Sidbi cuts loan rates for SMEs

BANKERS' CONFERENCE 2005

Smera, the credit rating agency for small and medium enterprises floated by Small Industries Development Bank of India (Sidbi), has completed assigning ratings to 50 SMEs across the country.

Following this, Sidbi has decided to formally grant interest rate concessions to the rated enterprises from Monday. The range of concessions would be between 0.25 per cent and 1 per cent.

N Balasubramanian, chairman and managing director, disclosed this at the sidelines of Bancon 2005.

"We want to give more flexibility to SME's", he said. The interest rate concessions for rated enterprises was a step towards that. The level of concession would be linked to the ratings. A enterprise with higher rating might get 1 per cent concession and on a Rs 1 crore loan, it could get up to Rs 1 lakh concession a year.

"We have issued a circular in this regard on Friday," said the Sidbi chairman. More than 300 companies have applied for ratings to Smera. Of this, around 134 companies have already paid for the assignment.

Besides giving concessions to SMEs, Sidbi is exploring different avenues to fund the sector. As the apex institution for SME lending, Sidbi would be organising a seminar next year for alternative financing opportunities.

"We shall invite World Bank, Unido, IFC and all the main Indian financial institutions in that meet," he said.

On alternative funding opportunities, he said Sidbi had already started the initiative through a tie-up with Kolkata-based Srei Infrastructure Finance for financing SMEs in the construction industry. "We are now looking for more tie-ups with NBFCs," he said.

According to Subramanian, Sidbi was laying a special thrust on cluster funding following the directive in the last budget. Sidbi had already shortlisted some clusters in the country for funding and the Kolkata leather complex in the suburb of Bantala had been in the list of clusters.