The West Bengal Finance Corporation (WBFC) has obtained permission from the Reserve Bank of India for tapping the capital market to mop up Rs 15 crore by way of fixed deposits towards the end of this month. This was revealed to Business Standard by D K Basu, managing director of WBFC.
Basu said that according to the norms set by the Small Industries Development Bank of India (Sidbi), WBFC is entitled to raise up to Rs 80 crore from the capital market. However, RBI has permitted the corporation to raise only Rs 15 crore. Basu said that WBFC may approach the central bank for permission to raise more funds, should the need arise.
At a workshop on Finance for Small and Medium Enterprises, organised by the Confederation of Indian Industries (Eastern Region) in Calcutta yesterday, Basu said the concept of financing of small and manufacturing enterprises (SMEs) is going through a metamorphosis.
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The idea of financial institutions providing term loans and commercial banks meeting the working capital requirements of SMEs is becoming defunct with the introduction of single-window agency funding, he said. Though many SMEs are uncomfortable with the idea of accessing demand loans for meeting their working capital requirements, instead of availing of the cash credit facility of commercial banks, Basu said the working capital demand loan culture will grow. Soon the entire gamut of funding requirements of SMEs will be met by a single agency.
This will make the process simpler for the borrower and will allow greater control and better access to the lender, he said. At the seminar, Biswajit Chowdhury, chairman and managing director of United Bank of India expounded the merits of the four Msman, market, material and money, in that orderthat are crucial to the success of any SME.
Chowdhury pointed to the deficiency of adequate entrepreneurial training and the inability of SME chiefs to prevent blockage of funds as the main culprit behind the widespread sickness amongst SMEs.
However, Pralay Talukdar, minister, cottage and small scale scale department, government of West Bengal, said that the major cause of sickness was inadequate and delayed finance to SMEs.