Small Industries Development Bank of India (SIDBI)

The SIDBI was established as a wholly owned subsidiary of Industrial Development Bank of
India (IDBI) under a special Act of the Parliament 1988 and started its operations on April 2,
1990. It took over the responsibility of administering Small Industries Development Fund and
National Equity Fund which were earlier administered by IDBI. It is the Principal Financial
Institution for the Promotion, Financing and Development of the Micro, Small and Medium
Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in
similar activities. It is managed by a team of 10 Board of Directors. The authorised capital of the
Bank is Rs. 1000 crore and the Paid up capital is Rs. 450 crore.

SIDBI Associates

CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES

INDIA SME TECHNOLOGY SERVICES LTD.

SME RATING AGENCY OF INDIA LTD. (SMERA)

INDIA SME ASSET RECONSTRUCTION COMPANY LTD

SIDBI VENTURE CAPITAL LIMITED (SVCL)

SIDBI TRUSTEE COMPANY LIMITED (STCL)

SIDBI Subsidiaries
SIDBI provides direct, indirect and micro finance facilities.

Direct Finance: In the form of Term Loan Assistance, Working Capital Assistance,
Support against Receivables, Foreign Currency Loan, Scheme of Energy Saving for
MSME sector, equity support etc.

Indirect Finance: The Indirect assistance in the form of Refinance is provided to

Primary Lending Institutions (PLIs), comprising banks, State Level Financial Institutions,
etc. having a wide network of branches all over the country. The main objective of
Refinance Scheme is to increase the resource position of PLIs which would ultimately
facilitate the flow of credit to MSME sector.

Micro Finance: SIDBI provides micro finance i.e. credit to small entrepreneurs and
businessmen for establish their business.

Functions of SIDBI
1. SIDBI refinances loans extended by the primary lending institutions to small scale
industrial units, and also provides resources support to them.
2. SIDBI discounts and rediscounts bills arising from sale of machinery to or manufactured
by industrial units in the small scale sector.
3. To expand the channels for marketing the products of Small Scale Industries (SSI) sector
in domestic and international markets.
4. It provides services like leasing, factoring etc. to industrial concerns in the small scale
sector.
5. To promote employment oriented industries especially in semi-urban areas to create more
employment opportunities and thereby checking migration of people to urban areas.
6. To initiate steps for technological up-gradation and modernisation of existing units.
7. SIDBI facilitates timely flow of credit for both term loans and working capital to SSI in
collaboration with commercial banks.
8. SIDBI Co-Promotes state level venture funds in association with respective state
government.
9. It grants direct assistance and refinance loans extended by primary lending institutions for
financing exports of products manufactured by small scale units.

Functions of NABARD
Credit Functions:

Framing policy and guidelines for rural financial institutions.

Providing credit facilities to issuing organizations

Monitoring the flow of ground level rural credit.

Preparation of credit plans annually for all districts for identification of credit potential.

Development Functions:

Help cooperative banks and Regional Rural Banks to prepare development actions plans
for themselves.

Help Regional Rural Banks and the sponsor banks to enter into MoUs with state
governments and cooperative banks to improve the affairs of the Regional Rural Banks.

Monitor implementation of development action plans of banks.

Provide financial support for the training institutes of cooperative banks, commercial
banks and Regional Rural Banks.

Provide financial assistance to cooperative banks for building improved management

information system, computerisation of operations and development of human resources.

Supervisory Functions:

Undertakes inspection of Regional Rural Banks (RRBs) and Cooperative Banks (other
than urban/primary cooperative banks) under the provisions of Banking Regulation Act,
1949.

Undertakes inspection of State Cooperative Agriculture and Rural Development Banks

(SCARDBs) and apex non- credit cooperative societies on a voluntary basis.

Provides recommendations to Reserve Bank of India on issue of licenses to Cooperative

Banks, opening of new branches by State Cooperative Banks and Regional Rural Banks
(RRBs).

Undertakes portfolio inspections besides off-site surveillance of Cooperative Banks and

Regional Rural Banks (RRBs).

Functions of NABARD
Credit Functions:

Framing policy and guidelines for rural financial institutions.

Providing credit facilities to issuing organizations

Monitoring the flow of ground level rural credit.

Preparation of credit plans annually for all districts for identification of credit potential.

Development Functions:

Help cooperative banks and Regional Rural Banks to prepare development actions plans
for themselves.

Help Regional Rural Banks and the sponsor banks to enter into MoUs with state
governments and cooperative banks to improve the affairs of the Regional Rural Banks.

Monitor implementation of development action plans of banks.

Provide financial support for the training institutes of cooperative banks, commercial
banks and Regional Rural Banks.

Provide financial assistance to cooperative banks for building improved management

information system, computerisation of operations and development of human resources.

Supervisory Functions:

Undertakes inspection of Regional Rural Banks (RRBs) and Cooperative Banks (other
than urban/primary cooperative banks) under the provisions of Banking Regulation Act,
1949.

Undertakes inspection of State Cooperative Agriculture and Rural Development Banks

(SCARDBs) and apex non- credit cooperative societies on a voluntary basis.

Provides recommendations to Reserve Bank of India on issue of licenses to Cooperative

Banks, opening of new branches by State Cooperative Banks and Regional Rural Banks
(RRBs).

Undertakes portfolio inspections besides off-site surveillance of Cooperative Banks and

Regional Rural Banks (RRBs).

IDBI Bank
IDBI Bank is an Indian government-owned financial service company, formerly known
as Industrial Development Bank of India, headquartered in Mumbai, India. It was established
in 1964 by an Act of Parliament to provide credit and other financial facilities for the
development of the fledgling Indian industry. IDBI Bank is on a par with nationalized banks and
the SBI Group as far as government ownership is concerned. It is one among the 27 commercial
banks owned by the Government of India. IDBI bank is considered as government of India
owned bank. It is currently 10th largest development bank in the world in terms of reach. It has
an authorised capital of 3000 cr.

Subsidiaries of IDBI Bank

IDBI Capital Market Services Limited (ICMS)

IDBI Intech Limited (IIL)

IDBI Asset Management Limited (IAML)

IDBI MF Trustee Company Limited (IMTCL)

DBI Trusteeship Services Ltd (ITSL)

Role of IDBI
As an apex development bank, the IDBI's major role is to co-ordinate the activities of other
development banks and term-financing institutions in the capital market of the country.

Providing technical and administrative assistance for promotion, management and

expansion of industry thus performing promotional and development functions.

Direct Assistance: The IDBI grants loans and advances to industrial concerns. The bank
guarantees loans raised by industrial concerns in the open market from the State Cooperative Banks, the Scheduled Banks, the Industrial Finance Corporation of India (IFCI)
and other 'notified' financial institutions.

Indirect Assistance: Providing refinancing facilities to the IFCI, SFCs and other
financial institutions approved by the government. IDBI subscribes to the shares and
bonds of the financial institutions and thereby provide supplementary resources.

Coordinating the activities of financial institutions for the promotion and development of
industries.

IDBI is the leader, coordinator and innovator in the field of industrial financing in our
country. Its major activity is confined to financing, developmental, co-ordination and
promotional functions.

Planning, promoting and developing industries with a view to fill the gaps in the
industrial structure by conceiving, preparing and floating new projects.

Functions performed by IDBI

That the IDBI has shown its particular interest in the development of small-scale
industries is demonstrated by the setting up of the Small Industries Development Fund
(SIDF) in May 1986, the National Equity Fund Scheme (NEFS) in 1988, and the
Voluntary Executive Corporation Cell (VECC) for providing support in the nature of

equity to tiny and small-scale industries engaged in manufacturing, cost not exceeding
Rs. 5 lakhs. The scheme is administrated by the IDBI through nationalised banks.

The IDBI has also introduced the single window assistance scheme for grant of termloans and working capital assistance to new, tiny and small-scale enterprises. As per data
available, IDBI has extended about one-third of total industrial assistance to small-sector
alone.

The scope of business of the IDBI has also been extended to cover consulting, merchant
banking and trusteeship activities.