SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

www.edutap.co.in

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Contents
1 INTRODUCTION ..................................................................................................................................................... 4
1.1 History ............................................................................................................................................................... 4
1.2 Mission .............................................................................................................................................................. 4
1.3 Corporate Structure .......................................................................................................................................... 4
1.4 Definitions of Micro, Small & Medium Enterprises ........................................................................................... 4
1.5 Business Domain of SIDBI .................................................................................................................................. 5
2 Objectives of SIDBI: ................................................................................................................................................... 6
2.1 Mandatory Objectives ....................................................................................................................................... 6
2.2 Other Objectives:............................................................................................................................................... 7
3 Functions of SIDBI...................................................................................................................................................... 7
4 Major Digital and other Initiatives undertaken by SIDBI........................................................................................... 9
4.1 SIDBI StartUp Mitra ........................................................................................................................................... 9
4.2 SIDBI Udyami Mitra ........................................................................................................................................... 9
4.3 MUDRA Mitra App ........................................................................................................................................... 11
4.3.1 What is MUDRA? ..................................................................................................................................... 11
4.3.2 Why MUDRA has been set up? ............................................................................................................... 11
4.3.3 What will be the role and responsibilities of MUDRA? ........................................................................... 12
4.3.4 Features of MUDRA ................................................................................................................................. 12
4.3.5 Who are the target clients of MUDRA/ What kind of borrowers are eligible for assistance from
MUDRA? ……………………………………………………………………………………………………………………………………………………………13
4.3.6 What is the Scope of PMMY and various types of loan available and which are the agencies that will
provide loan? ........................................................................................................................................................... 13
4.3.7 Who will monitor the implementation of PMMY? .................................................................................. 13
4.3.8 What is the eligibility of persons for availing MUDRA loans? ................................................................. 13
4.3.9 Features of MUDRA Card?....................................................................................................................... 14
4.4 SIDBI Venture Funds ........................................................................................................................................ 14
4.5 Stand Up Mitra Portal...................................................................................................................................... 15
4.6 smallB.in .......................................................................................................................................................... 16
4.7 Udyog Aadhar .................................................................................................................................................. 16
4.8 SIDBI MITRA- Mobile App ................................................................................................................................ 18
4.9 Mahila E-Haat .................................................................................................................................................. 19
4.10 GST4MSME ...................................................................................................................................................... 20
5 Budget 2017-2018 announcements for MSME sector ............................................................................................ 21
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6 Recent SIDBI and MSME sector related News......................................................................................................... 22
6.1 TReDS – India’s First Trade Receivables Discounting System.......................................................................... 22
6.2 Key highlights related to MSME sector from the speech of Hon’ble Prime Minister Shri Narendra Modi on
New Year’s eve: ........................................................................................................................................................... 24
6.3 Formulation of Trade Marks Rules 2017 ......................................................................................................... 24
6.4 ‘PowerTex India ............................................................................................................................................... 25
6.5 Report on National MSME Policy .................................................................................................................... 25
6.6 Amendments in definition of Start-up ............................................................................................................ 25
7 SIDBI Subsidiaries .................................................................................................................................................... 26
7.1 CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGTMSE) ................................... 26
7.2 INDIA SME ASSET RECONSTRUCTION COMPANY LTD (ISARC) ........................................................................ 26
7.3 INDIA SME TECHNOLOGY SERVICES LTD. ........................................................................................................ 27
7.4 SMERA Ratings Limited.................................................................................................................................... 27
7.5 Receivables Exchange of India Ltd (RXIL) ........................................................................................................ 27
7.6 Micro Units Development Refinance Agency Ltd. (MUDRA) .......................................................................... 27
7.7 SIDBI VENTURE CAPITAL LIMITED (SVCL) ........................................................................................................ 28

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1 INTRODUCTION

1.1 History
Small Industries Development Bank of India (SIDBI) set up on April 2, 1990 under an Act of
Indian Parliament- the SIDBI Act, 1989. The charter establishing SIDBI envisaged it to be ‘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’.

SIDBI commenced its operations by taking over the outstanding portfolio and activities of
IDBI pertaining to the small scale sector. In pursuance of the SIDBI Amendment Act,2000
and as approved by GOI, 51.1 percent equity shares of SIDBI held by IDBI have been
transferred to public sector banks, LIC, GIC and other institutions owned and controlled by
the central Government.

Presently, the shares of SIDBI are held by 29 institutions/PSBs/insurance companies owned

or controlled by the Central Government, with State Bank of India (16.73%), IDBI Bank Ltd.
(16.25%) and GOI (15.40%) as its three largest shareholders.

1.2 Mission
Its mission is to facilitate and strengthen credit flow to MSMEs and address both financial
and developmental gaps in the MSME eco-system.

1.3 Corporate Structure

Presently Shri Ajay Kumar Kapur and Shri Manoj Mittal are the Deputy Managing Director
of the organisation. SIDBI is headquartered in Lucknow. It has 15 Regional offices and 80
Branches located all over the India.

1.4 Definitions of Micro, Small & Medium Enterprises

MSMEs in India are defined in terms of investment in plant and machinery / equipment
up to Rs 10 Crore.

In accordance with the provision of Micro, Small & Medium Enterprises Development
(MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two
Classes:

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1. Manufacturing Enterprises-he enterprises engaged in the manufacture or production of
goods pertaining to any industry specified in the first schedule to the industries
(Development and regulation) Act, 1951) or employing plant and machinery in the process
of value addition to the final product having a distinct name or character or use. The
Manufacturing Enterprise is defined in terms of investment in Plant & Machinery.
2. Service Enterprises:-The enterprises engaged in providing or rendering of services and
are defined in terms of investment in equipment.
The limit for investment in plant and machinery / equipment for manufacturing / service
enterprises are as under:

1.5 Business Domain of SIDBI

The business domain of SIDBI consists of Micro, Small and Medium Enterprises (MSMEs),
which contribute significantly to the national economy in terms of production, employment
and exports.

MSME sector is an important pillar of Indian economy as it contributes greatly to the growth
of Indian economy with a vast network of around 5.1 crore units, creating employment of
about 11.7 crore, manufacturing more than 6,000 products, contributing about 45% to
manufacturing output and about 40% of exports in terms of value, about 37% of GDP.

The business strategy of SIDBI is to address the financial and non-financial gaps in MSME
eco-system. Financial support to MSMEs is provided by way of

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(a) Indirect / refinance to Financial Institutions including banks, state entities, Micro
Finance Institutions (MFIs) for onward lending to MSMEs and

(b) Direct finance to MSMEs in the niche areas like risk capital, sustainable finance,
receivable financing, service sector financing, etc.

As on March 31, 2016, SIDBI has made cumulative disbursements of about `4.50 lakh crore
benefitting about 350 lakh persons. By this way, SIDBI would be complementing and
supplementing efforts of banks/ FIs in meeting diverse credit needs of MSMEs.

Development Outlook

In order to promote and develop the MSME sector, SIDBI adopts a ‘Credit Plus’ approach,
under which, besides credit, SIDBI supports enterprise development, skill up-gradation,
marketing support, cluster development, technology modernization, etc., in the MSME
sector through its promotional and developmental support to MSMEs. These P&D support
have benefitted more than 2.3 lakh persons in the MSME sector, created more than 1.5 lakh
employment and helped in setting up more than 80,000 units, mostly rural enterprises.

While extending financial assistance to the small units all over the country SIDBI makes use
of the existing banking and financial institutions, such as the commercial banks, cooperative
banks and RRBs, SFCs and SIDCs which have vast network of branches all over the country.
As many as 870 institutions are eligible for assistance from SIDBI.

2 Objectives of SIDBI:

2.1 Mandatory Objectives

Four basic objectives are set out in the SIDBI Charter. They are:

1. Financing
2. Promotion
3. Development
4. Co-ordination
The Charter has provided SIDBI considerable flexibility in adopting appropriate operational
strategies to meet these objectives. The activities of SIDBI, as they have evolved over the
period of time, now meet almost all the requirements of small scale industries which fall

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into a wide spectrum constituting modem and technologically superior units at one end and
traditional units at the other.

2.2 Other Objectives:

 To empower the Micro, Small and Medium Enterprises (MSME) sector with a view to
contributing to the process of economic growth, employment generation and
balanced regional development.
 To emerge as a single window for meeting the financial and developmental needs of
the MSME sector to make it strong, vibrant and globally competitive, to position SIDBI
Brand as the preferred and customer - friendly institution and for enhancement of
share – holder wealth and highest corporate values through modem technology
platform.

3 Functions of SIDBI
The important functions of SIDBI are as follows:

1. SIDBI Refinance loans and advances extended by the primary lending institutions to
small scale industrial units and also provide sources 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. SIDBI extends seeds capital / soft loan assistance under National Equity Fund, Mahila
Udyam Nidhi and Mahila Vikas Nidhi and seed capital scheme through specified
lending agencies,
4. SIDBI grant direct assistance as well as refinance loan extended by primary lending
Institution for financing export of products manufactured by industrial concerns in
the small scale sector,
5. SIDBI provides services like leasing, factoring etc. to industrial concerns in small scale
sector.
6. SIDBI extends financial support to state small Industries Development Corporation
(SSIDCs) for providing source raw materials to and marketing the end products of
industrial units in small scale units,
7. SIDBI provides support to National Small Industries Corporation (NSICs) for providing
leasing, hire-purchase, and marketing support to industrial units in the small scale
sector,
In setting up SIDBI, the intention of the GOI was to ensure larger flow of financial assistance
to small scale sector. SIDBI has in line initiated steps for technological up gradation and

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modernization of existing units. It is expanding the channels for marketing of products of SSI
sector in internal and International market. It is also promoting employment - oriented
industries especially in semi - urban areas to credit more employment opportunities and
thereby checking migration of rural population to urban and cosmopolitan areas.

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4 Major Digital and other Initiatives undertaken by SIDBI

4.1 SIDBI StartUp Mitra

An online start-up ecosystem platform -- SIDBI Startup Mitra -- developed by the state-
owned funding institution as part of its efforts to scale up initiatives targeted at
entrepreneurship development.

The launch of the ‘www.sidbistartupmitra.in’ portal is in line with the objective of the
government in forging innovation-led growth through various measures, including start-up
action plan and Atal Innovation Mission.

The platform will enable entrepreneurs in the start-up community to get connected with
various stakeholders, namely incubators, angel investors, venture capital funds and the like,
SIDBI said in a statement.

This gives an opportunity for discussion and implementation of several suggestions to

strengthen financing and other aspects relating to innovation ecosystem. This would also
include greater participation by banks in financing innovation and creating policy at board
level, enhancing domestic pool of capital for start-ups, establishment of the National
Innovation Promotion Board.

4.2 SIDBI Udyami Mitra

Under portal ‘www.udyamimitra.in’, financial assistance is provided for all enterprise loans
including MUDRA loans up to Rs 10 Lakh and MSME loans for amount beyond 10 Lakh and
upto 1 Crore for existing and new enterprises.

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It is an enabling platform which leverages IT architecture of Stand-Up Mitra portal and aims
at instilling ease of access to MSMEs financial and non-financial service needs.

Key Features

The Portal, as a virtual market place endeavors to provide 'End to End' solutions not only for
credit delivery but also for the host of Credit-plus services by way of hand holding support,
application tracking, and multiple interfaces with stakeholders (i.e. banks, service providers,
applicants). The important features include: -

 Matchmaking platform- It provides a unique match making platform to MSME loan

seekers, lenders as also handholding agencies. The portal has designed capability to
accept varied MSME loan applications. Presently loans up to 1 crore can be accessed.
The portal aims to be a crucial interface layer to create a support system involving
varied stakeholder
 Inclusive Access to all - It provides access to both financial (1.25 lakh bank branches)
and non financial services (17000+ handholding agencies) with three distinct features
viz.
(i) Seek Handholding support;
(ii) Select and apply for loans to preferred banks;
(iii) Enable faster loan processing.

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 Borrowers) and disposal of the applications are expected to be ensured as per Code
of Commitment for its Customers adopted by respective banks.

4.3 MUDRA Mitra App

‘MUDRA Mitra’ is a mobile phone application providing information regarding ‘Micro Units
Development and Refinance Agency Ltd. (MUDRA)’, a wholly owned subsidiary of SIDBI and
its various products/schemes. It will guide a loan seeker to approach a banker in availing
MUDRA loan under Pradhan Mantri Mudra Yojana (PMMY). Users can also access useful
loan related material including sample loan application forms.

Below, we have explained about the MUDRA scheme and its features.
4.3.1 What is MUDRA?
MUDRA, which stands for Micro Units Development & Refinance Agency Ltd, is a financial
institution being set up by Government of India for development and refinancing micro
units enterprises. It was announced by the Finance Minister while presenting the Union
Budget for FY 2016. The purpose of MUDRA is to provide funding to the non-corporate
small business sector through various Last Mile Financial Institutions like Banks, NBFCs and
MFIs.

MUDRA is a refinance agency and not a direct lending institution. MUDRA provides
refinance support to its intermediaries viz. Banks, Micro Finance Institutions and NBFCs,
who are in the business of lending for income generating activities in the non farm sector in
manufacturing, processing, trading or service sector and who in turn will finance the
beneficiaries.
4.3.2 Why MUDRA has been set up?
The biggest bottleneck to the growth of entrepreneurship in the Non–Corporate Small
Business Sector (NCSB) is lack of financial support to this sector. More than 90% of this
sector does not have access to formal sources of finance. GoI is setting up MUDRA Bank
through a statutory enactment for catering to the needs of the NCSB segment or the
informal sector for bringing them in the mainstream. Pending enactment of an act for
MUDRA Bank, a Non Banking Finance Company as MUDRA Ltd has been set up as a
subsidiary of SIDBI.

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4.3.3 What will be the role and responsibilities of MUDRA?
MUDRA would be responsible for refinancing all Last Mile Financiers such as Non-Banking
Finance Companies, Societies, Trusts, Co-operative Societies, Small Banks, Scheduled
Commercial Banks and Regional Rural Banks which are in the business of lending to
micro/small business entities engaged in manufacturing, trading and services activities.
MUDRA would also partner with State/Regional level financial intermediaries to provide
finance to Last Mile Financier of small/micro business enterprises.

4.3.4 Features of MUDRA

Under the aegis of Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has already created its
initial products / schemes. The interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’
to signify the stage of growth / development and funding needs of the beneficiary micro
unit / entrepreneur and also to provide a reference point for the next phase of graduation /
growth to look forward to. The financial limit for these schemes is:-

a. Shishu : covering loans upto 50,000/-

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b. Kishor : covering loans above 50,000/- and upto 5 lakh

c. Tarun : covering loans above 5 lakh to 10 lakh

MUDRA’s delivery channel is conceived to be through the route of refinance primarily to

Banks/NBFCs/MFIs.
4.3.5 Who are the target clients of MUDRA/ What kind of borrowers are eligible for assistance from
MUDRA?
Non–Corporate Small Business Segment (NCSB) comprising of millions of proprietorship /
partnership firms running as small manufacturing units, service sector units, shopkeepers,
fruits / vegetable vendors, truck operators, food-service units, repair shops, machine
operators, small industries, artisans, food processors and others, in rural and urban areas.
4.3.6 What is the Scope of PMMY and various types of loan available and which are the agencies that
will provide loan?
Pradhan Mantri Mudra Yojana (PMMY) loans will be extended by all Public Sector Banks
such as PSU banks, Regional Rural Banks (RRBs), Cooperative Banks, Private Sector Banks,
Foreign Banks, Micro Finance Institutions and Non Banking Finance Companies. All loans
sanctioned on or after April 08, 2015 upto a loan size of 10 lakh for non-farm income
generating activities will be branded as PMMY loans.
4.3.7 Who will monitor the implementation of PMMY?
Monitoring of PMMY progress at the State level will be done through SLBC forum and at
National level by MUDRA/Department of Financial Services, Government of India. For this
purpose, MUDRA has developed a portal, wherein the banks and other lending institutions
directly feed their achievement details which are consolidated by the system and reports
are generated for review.
4.3.8 What is the eligibility of persons for availing MUDRA loans?
Any Indian Citizen who has a business plan for a non farm income generating activity such
as manufacturing, processing, trading or service sector whose credit need is less than 10
lakh can approach either a Bank, MFI or NBFC for availing of MUDRA loans under PMMY.
The usual terms and conditions of the lending agency may have to be followed for availing
of loans under PMMY. The lending rates are as per the RBI guidelines issued in this regard
from time to time.

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4.3.9 Features of MUDRA Card?
MUDRA Card is an innovative credit product wherein the borrower can avail of credit in a
hassle free and flexible manner. It will provide a facility of working capital arrangement in
the form of CC/OD to the borrower. Since MUDRA Card will be RuPay debit card, it can be
used for drawing cash from ATM or Business Correspondent or make purchase using Point
of Sale (POS) machine. Facility is also there to repay the amount, as and when, surplus cash
is available, thereby reducing the interest cost.

4.4 SIDBI Venture Funds

MSMEs have been largely dependent on the promoters’ resources, borrowings from friends
and relatives and secured loans from banks/ financial institutions for meeting their financial
requirements. Financing of MSMEs, particularly knowledge-based enterprises has some
issues as these industries do not create tangible assets. The conventional method of raising
finance by MSMEs continues to be debt finance, which has its own inherent limitations like

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gearing ratio norm, asset coverage, etc. To facilitate the flow of equity capital to this sector,
the stake holders in the echo system have taken up several measures.

SIDBI has played a critical role in developing the MSME venture eco- system in the country.
SIDBI has so far contributed to the corpus of 88 venture capital funds which has catalyzed
investment of more than Rs.5600 Crore to more than 472 MSMEs.

4.5 Stand Up Mitra Portal

The portal ‘www.startupmitra.in’ facilitates bank loan between `10 lakh to `1 crore to at
least one SC/ST and one women borrower per bank branch for setting up Greenfield
enterprises in manufacturing, services or trading activities. The portal acts as a virtual
market place with eased business leads, standardized application with entire annexures
downloadable in one go, enable applicant to revisit and submit edited applications, reduced
reporting/M&E involvements and so on. The maximum rate of interest under the scheme is
capped at MCLR + 3% plus tenure premium.

Details regarding the Stand up India Scheme have already been discussed in the report on
Social Justice.

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4.6 smallB.in

SIDBI-developed website ‘www.smallB.in’ is a virtual mentor and handholding forum for the
potential / budding and even existing entrepreneurs. The website is quite exhaustive,
covering various aspects such as scouting for business opportunities, understanding various
forms of business organizations, basics of legal aspects, Business Plan preparation,
understanding various requirements for obtaining credit from banks / Financial Institutions,
knowing policies and regulations, schemes and incentives offered by the Central and State
governments etc. The website is a valuable source of information to budding / existing
entrepreneurs.

4.7 Udyog Aadhar

If small and medium small industries want to start any business then they need to do the
registration with MSME. This registration with MSME can be done in two ways i.e. one is
online and other one is offline.

Udyog Aadhaar is the online method.

The Ministry of MSME, in consultation with the National Board of MSMEs and the Advisory
Committee in this behalf, has prepared a one-page registration form that would constitute a
self- declaration format under which the MSME will self-certify its existence, bank account
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details, promoter/owner’s Aadhaar details and other minimum basic information required.
Based on the same, the MSMEs can be issued online, a unique identifier i.e. Udyog Aadhaar
Number.

The Ministry of MSME has set up the infrastructure i.e. the Udyog Aadhaar (UA) Portal
(http://udyogaadhaar.gov.in) for online filing of Udyog Aadhaar Memorandum (UAM) by
enterprises located anywhere in the country. The UA portal is also accessible on mobile
devices.

Udyog Aadhaar registration will enable the units/enterprises to seek information and apply
online about various services being offered by all Ministries and Departments.

Earlier only medium enterprises were insisted to file as it was very cumbersome to file, the
simplified Udyog Aadhaar will enable all enterprises to file and register themselves simply
by using Udyog Aadhaar Number.
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The process of obtaining Udyog Aadhaar Number is free-of cost, paperless and results in
instant registration.

4.8 SIDBI MITRA- Mobile App

As part of its digital initiatives, SIDBI developed new mobile app; ‘SIDBI Mitra’ to facilitate
mobility in viewing customer accounts, providing direct channel to customers to interact
with the Relationship Managers (RM) and raising other service requests, etc. It is a mobile
app for all SIDBI beneficiaries. It makes access to SIDBI schemes and relevant data very easy.

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4.9 Mahila E-Haat

The Union Government has launched an online marketing platform Mahila E-HAAT to
facilitate women entrepreneurs to sell their products to buyers. It was launched by Union
Women and Child Development Minister Maneka Gandhi in New Delhi. The Mahila e-Haat
portal can be accessed at ‘http://mahilaehaat-rmk.gov.in’. Mahila E-HAAT is an online
marketing platform to facilitate women entrepreneurs to sell their products to buyers. It is
an initiative mainly for women across the country and is part of Union Government’s
flagship ‘Digital India’ and ‘Stand Up India’ initiatives. It is promoted and supported by SIDBI
for boosting the MSME ecosystem in the country.

Objective:

To strengthen the financial inclusion of women entrepreneurs by providing continued

support to their creativity. Joint initiative of: Union Women and Child Development Ministry
and Rashtriya Mahila Kosh (RMK) for meeting the needs of women entrepreneurs.

Features:

I. The initiative is unique as for the first time government will help women to sell
products online.
II. Women can sell their products like cloths, bags, jewelleries through this web portal.

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 III. It is open to all Indian women citizens above 18 years of age and women Self Help
Groups (SHGs) desiring for marketing their legal products/services.
IV. The entire business on the e-Haat platform can be easily handled through mobile
phone.
V. This e-platform seeks to strengthen the socio-economic empowerment of women by
mobilizing and providing better avenues to them. It will benefit more than 10000 Self
Help Groups (SHGs) and 1.25 Lakh women.
VI. The e-Haat is expected may also bring paradigm shift in socio-economic conditions of
women by enabling them to exercise control over their finances.

4.10 GST4MSME

GST is a reform of far reaching consequence. It will have profound impact on MSMEs: on
their competitiveness, scale of economies, market access including cash flows. There is a
critical need to undertake a comprehensive support programme to focusing three thematic
areas:
i. Awareness creation to elicit concerns and apprehensions
ii. Advocacy to policy makers to accommodate MSMEs’ concerns
iii. Capacity building
Therefore, SIDBI– India’s premier development finance institutions dedicated to MSMEs,
and the FISME– the largest network of MSME associations, joined hands to organize
awareness campaign, establish MSME Forum on GST to keep track of developments and
develop a support system. Such a system may consist of a practical guide for MSMEs on
GST, a helpline where MSMEs can ask questions and support portal to interact and also
disseminate knowledge.
The SIDBI-FISME campaign to support MSMEs on GST was launched in October 2016 with
the launch of ‘www.gst4msme.com’ portal.

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5 Budget 2017-2018 announcements for MSME sector

1. A Special Scheme for creating employment in leather and footwear industries is

proposed to be implemented, on the lines of the scheme in textile and apparel sector.
2. The long standing demand of startups has been accepted and the profit (linked
deduction) exemption available to them for 3 years out of 5 years is changed to 3 years
out of 7 years. For the purpose of carry forward of losses in respect of start-ups, the
condition of continuous holding of 51% of voting rights has been relaxed subject to the
condition that the holding of the original promoter/promoters continues.
3. In order to make MSME companies more viable, income tax for companies with annual
turnover uptoRs. 50 crore is reduced to 25%. About 96% of companies will get this
benefit of lower taxation. This will make our MSME sector more competitive as
compared to large companies.
4. MAT credit is allowed to be carried forward up to a period of 15 years instead of 10
years at present.
5. For creating an eco-system to make India a global hub for electronics manufacturing a
provision of Rs. 745 crores in 2017-18 in incentive schemes like M-SIPS and EDF. The
incentives and allocation has been exponentially increased following the increase in
number of investment proposals.
6. Inverted duty has been rectified in several products in the chemicals & petrochemicals,
textiles, metals, renewable energy sectors. Duty changes to improve domestic
manufacturing of medical devices, those used for digital transactions and capital goods
have also been announced.
7. Initiatives in Skill Development provide essential support for the Make in India sectors to
thrive. Launch of SANKALP(Skill Acquisition and Knowledge Awareness for Livelihood
Promotion Programme) scheme to provide market relevant training to 3.5 crore youth
with budgetary allocation of Rs 4,000 Crores and STRIVE(Skill Strengthening for
Industrial Value Enhancement) scheme to improve the quality and market relevance of
vocational training with allocation of Rs 2, 200 Crores.

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6 Recent SIDBI and MSME sector related News

6.1 TReDS – India’s First Trade Receivables Discounting System

Trade Receivables Discounting System (TReDS) is the continuum of series of SIDBI's efforts
in addressing the gaps in the MSME eco-system. SIDBI in early nineties had piloted the
Receivable Financing Scheme [RFS] in reverse factoring process in India for addressing the
delayed payments problem of MSMEs. SIDBI through the scheme has demonstrated how
the credit profile of large corporates could be leveraged for bringing down the cost of
financing the receivables of MSMEs.

National Stock Exchange (NSE) has always been at the forefront of innovation and has
played a catalytic role in reforming the Indian capital market. As an exchange, NSE has been
focussing on the growth of SMEs in India by setting up ‘EMERGE’ for listing SMEs. NSE brings
technical expertise in managing exchange operations to commence the TReDS platform
successfully.

What is TReDS?

TReDS is an automated system driven platform set up to benefit MSMEs. It will enable them
to auction their trade receivables at competitive market interest rates through a
transparent bidding process in which multiple financiers will participate.

Eligible Participants:

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The main objective of the TReDS platform is to address the critical needs of MSMEs i.e. the
twin issues of promptly en-cashing receivables and eliminating credit risk. The TReDS
platform of Receivables Exchange of India Limited (RXIL) is expected to be a catalyst in the
growth of MSMEs by bringing transparency in the business eco-system. Receivables
Exchange of India Limited (RXIL) is promoted by National Stock Exchange of India Limited
(NSE), the premier stock exchange in India and Small Industries Development Bank of India
(SIDBI), the apex financial institution for promoting and financing MSMEs in India. RXIL will
operate the TReDS platform as per TReDS guidelines issued by RBI.RXIL is the first entity to
receive approval from RBI to launch India's first TReDS Exchange. The web-based TReDS
platform of RXIL can be accessed by using the link - www.treds.in

Key Benefits / Advantages to MSMEs

 Paper less transaction

 Acceptance of invoices on the platform (by the buyer) and no follow up required for
payment

 Immediate payment upon acceptance of auction bids by MSME Seller

 No dependency on single banker

 Facilitates competitive price discovery through bidding of invoices by multiple financiers

 MSMEs have the right to choose the best / lowest bid rate

 Reduced administrative cost and time

 Transparency in dealings

 Without Recourse to MSME sellers

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 Improved productivity and efficient liquidity management

6.2 Key highlights related to MSME sector from the speech of Hon’ble Prime Minister
Shri Narendra Modi on New Year’s eve:

 Government to double the amount allocated under its loan guarantee scheme (to micro
and small enterprises) to `2 crore. This widens scope to include non-banking finance
companies (NBFCs) in addition to banks. The banks and NBFCs will not levy high interest on
these loans, as the Government is bearing the cost of underwriting them.

 Banks to raise the Working Capital credit limit to 25 percent from 20 percent of turnover
for small businesses. The banks were asked to raise working capital loans to 30 percent
from 20 percent of sales for enterprises that transact digitally.

 Reduces tax rate from 8% to 6% for digital transactions for small businesses with turnover
of up to `2 crore.

6.3 Formulation of Trade Marks Rules 2017

The Central Government has formulated Trade Marks Rules 2017, thereby replacing the
Trade Marks Rules 2002. The new rules came into effect on March 06, 2017. In order to
achieve its objectives of expediting and easing the process of trademark registration, major
changes have been made which include, simplification, consolidation and reduction in the
number of forms from 75 to 8; introduction of new category of applicants namely
Startup/Small Enterprise/Individual, where the fee for this category is 50% lower than the
fee for all the others (with 10% concession on fee for e-filings); increase in the fee in order
to avoid frivolous filing of trademarks; easier sound marks to register; expedited processing
of Trademarks; electronic service of the documents, registration of three dimensional marks
etc.

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6.4 ‘PowerTex India

The Government of India launched ‘PowerTex India’ scheme, a comprehensive scheme for
powerloom sector development at over 45 locations in the country to boost the powerloom
sector especially the small weavers. The scheme would provide incentive and subsidy for
up-gradation of units and would give special emphasis on sustainable energy and credit
availability to the powerloom weavers. It would enable upgradation to semi-automatic or
shuttleless looms by changing certain parts and attachments of the loom. Under PowerTex
India, financial assistance would be provided for setting up Common Facility Centre (CFC)
that includes a wide range of pre-weaving as well as post weaving facilities.

6.5 Report on National MSME Policy

Recently, the one-man committee (Shri Prabhat Kumar Committee) on National MSME
Policy has made various recommendations including creation of a National MSME Authority,
setting up of a `1,000 crore fund under SIDBI for overall growth of the exportoriented SMEs,
setting up of Low-Cost Micro Enterprise Nurturing Centres in Public-Private-Partnership
(PPP) model to promote rural entrepreneurship, upscaling of MUDRA and various other
Inter-Ministerial programmes, etc. besides redefining the MSME criteria. The Report has
also made far-reaching recommendations in the areas of labour issues, technology,
marketing, infrastructure, skill development, underserved regions, etc.

6.6 Amendments in definition of Start-up

The Government of India has amended the definition of a Start-up. The revised definition of
start-up is as under:

An entity shall be considered as a startup:

i. If it is incorporated as a private limited company / registered partnership firm /

limited liability partnership in India.
ii. Upto seven years from the date of its incorporation / registration; however for bio-
technology start-ups the period shall be upto 10 years,
iii. If its turnover for any of the financial years since incorporation / registration has not
exceeded Rs25 crores.

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iv. If it is working towards innovation, development or improvement of product /
process / services or if it is a scalable business model with a high potential of
employment generation or wealth creation

7 SIDBI Subsidiaries

7.1 CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGTMSE)

Credit to micro and small enterprises sector is generally perceived as high risk lending, more
so, when there is absence of any collateral. In order to encourage banks to lend more to this
sector, Government of India and SIDBI have set up the Credit Guarantee Fund Trust for
Micro and Small Enterprises (CGTMSE) in July 2000, to provide credit guarantee support to
collateral free / third-party guarantee free loans up to Rs100 lakh extended by banks and
lending institutions for micro and small enterprise (MSEs) under its Credit Guarantee
Scheme (CGS).

7.2 INDIA SME ASSET RECONSTRUCTION COMPANY LTD (ISARC)

India SME Asset Reconstruction Company ltd (ISARC) was set up in 2009 by SIDBI along with
leading Public Sector Banks. Its objective is to acquire NPAs, inter-alia in MSME sector and
catalyze speedy restructuring of potentially viable units and liquidation of unviable units, so
that productive use of the assets is maximized.

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7.3 INDIA SME TECHNOLOGY SERVICES LTD.

A major challenge for the MSME sector is the need for keeping itself abreast with the
changing technology to remain competitive. To address the challenge India SME Technology
Services Limited (ISTSL) was set up in November 2005 by SIDBI along with Indian Bank,
Oriental Bank of Commerce, Indian Overseas Bank and State Bank of India, provides a
platform for MSMEs to tap opportunities at the domestic and global level for acquisition of
modern technologies. ISTSL offers various technical services to MSMEs with a focus on
promotion of energy efficient, environment friendly technologies in the MSME sector.
Efforts are being made to facilitate reduction in Green House Gases in the MSME sector.

7.4 SMERA Ratings Limited

SIDBI, along with leading public, foreign and private sector banks and Dun & Bradstreet
Information Services India Private Limited (D&B), set up SMERA Ratings Limited (then SME
Rating Agency of India Limited)in September 2005, as an SME focused Credit Rating Agency
to provide comprehensive, transparent and reliable ratings and risk profiling. In year 2011,
SMERA received its registration from the Securities and Exchange Board of India (SEBI) to
rate the debt instruments. SMERA also received the accreditation from Reserve Bank of
India (RBI) in the year 2012 as an External Credit Assessment Institution (ECAI), under
BASEL-II norms for undertaking Bank Loan Ratings.

7.5 Receivables Exchange of India Ltd (RXIL)

It is discussed above in the notes.

7.6 Micro Units Development Refinance Agency Ltd. (MUDRA)

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It is discussed above in the notes.

7.7 SIDBI VENTURE CAPITAL LIMITED (SVCL)

SIDBI Venture Capital Ltd. (SVCL), a wholly owned subsidiary of SIDBI was set up in July,
1999. SVCL is an asset management company, presently having venture capital funds under
management viz. the National Venture Fund for Software and Information Technology
Industry (NFSIT), SME Growth Fund (SGF), India Opportunities Fund (IOF), Samridhi Fund
(SF), TEX Fund (TF), Maharashtra State Social Venture Fund (MS Fund) and West Bengal
MSME VC Fund (WB Fund).

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