SIDBI identifies MFIs to provide enhanced support for micro-lending

Speaking at Business Standard's BFSI Summit, Ramann added that the state-owned small industries lender said that it is once again looking at how to bring capital to micro finance institutions

Small Industries Development Bank of India (Sidbi) has now gone back to its earlier avatar when it comes to microfinance institutions (MFIs). According to Sivasubramanian Ramann, chairman and managing director, the bank has started identifying finance companies to give them enhanced support for micro lending.
 

Speaking at Business Standard’s BFSI Summit, Ramann added that the state-owned small industries lender is once again looking at how to bring capital to microfinance institutions.

Also, the fund of funds activity of Sidbi has provided capital to many venture capital and private equity firms.

“The private equity segment will chase the upper end of the spectrum, where the growth is fast and the money is quickly made. Sidbi is there for a development effort,” Ramann said.

Also, under Sidbi’s Prayas scheme, which has about Rs 600 crore for micro lending, lends in the range of Rs 100,000-Rs 500,000.

Ramann said that lending cannot happen through its 75-odd branches but it is through small towns and villages, where such loans are disbursed. And, it has built partnerships with MFIs, NGOs and banking correspondents for small loans.

“We have got a fully-digitised platform where the person on the street is available there with a tab, puts in all the data and sends it to us. We have a simple business rule engine. Roughly within 48 hours, we are able to disburse loans of those amounts directly into the bank accounts of micro enterprises,” Ramann added.

He believes that there is a huge scope to scale up lending through Prayas as it is relying on its partner institutions.

Sidbi is also actively working on putting its money in incubators and accelerators.

Ramann said that Sidbi needs to work more with the National Innovation Fund.

“We stopped working with them and we need to restart this. There will be many other persons who would be able to bring in equity to a variety of small projects,” he said.

Sidbi cannot be worried about the schemes failing. Ramann said if money is put into 1,000 companies, and even if 50 work, then it gets its money back.

He added that Sidbi has provided finance to about 300 entities under the World Bank scheme of energy efficiency during the last five years.

“We have saved over 0.3 million tonnes of CO2 emissions. We have successful partnerships with several world organisations. We are going ahead with a solar rooftop plan with the World Bank. We will do 1,000 solar rooftops in 1,000 MSMEs (micro, small and medium enterprises),” he said.

He said that MSMEs get solar rooftops with an investment of Rs 1 crore-Rs 2.5 crore, which takes care of all its power needs.

Payback will be seen after 36-42 months and the plant will run for another 15 years.

Ramann added, “We are moving to an era where energy-efficient solar panels and rooftop solar panels are the substitutes for power, which today is the fulcrum of any business.”