SIDBI gift for Orissa firms

The 'bills discounting facility' for small firms provided by SIDBI will help them get their invoices cleared and receive payments on time.

The Small Industries Development Bank of India (SIDBI), providing capacity-building assistance to micro and small industrial units, has started the 'bills discounting facility' for small and medium enterprises (SMEs) in Orissa.

This will ensure prompt payments to the SMEs against supply of materials to large units and in the process will benefit a large number of SMEs, who, otherwise, used to wait for long periods to get their bills cleared and receive payment.

"We have introduced the 'bills discounting facility' in Orissa and will directly discount the bills of the SMEs in the state", Kirpal Singh, general manager, SIDBI, told Business Standard.

SIDBI has already sanctioned Rs 15 crore under this facility to Jindal Steel which located at Kalinganagar in Jajpur district. Similarly, discussions are in an advanced stage with other companies like Adhunik Metalliks, Nilachal Ispat Nigam Limited (NINL) and Tata Refactories for introduction of this facility.

The bank perceives that the SMEs are on a growth path and need help to bolster their fund raising capacities. "We are aiming to add to the fund raising capacity of these units through equity participation. This will increase the promoters' share and help these units to avail more loans", he added.

Though the bank has not set any targets for equity participation in the Orissa units, all the branches have been advised to send more proposals for equity participation. Besides, the units can also apply directly to SIDBI, Singh added.

Meanwhile, the SME Rating Agency of India, floated by SIDBI and other banks, has completed the rating process of 14 borrowers in Orissa. This number is expected to increase substantially in the coming months, he pointed out.

Similarly, under the Credit Guarantee Fund Trust for Micro and Small Enterprises, it has covered about 5,491 proposals amounting to Rs 84 crore in Orissa.

Stating that the direct lending of SIDBI has crossed Rs 55 crore during the current fiscal, he said, it does not include the Rs 220 crore outstanding to Orissa State Financial Corporation (OSFC). Micro-finance lending and direct lending are expected to reach Rs 107 crore by March 2008.

Outlining measures to increase flow of credit to the SME sector, Singh said, the bank is in the process of signing a memorandum of understanding (MoU) with the state-owned lender OSFC and the Orissa government.

Once that process is over, the SMEs in Orissa will be able to avail more loans from OSFC and SIDBI will also start re-financing them.

He said, to give further impetus to the micro-finance movement in Orissa, SIDBI has set up a special cell for micro-finance in the eastern zone. As a proactive measure for financial inclusion, it has taken several initiatives to increase the flow of micro-finance assistance in the state.