It offers growth capital through venture capital funds that focus on MSMEs

SIDBI also offers indirect financial assistance via line of credit, refinancing facilities, discounting of bills etc.

Finance Facilities Offered by SIDBI

1. Direct Finance: Assistance with working capital, term loan, equity, support against receivables, etc

2. Indirect Finance: Provides refinance to lending institutions which have branches across the country – banks, state financial institutions, etc

3. Micro Finance: Offers microfinance to small businesses for establishing their business