Firms to get credit cards, insurance

Sidbi proposals include a bureau for queries, a Rs 500-cr venture capital fund and management programmes.

The small and medium enterprises (SMEs) may soon have a credit card in their names. The Lucknow-based Small Industry Development Bank of India (Sidbi) is mulling over the idea of having an SME credit card.

"Today, many public as well as private sector banks disseminate credit cards like the kisan credit card. These are primarily for the farmers and other rural public. However, till now no such card has been made for the benefit of SMEs. This is what we hope to do in near future," informed a Sidbi executive.

Besides this, Sidbi is also considering the idea of having an insurance scheme dedicated to the micro and small-scale enterprises. The thought has evolved from the insights gained by the bank from its customers.

"The customers have a lot of expectations from our bank and we are duty-bound to provide them with all the facilities," the official said. The bank is also in the process to set up an information bureau to receive and resolve SME queries in a time-bound manner.

Sidbi is the principal financial institution for the promotion, financing and development of the small and medium industries.

It operates through a cluster of 64 retail branches spread across the country and plans to increase its presence in rural India by taking the number of its branches to 100 by 2009.

In order to strengthen the SME sector, the bank offers the Skill-cum-Technology Upgrade Programme (STUP) and the Small Industries Management Programme (SIMAP) in collaboration with reputed management/technology institutions.

The STUP aims at enhancing technology profile of SME units and the SIMAP grooms qualified but unemployed youth as well as industry sponsored candidates with the objective of providing competent managers to the SME sector.

During 2006-07, the bank supported 38 STUPs and six SIMAPs. In Uttar Pradesh, the Central Institute of Plastic Engineering and Technology, with the support of Sidbi, conducted a diagnostic survey and the STUP in Kanpur's plastic cluster.

Among other programmes being run by Sidbi is the SME Growth Fund, a close-ended venture capital fund with a corpus of Rs 500 crore, contributed by Sidbi and eight other banks. It is a general fund with the focus on the growth potential of SMEs in the area of life sciences, retailing, food processing and information technology.

The bank, sensing the importance of credit flow for SMEs and the difficulties faced by them in getting sanctions from financial institutions, has along with Dun and Bradstreet, Credit Information Bureau (India) Ltd, leading Indian banks (both public and private) and certain foreign banks, has set up an SME Rating Agency (SMERA).

It is the country's first and the only rating agency for the SME sector. The objective was to augment credit flow to SMEs by way of fair pricing.

While the SMERA enables banks to validate their internal assessment, it supports SMEs by helping them get credit faster and at favourable terms. It also assists the small and medium units in trade and commerce, both domestic and international.

The ratings by the SMERA have been getting wider acceptance. As of now, 12 banks have already issued circulars to pass on softer interest rates to SMEs appropriately rated by the SMERA.

It has also entered into a memorandum of understanding with 20 banks and institutions to rate their SME clients. As on March 31 this year, the SMERA completed ratings of over 546 SME units.