The Small Industries Development Bank of India (Sidbi) on Monday said it would utilise the Rs 5,000 cr venture fund allocated to it for investments in micro, small and medium enterprises (MSME) in the next four years.
The Lucknow-based development bank said small and medium enterprises (SME) sector, which contributes around 17 per cent to India's GDP, was facing a slow down.
Sidbi chairman and managing director Sushil Muhnot told reporters that the utilisation of Rs 5,000 crore fund has started with a commitment of Rs 180 crores in the series one of the India Opportunities Fund. Sidbi Venture Capital Ltd, a subsidiary of SIDBI would float the fund that will have a corpus of Rs 600 crore.
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“Sidbi Venture Capital has got commitments from various investors including domestic banks and insurance companies. The Rs 600-crore India Opportunity Fund would be operational soon,” Muhnoot said.
The fund would focus on development of the MSME sector and Sidbi is expecting returns of around 15 per cent from the fund. The government had allocated Rs 5,000 crore to the development bank for venture funding in MSME Sector in the budget for 2012-13.
Sidbi Venture Capital has two funds since its inception. The first one, the National Venture Fund for Software and IT Industry, had a corpus of Rs 100 crore.
The development bank's second fund, SME Growth Fund, has a corpus of Rs 500 crore and is under divestment phase at present.
When asked if Sidbi’s interaction with the SME sector gives an impression of a slowdown, the Sidbi chief said there were low business sentiments in many small industries which were postponing their expansion plans.
Talking about Sidbi, Muhnot said, the financial institution was working on a new business model in consultation with the government.
The new business model envisages to fill not only financial gap but also non-financial gaps for the MSME sector, he said. The non-financial gaps include, consultation, advisory services, loan syndication, etc.
Moreover, Sidbi is also looking at a three-level development and support plan for entrepreneurs.
At the first level, a website would be launched to guide a layman on how to start an industry. At the second level, these aspiring entrepreneurs are expected to approach Sidbi which would guide them through its credit facilitation centres on various nuances of setting up an industry including financing. In the last stage, Sidbi would assist them in preparing project reports that can help in getting loans for the project.
100 MSME clusters have already been identified for the establishment of credit facilitation centres, Muhnoot added.
