Sidbi sets up tech bank for SMEs

The Small Industries Development Bank of India (Sidbi) has set up a company to serve as a "technology bank" for the purpose of implanting appropriate foreign technologies in small and medium enterprises (SMEs).

The bank has been launched jointly by Indian Bank, Oriental Bank of Commerce (OBC) and Sidbi with each having a one-third stake in the company, called India SME Technology Services (ISTS). The company has a paid-up capital of Rs 3 crore.

The new company has also received funding support of Rs 75 lakh each from State Bank of India and Indian Overseas Bank.

Speaking to Business Standard, Sidbi chairman and managing director, N Balasubramaniam, said bringing in imported technologies will help increase productivity levels of SMEs. The pilot project is proposed to be launched at the sports clusters in Jalandhar district of Punjab.

Sidbi is writing to other public and private sector banks for capital contribution. "We may involve government-run or private technical agencies if necessary," Balasubramaniam said.

The technology bank officials would conduct field visits to SME units and then decide on how good the technology in use is compared with alternative technologies available globally and then forge links with the suppliers of technology.

This initiative will plug the gap in indentifying requisite technology for SMEs, which have access to funding from banks but lack access to economically feasible inputs for purchasing appropriate technology.

In the Union Budget for 2006-07, Finance Minister P Chidambaram announced a slew of measures for providing a fresh impetus to lending by the Sidbi.

These include raising the corpus of the credit guarantee fund from Rs 1,132 crore as on March 2006 to Rs 2,500 crore over the next five years. In 2006-07 alone, the ministry of finance has agreed to extend a sum of Rs 118 crore.

Sidbi has also been asked to advise the Credit Guarantee Trust for Small Industries (CGTSI) to lower the one-time guarantee fee from 2.5 per cent to 1.5 per cent for all loans.

In addition to these measures, the development financial institution has been told to extend on-par treatment to the small scale enterprises in the services sector with those in the manufacturing sector.

The budget statement has also directed Sidbi to extend an insurance cover to approximately 30,000 borrowers, identified as chief promoters, under the CGTSI. Accordingly, the sum assured would be Rs 2 lakh for each recipient and the premium would be paid by CGTSI.

The finance minister opined that the new thrust is clearly towards up-scaling the size and technological upgradation.