Development of small-scale industrial units throughout the length and breadth of the country has always been on a very high priority list of the Central and all State Governments. Special incentives by way of liberal credit on soft terms, cash subsidy, allocation of raw material etc. were offered and are still available to small-scale industrial units.
Advances to small-scale industrial units are part of priority sector
advances of commercial banks and are sanctioned on very liberal terms. The
units in India are classified as 'Small-scale Units' mainly on the basis of
investment in plant and machinery. Vide Order No. S.O. 1288 (E) dt. 24.12.1999,
investment limit in respect of SSI units has been reduced from Rs. three crores
to Rs. one crore. However, in respect of certain specified items under hosiery
and hand tools, the limit shall be Rs. 5 cores, vide Notification No. S.O.
1013(E), dated 9.10.2001. In connection with reduction in limit following
clarifications have been issued:
(A)
Clarification regarding Reduction in the Investment limit on SSI/ancillary
undertakings1
In fulfilment of the aspirations of individual SSI units and SSI
associations, Government have decided to reduce the investment limit on plant
and machinery in respect of SSI/ancillary industrial undertakings from Rs. 3
crore to Rs. 1 crore. This decision has been notified vide Order No. S.O.
1288(E), dated 24th December, 1999.
Subsequently, there have been many queries from the individual
entrepreneurs, SSI units, State Governments etc. seeking clarifications on the
status of SSI units set up prior to the issue of order dated the 24th December,
1999. The matter has been carefully considered and the position is clarified as
under :
(i) units
that have obtained permanent registration based on the order dated 10th
December, 1997 would continue to remain as SSI units, in spite of the order
dated 24th December, 1999, reducing the investment limit to Rs. 1 crore;
(ii) units
which had switched over to the SSI status based on the order dated 10th
December, 1997 would continue to remain as SSI units, in spite of the order
dated 24th December, 1999; and
(iii) units
which have got provisional registration with the State authorities for their
SSI status would continue to remain as SSI units in spite of the order dated
24th December, 1999, provided the provisional registration had taken place
within the period of limitation of 180 days specified in the order dated 10th
December, 1997.
(B) Further
Clarification regarding Reduction in the Investment limit on SSI/ancillary
undertakings1
The new investment limit in fixed assets in plant and machinery in respect of small scale/ancillary industrial undertakings has been notified vide Order No. S.O. 1288(E), dated 24th December, 1999. Subsequently, doubts raised by the individual entrepreneurs, SSI units, State Governments etc. have been clarified vide Press Note dated 14th March, 2000.
Still, a doubt has been raised as to whether the time of 180 days
mentioned in para 2(iii) of the Press Note dated the 14th March, 2000 is
applicable to the new units which have got provisional registration with the
State authorities for their SSI status, based on the notification dated
10.12.1997.
It is now clarified that the units that have obtained provisional
registration on the basis of the notification dated 10th December, 1997 and have
taken concrete steps for implementing the project such as preparation of
project report, sanction of loan, purchase of land, civil construction,
placement of orders for plant and machinery, etc. prior to 24th December, 1999
would continue to enjoy the SSI status so long as the investment in plant and
machinery does not exceed Rs. 300 lakh, notwithstanding the revised investment
limit of Rs. 100 lakh notified on 24th December, 1999.
Small Scale (Industry related) Service
& Business Enterprise (SSSBE)2
Certain category of establishments which are treated as equivalent to
small scale units and entitled to all incentives that are available to SSI
units are termed as ‘Small scale (Industry related) Service/Business Enterprise
(SSSBE)’. SSSBEs can be located in cities and metropolitan areas. This category
includes all the service oriented enterprises whose investment in the plant and
machinery does not exceed Rs. 10.00 lacs irrespective of their area of
location.
An illustrative list of activities that are covered as SSSBE is given in
Appendix 24.I. Another list of activities which are not recognised as SSSBE is
also given in Appendix 24.II.
CRITERION FOR DETERMINATION OF SSI STATUS3
The main criterion for determination of the status of an industrial unit
remains the value of original investment in plant and machinery by a unit.
There are basically two types of industrial undertakings that are included in
the priority sector and the present revised definition of these units is as
follows:
An industrial undertaking in which the investment in fixed, a sets in
plant and machinery, whether held on ownership terms or on lease or on hire
purchase, does not exceed rupees one crore.1
The investment ceiling of Rs. 1 crore for classification as SSI has been
enhanced to Rs. 5 crores in respect of certain specified items under hosiery
and hand tools.2
An industrial undertaking which is engaged or is proposed to be engaged
in the manufacturing or production of parts, components, sub‑assemblies, tooling
or intermediates, or the rendering of services and undertaking supplies or
proposes to supply or renders not more than fifty per cent of its production or
services, as the case may be, to one or more other industrial undertakings and
whose investment in fixed assets in plant and machinery, whether held on
ownership terms or on lease or on hire purchase, does not exceed rupees one
crore.
The investment limit of Rs. 1 crore in respect of ancillary industrial
undertaking, manufacturing certain specified items under hosiery and hand tools
has, been enhanced to Rs. 5 crores.
Note 1 : No small-scale or ancillary industrial undertaking referred to above
shall be subsidiary of, or owned or controlled by any other industrial
undertaking.
Explanation‑ For the purposes of this note,
(A) "owned"
shall have the meaning as derived from the definition of the expression
"owner" specified in clause (f) of section 3 of the Industries
(Development and Regulation) Act, 1951 (65 of 1951);
(B) "subsidiary"
shall have the same meaning as in clause (47) of section 2, read with section
4, of the Companies Act, 1956(1 of 1956);
(C) the expression
"controlled by any other industrial undertaking" means as under
(i) where
two or more industrial undertakings are set up by the same person as a
proprietor, each of such industrial undertakings shall be considered to be
controlled by the other industrial undertaking or undertakings,
(ii) where
two or more industrial undertakings are set up as partnership firms under the
Indian Partnership Act, 1932 (1 of 1932) and one or more partners are common
partner or partners in such firms, each such undertaking shall be considered to
he controlled by the other undertaking or undertakings,
(iii)
where industrial undertakings are set up by
companies under the Companies Act, 1956 (1 of 1956) an industrial undertaking
shall be considered to be controlled by other industrial undertaking if,
(a) the
equity holding by other industrial undertaking in it exceeds twenty four per
cent of its total equity; or
(b) the
management control of an undertaking is passed on to the other industrial
undertaking by way of the Managing Director of the first‑mentioned
undertaking being also the Managing Director or Director in the other
industrial undertaking or the majority of Directors on the Board of the first‑mentioned
undertaking being the equity holders in the other industrial undertaking in
terms of the provisions of the following items (a) and (b) of sub‑clause
(iv);
(iv) the
extent of equity participation by other industrial undertaking or undertakings
in the undertaking as per sub‑clause (iii) above shall be worked out as
follows :
(a) the
equity participation by other industrial undertaking shall include both foreign
and domestic equity;
(b) equity
participation by other industrial undertaking shall mean total equity held in
an industrial undertaking by other industrial undertaking or undertakings,
whether small-scale or otherwise put together as well as the equity held by
persons who are Directors in any other industrial undertaking or undertakings
even if the person concerned is a Director in other industrial undertaking or
undertakings:
(c) equity
held by a person, having special technical qualification and experience,
appointed as a Director in a small-scale industrial undertaking, to the extent
of qualification shares, if so provided in the Articles of Association, shall
not be counted in computing the equity held by other industrial undertaking or
undertakings even if the person concerned is a Director in other industrial
undertaking or undertakings;
(v) where
an industrial undertaking is a subsidiary of, or is owned or controlled by, any
other industrial undertaking or undertakings in terms of sub‑clause (i), (ii)
or (iii) and. if the total investment in fixed assets in plant and machinery of
the first mentioned industrial undertaking and the other industrial undertaking
or undertakings clubbed together exceeds the limit of investment specified in
paragraph (1) or (2) of this notification, as the case may be, none of these
industrial undertakings shall be considered to be a small-scale or ancillary
industrial undertaking.
Note
2: (a) In
calculating the value of plant and machinery for the purposes of paragraphs (1)
and (2) of this notification, the original price thereof, irrespective of
whether the plant and machinery are new or second hand, shall be taken into
account.
(b) In
calculating the value of plant and machinery, the following shall be excluded,
namely:
(i) the
cost of equipment’s such as tools, jigs, dies, moulds, and spare parts for
maintenance and the cost of consumable stores;
(ii) the
cost of installation of plant and machinery;
(iii) the
cost of research and development equipment and pollution control equipment;
(iv) the
cost of generation sets and extra transformer installed by the undertaking as
per the regulations of the State Electricity Board;
(v) the
bank charges and service charges paid to the National Small Industries
Corporation or the State Small Industries Corporation;
(vi) the
cost involved in procurement or installation of cables, wiring, bus bars,
electrical control panels (not those mounted or individual machines), oil
circuit breakers or miniature circuit breakers which are necessarily to be used
for providing electrical power to the plant and machinery or for safety
measures.,
(vii) the
cost of gas producer plants;
(viii) transportation
charges (excluding of sales‑tax and excise) for indigenous machinery from
the place of manufacturing to the site of the factory;
(ix) charges
paid for technical know‑how for erection of plant and machinery;
(x) cost
of such storage tanks which store raw materials, finished products only and are
not linked with the manufacturing process; and
(xi) cost of fire fighting equipment.
(c) In the
case of imported machinery, the following shall be included in calculating the
value, namely:
(i) import
duty (excluding miscellaneous expenses as transportation from the port to the
site of the factory, demurrage paid at the port);
(ii) the
shipping charges;
(iii) customs clearance charges; and
(iv) sales tax.
Every industrial undertaking which has been issued a certificate of
registration under section 10 of the Industries (Development and Regulation) Act
or a licence under sections 11, 11 A and 13 of the said Act by the Central
Government and are covered by the provisions of paragraphs (1) and (2) above
relating to the ancillary or small-scale industrial undertaking, may be
registered, at the discretion of the owner, as such, within a period of one
hundred and eighty days from the date of publication of this notification in
the Official Gazette.
Small scale industries are required to register themselves with the
Directorate of Industries of the State concerned and obtain necessary
'Registration Certificate'. This registration is necessary to enable the units
to have allotment of factory sheds/plots in industrial estates, supply of
machinery on hire purchase terms from NSIC, participation in Government stores
purchase programme, training and industrial extension services and also for
allocation of raw material, wherever applicable.
Commercial banks generally insist for production of registration
certificate while sanctioning financial assistance to small-scale units.
Financial assistance may nevertheless be sanctioned even without registration
certificate against an affidavit from the borrowing unit if the bank is
satisfied about the small-scale status of the unit on the basis of investment
in plant and machinery. However, in case of ancillary units, the registration
of the unit with the Directorate of Industries is compulsory even for seeking
financial assistance from banks as a small-scale ancillary unit.
Financial institutions and banks give preferential treatment to
small-scale units and credit facilities to such units are sanctioned on liberal
terms. The financing pattern and appraisal techniques for granting advances to
small-scale units are, however, no different than the normal procedure followed
by these institutions and banks for their credit operations. State level
financial institutions participate in granting term loans to small-scale units
in a big way. Commercial banks also sanction loans and credit facilities for
working capital to small-scale units on priority basis. Industrial Development
Bank of India also provides indirect assistance by granting refinance facility
to state level institutions and banks against assistance sanctioned by them to
small-scale units. The refinance facilities augment. the resources of these
institutions for granting further advances. Small-scale units can also purchase
machinery under SIDBI Bills Rediscounting Scheme.
Another important source for supply of machines on hire purchase basis
to small-scale units is 'National Small Industries Corporation Limited' with
its head Office situated at 'Laghu Udyog Bhavan,' Okhla Industrial Estate, New Delhi110
020. NSIC supplies machinery upto the maximum amount permitted for investment
as per Government's guidelines. NSIC also provides marketing facilities and
assistance in borrowing raw material to SSI's.
NSIC has prescribed an application form for availing hire purchase
facilities and the prescribed application fee is to be paid at the time of
making application.
At the State level, the State Financial Corporation provide finance for
the Small-scale Industrial Units either directly or on refinance basis from the
SIDBI, Central Industrial Finance Corporation, etc. List of State level
institutions and the schemes offered by them are given in Chapter 'State Level
Institutions'. Complete details regarding the facilities available may be
obtained from the respective institutions.
District Industries Centres (DICs)
To give a further boost to development of small & village
industries, a 'District Industries Centre' (DIC) has been established in every
district as a part of a centrally sponsored scheme. The role of DIC is to
collect information about the availability of raw materials and other resources
and for making arrangement for machinery and equipment, marketing, quality
control, research and credit facilities etc. for the small units to be set up
in the district. It is also sponsoring authority for directing application of
small units to commercial banks for sanctioning of credit facilities.
Increasing role to DIC has been assigned for implementation of yet another
centrally sponsored scheme named as Prime Minister's Rozgar Yojana (PMRY). A
task force for identification of beneficiaries and implementation of the above
scheme has been set up at each 'District Industries Centre'.
Commercial banks continue to be the main source of finance for working
capital even for small-scale units. Banks also grant term loans to such units
on a very large scale. As already stated the financing pattern and appraising
techniques adopted by the banks are almost the same as adopted for other credit
proposals. However, Reserve Bank has issued various guidelines to the banks
exhorting them to have a liberal approach and ensure quick disposal of small
projects within a time bound schedule. Small-scale units for the purpose of
financing by the banks may broadly be divided in the following categories as
under:
·
Artisans, Village and Cottage Industries
Artisans irrespective of their location and small industrial units engaged
in manufacturing, processing and servicing in villages and small towns, with a
population not exceeding 50,000 (as per 1971 census) involving utilisation of
locally available natural resources and/or human skills with maximum total
credit requirement upto Rs. 50,000.
·
Small Industries in Tiny Sector
Industrial units in which the investment in plant and machinery does not
exceed Rs. 25 lacs irrespective of their location.
·
Other Small-scale Units
Industrial units having investment in plant and machinery to the extent
of Rs. 1.00 crore.
·
Small-scale (Industry related) Service Business
Enterprises (SSSBEs)
Service oriented enterprises whose investment in plant and machinery
does not exceed Rs. 10.00 lacs
Banks are required to sanction a composite loan upto Rs. 50,000 for
purchase of machinery or working capital or both on very liberal terms to
borrowers falling under this category. Assessment is to be done liberally providing
10% to 20% for any unforeseen contingency due to operational bottlenecks or for
some essential consumption requirements.
No margin/contribution from the borrower, third party guarantee or any
collateral security is necessary. No service charges are payable.
The rates of interest that are payable depending upon the quantum of
advance are already explained in the relevant chapter.
The repayment period is fixed from 7 years to 10 years with an initial
moratorium period of 18 months which may be reduced to 12 months in case of
artisans already established in the business.
Application under this category may be sponsored by DIC after proper
appraisal. Applications for credit limits upto Rs. 1 lac shall be disposed of
by the banks within 30 days on the basis of appraisal done by DIC. Cogent
reasons for rejecting any application sponsored by DIC to the bank have to be
stated while rejecting any application. For advances above Rs. 1 lac and upto
Rs. 2 lacs joint appraisal by DIC and financing bank may be considered
necessary before sanctioning the facility. It may be clarified here that banks
can also directly entertain proposals from tiny sector and grant facilities to
such units.
Composite loans up to Rs. 50,000 may also be sanctioned on the same
terms and conditions as applicable to artisans and village/cottage industries
under the tiny sector. Exemption limit for obtaining collateral securities from
units in tiny sector has been raised from Rs. 1.00 lac to Rs. 5.00 lacs. Further
composite loan limit (for providing working capital and term loans through a
single window) has been increased from Its,5.00 lakh to Rs. 10 lakh.
Some special features of credit facilities to small-scale industries by
banks are discussed hereunder:
Application forms have been revised as per the recommendation of 'Nayak
Committee' and the forms have been standardised for uniform implementation by
all the banks. Application forms depending upon the quantum of bank loan
required for the project are as under :
(i) Application Form for
credit facilities upto Rs. 2 lakhs (including Composite Loan)
(ii) Application Form for
credit facilities of over Rs. 2 lacs and upto
Rs. 15 lacs.
(iii) Application Form for
credit, facilities of over Rs. 15 lacs and upto Rs. 1 crore.
(iv) Application F6rmfor
credit facilities of over Rs. 1 crore.
Basically the rates of interest charged on SSI units are the same as per
general scheme in this regard. The present rates of interest are as under
Upto and inclusive of
Rs. 2,00,000 Not
exceeding PLR
Over Rs. 2,00,000 At
the discretion of the bank
Banks may on the basis of good track record and financial position of
the SSI units dispense with the requirement of collateral for loans up to Rs.
25 lakhs (with the approval of appropriate authority)1
SSI Sector (Marketing Companies)
2nd method of lending is applicable for calculating MPBF1 in respect of all borrowers
enjoying working capital limit of Rs. 100 lacs and above from the entire
banking system. With a view to giving encouragement to SSI sector and to
facilitate marketing of products of village, tiny and small-scale industrial
units, it has since been decided by Reserve Bank that the
companies/organisations marketing/trading the products of village, tiny and
small-scale sectors will he subjected to the first method of lending by banks
while assessing MPBF1 subject to the fulfilment of the
following conditions:
(i) The
borrowing unit is exclusively dealing with the products and merchandise
manufactured by village, tiny and SSI units. In case such a borrower is also
marketing products manufactured by medium and large industries and/or having
manufacturing activity of its own, the relaxation of applying the first method
of lending will be made only to that portion of marketing business which is
related to the products manufactured by village, tiny and SSI industries; and
(ii) Dues
of the said village, tiny and SSI units have been settled by such borrowers
within a maximum period of 30 days from the date of supply; this should be
certified by the statutory auditors of the borrowing units on a quarterly basis.
RBI constituted a committee under the chairmanship of P.R Nayak to
examine the adequacy of institutional credit to SSI sector and related aspects.
The main recommendations of the report as accepted by Reserve Bank for implementation
are given below :
(i) Credit
requirement of village industries, tiny industries and other SSI units having
aggregate fund‑based working capital credit limits upto Rs. 500.00 lacs from
the banking system, the norms of inventory and receivables as also 1st method
of lending will not apply. Such units may be provided working capital limits
computed on the basis of a minimum of 20 per cent of their projected annual
turnover. This basis will be adopted for all new as well existing units. The
SSI units will he required to bring in 5 per cent of annual turnover as margin
money. In cases where output exceeds the projections or where initial
assessment of working capital is found inadequate, suitable enhancement in
working capital limits will be granted as per the above formula.
Other SSI units having aggregate fund‑based working capital limits‑of
above Rs. 200.00 lacs would, however, continue to be governed by the existing
guidelines.
(ii) Each
branch of the bank will prepare an annual budget in respect of working capital
requirement of all SSI units before commencement of year which will form the
basis of credit budget of the bank for SSI.
(iii) The
guidelines relating to definition of sick SSI unit and interest applicable on
Working Capital Term Loan (WCTL) have been amended as under :
(a) Definition of a sick SSI Unit
A SSI unit may be classified as sick unit (i) when any of its borrowal
accounts has become 'doubtful' advance i.e. principal or interest in respect of
any of its borrowal accounts has remained overdue for a period exceeding 2‑11,
years and (ii) there is erosion in the net worth due to accumulated cash losses
to the extent of 50% or more of its peak net worth during preceding two
accounting years.
(b) Interest on WCTL
In respect of WCTL the rate of interest applicable may be 1.5 to 3
percentage points below the prevailing fixed rate/minimum lending rate,
wherever applicable, but not more than the lowest lending rate for tiny/decentralised
sector units and not more than 5 percentage
points below the minimum lending rate in the case of advances of over Rs.2.00
lacs for the other SSI units.
(iv) SSI
units having a project outlay of Rs. 200 lacs (both term loan and working capital
needs) may be covered under ‘Single Window Scheme’ of SIDBI under which the
term loan and working capital requirements must be met by a single financing
agency i.e. either by the bank or State Financial Institution.
Despite the steady increase in the flow of credit to the SSI sector,
there are, however, often complaints relating to the adequacy and timeliness of
credit to this sector. The Government had appointed an expert committee on
small enterprises headed by Shri Abid Hussain which submitted its report in
January 1997.
The recommendations of the Abid Hussain Committee cover various facets
of the SSI sector and in particular the definition for classification of a unit
as SSI is being revised so as to cover units with investment in plant and
machinery up to Rs. 3 crore1 (from the present limit of
Rs. 60 lakh/Rs. 75 lakh). The definition of tiny enterprises is also being
enhanced to cover units with investment in plant and machinery upto Rs. 25 lakh
(present limit Rs.5 lakh). The banks have also been advised that 40 per cent of
the funds available to all segments of the SSI sector should be made available
to units with investment in plant and machinery upto Rs. 5 lakh, 20 per cent to
units with investment in plant and machinery between Rs. 5 lakh and Rs. 25 lakh
and the remaining 40 per cent to other SSI units.
In recent years, the banks have also operationalised a number of specialised
SSI branches with a view to paying special attention to the financing of
small-scale units. Further, PSBs have been asked to accelerate their programme
of SSI branches to ensure that every district and SSI clusters within districts
are well served by at least one specialised SSI bank branch. The Government has
also decided that SSI branches would need to obtain ISO certification to
improve the quality of their banking services. All these initiatives are
expected to yield considerable results in the form of adequate flow of credit
to SSI sector.
One of the major difficulties faced by small-scale and ancillary
industrial units is in respect of realisation of their dues. The Interest on
Delayed Payment to Small-scale & Ancillary Industrial Undertakings Act,
1993 provides for and regulates payment of interest on delayed payments to
small-scale and ancillary industrial undertakings and for matters connected
therewith or incidental thereto. The salient features of the enactment are as
under :
(i) Where
an SSI unit supplies any goods or renders any services to any buyer, the buyer
shall make payment therefor on or before the date agreed upon between him and
the SSI unit in writing or where there is no agreement in this behalf, within
30 days from the date of delivery of goods/services (appointed day).
(ii) Where
the buyer fails to make payment as in the preceding paragraph, he is liable to
pay interest to the supplier on that amount from the appointed day or from the
date immediately following the date agreed upon, at one‑and‑a‑half
times of Prime Lending Rate charged by the State Bank of India.
(iii) The
interest is payable on compounding basis (with monthly rests) at the rate
mentioned in (ii) above.
(iv) The
amount as above shall be recoverable by the supplier from buyer by way of
suits. No appeal against any decree shall be entertained by any court unless
the appellant has deposited with the court seventy five per cent of the amount
in terms of degree.
(v) The
buyer, if his accounts are audited under any law, is required to specify the
amount together with interest in his annual statement of accounts as remains
unpaid to any SSI unit at the end of each accounting year. The interest payable
or paid by any buyer on the above account shall not be treated as deductible
expense for the purpose of computation of his income under Income tax Act,
1961.
(vi) The
provisions of this Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in force meaning
thereby that the Act will have an overriding effect.
Small Industries Development Bank of India (SIDBI) was set up, by an Act
of Parliament, as an apex institution for promotion, financing and development
of institutions engaged in similar activities. SIDBI started as a wholly owned
subsidiary of Industrial Development Bank of India (IDBI). It commenced its
operations on April 2, 1990 by taking over the outstanding portfolio and
activities of IDBI pertaining to the small-scale sector.
However, with effect from 27.3.2000, SIDBI has been de‑linked from
IDBI. Now, 51 % stake of SIDBI shall be held by IDBI/LIC/GIC, public sector
banks and other institutions owned or controlled by the Government and the rest
by public.
All projects in the small-scale sector are normally eligible for
assistance. The minimum promoteSrs' contribution prescribed under the schemes
generally varies between 10% and 25%. The debt‑equity ratio upto 3:1 is
normally applicable under all refinance schemes. Interest rate for most
activities is related to size of loan under various schemes of assistance.
Repayment period for the term loan is fixed after taking into account the
profitability and debt servicing capacity of the project.
National Venture Fund for Software and IT Industry (NFSIT) was
introduced in December, 1999 by SIDBI in association with Ministry of
Technology and IDBI. The main objective of the fund is to meet the total fund
requirements of software and IT companies in small-scale sector. The fund shall
also develop international networking and enable assisted units to attract co‑investment
from international venture capitalists.
SIDBI Venture Capital Ltd. (SVCL), a wholly owned subsidiary of SIDBI
acts as Asset Management Company for the Fund. Trustee company for the Fund is
SIDBI Trustee Company Ltd. which is another wholly‑owned subsidiary of
SIDBI.
SIDBI has been operating a scheme to enhance export capabilities of SSIs
wherein SSI units are rated at a subsidised rate by Dun & Bradstreet
Information Services (India) Pvt. Ltd. (D & B). With die D& B agreeing
to forego 50 per cent of its fees for rating of SSIs, the SSI units shall now
be rated without having to bear any expenditure since the entire fee would be
borne by D&B and the SIDBI.
Interest on loans
under various SIDBI schemes shall be payable at rates prescribed from time to time.
See Appendix 24.III.
For availing
assistance from SIDBI, borrowers may approach the concerned office. List of
SIDBI offices is given in Appendix 24.IV.
Details of individual
schemes and procedure for availing financial assistance may be obtained from
the Offices of SIDBI/PLIs. Brief particulars of various schemes are as follows
:
Purpose
(a) For
setting up new SSI units; preference will be given to units with export
orientation, import substitution, hi‑tech and those promoted by
entrepreneurs with a good track record,
(b) Modernisation,
technology upgradation, diversification and expansion of existing well run units
in the SSI sector,
(c) For
setting up of small hotels and other tourism related activities as well as
hospitals & nursing homes.
New or existing SSI concerns. They should be, generally, at least
private limited companies.
Units graduating to medium scale are also covered subject to certain
conditions.
Term loan not less than Rs.100 lakh. The limits in respect of SIDBI
Offices located in Eastern Region, North Eastern Region, Aurangabad, Dehradun,
Jammu, Nagpur, Pondicherry, Raipur, Shimla, Varanasi and Visakhapatnam shall be
Rs.50 Lakh.
Technology Development and Modernisation
Fund Scheme (TDMFS)
(a) For
purchase of capital equipment, need‑based civil works and acquisition of
additional land and need based additional margin money for working capital.
(b) Acquisition
of technical know‑how, designs, drawings and fashion forecast where
considered relevant to specific product group.
(c) Upgradation
of process technology and products with thrust on quality improvement comparable
with acceptable domestic and international standards.
(d) Improvement in
packaging; and
(e) Cost of TQM and
acquisition of ISO 9000 Series Certification.
Existing units in SSI sector which go in for modernisation/technology
upgradation. They should have been in operation for at least three years. The
units should not be in default to institutions/banks in payment of dues. Units
graduating out of SSI sector are also eligible subject to certain conditions.
Assistance by way of term loan in rupee currency or foreign currency. In
select cases SIDBI may consider participating in equity also depending upon the
exit route available to SIDBI for disinvestment in due course. Minimum amount
of assistance should be Rs.10 lakh per unit, Repayment ‑maximum 5 years
including initial moratorium upto one year.
Technology Upgradation Fund Scheme for
Textile Industries (TUFS)
TUFS has been launched with a view to sustaining as well as improving
the competitiveness and overall long term viability of the textile sector. The
scheme intends to provide timely and adequate capital at internationally
comparable rates of interest in order to upgrade the textile industry's
technology level.
The borrower can either avail 12% credit linked subsidy or 5% interest
reimbursement on the interest actually charged in respect of rupee loan. The
scheme also provides for coverage of exchange rate fluctuation not exceeding 5%
p.a, from the base rate or cost of forward cover premium upto 5% p.a. on the
base rate of exchange in respect of foreign currency loan.
SSI units in the Textile sector and Cotton Ginning and Pressing sector.
SSI units graduating out of the sector after implementation of the Scheme would
also be covered.
Amount of term loan shall be need based but not below Rs. 10 lakh.
For SSI units graduating out of the sector, the amount of loan shall be
decided on a case to case basis.
20 per cent of the project cost for rupee term loan.
33.33 per cent of the cost of project for foreign currency term loan.
Equipment Finance Scheme (EFS)
For acquisition of machinery/equipment, including DG set, both
indigenous and imported which are not related to any specific project.
Additional need based civil work at existing location, miscellaneous
fixed assets additional margin money for working capital may also be
considered.
Existing units in SSI sector with good track record of performance and
sound financial position. They should have been in operation for at least three
years and have earned profits and/or declared dividend during two years
preceding to taking up the scheme. The units should not be in default to
institutions/banks in payment of dues.
Requirement of loans should not be less than Rs.50 lakh. The limits in
respect of SIDBI Offices located in Eastern Region, North Eastern Region,
Aurangabad, Dehradun, Jammu, Nagpur, Pondicherry, Raipur, Shimla, Varanasi and
Visakhapatnam shall be Rs.25 lakh.
In case of finances for DG set alone, loan requirement should not be
less than Rs.5 lakh.
Debt Equity Ratio ‑ Not more than 2:1 for the project and not wore
than 13: 1 for the company.
Repayment ‑ 5 years including moratorium upto 12 months.
Fast Track Financing Scheme (FTFS)
Under normal financing schemes of Financial Institutions (FIs) and
Banks, units having specific requirements of additional equipment, plant and
machinery need to approach FIs/Banks with a list of such machinery together
with cost benefit analysis thereof to seek sanction/disbursement of additional
loan(s). This necessitates advance estimates of the requirements of the unit for
possible assistance and a complete appraisal by the FI/Bank. Most of the SSI
units are not able to envisage these
requirements in advance. However, it is observed that well run SSI units
acquire additional equipment, plant and machinery as and when required by them
by arranging temporary funds at high costs or by diverting their working
capital to meet their immediate requirements of either executing certain bulk
orders or for meeting capital expenditure for marginal expansion and/or
modernisation technology. The funds may also be required for augmenting Working
Capital and for construction of need based additional shed / factory building.
If such well run units having impeccable track record of satisfactory
performance and repayment are identified by SIDBI from its existing clientele
then a fast track financing scheme could be offered to them for meeting such
requirement.
Existing assisted units of SIDBI in the SSI sector satisfying the
following requirements :
·
Essential
(i) Unit in existence for 5
years and making profits and having a satisfactory track record with SIDBI.
(ii) Borrower to have a Debt
Equity Ratio (after the proposed borrowing) of not more than 2 : 1.
(iii) Atleast
25% of the additional fund requirement to be arranged as promoters’
contribution.
(iv) The
term loan to be made available for acquiring specific identifiable equipment
(including on reimbursement basis), additional working capital as a result
thereof and need based civil construction. Acquisition of additional land will
not be eligible for assistance under the scheme.
(v) The borrower or any of
its associate concerns to be not in default to any bank / FI.
·
Desirable
(i) The average annual
turnover for last 3 years to be around Rs. 3 crore.
(ii) The
borrower to have been enjoying a limit of around Rs.50 lakh from a scheduled
commercial bank.
(iii) Preferably having a
corporate constitution.
Units graduating to medium scale shall also be eligible subject to certain
conditions.
The assistance would be in the form of a Term Loan Limit ("Limit')
valid for one year. This could be in the form of Rupee/foreign currency or
both.
Based upon the financial position and operations of the unit, an annual
limit would be sanctioned. The minimum and maximum amount of limits under the
Scheme for a period of one year could be between Rs. 25 lakh and Rs. 200 lakh
respectively.
(i) Rate of Interest
As
per prevailing interest rate structure of SIDBI announced from time to time.
(ii) Upfront Fee
Non‑refundable
upfront fee of 0.5% of the limit.
(iii) Repayment Period
3 to
5 years including an initial moratorium not exceeding 6 months.
·
First charge by way of hypothecation of the
equipment/stocks/assets covered under the Scheme in favour of SIDBI.
·
Extension of charge on existing securities
available with SIDBI in respect of earlier loans granted to the unit.
·
Personal Guarantee of the promoters/directors.
To meet the expenses
on consultancy, documentation, audit, certification fee, equipment and
calibrating instruments required for obtaining ISO 9000 certification.
Existing industrial
concerns in the SSI sector having a good record of past performance and sound
financial position. The objective is to promote quality/ management systems in
SSI units with a view to strengthening their marketing and export capabilities.
Loan Limit ‑ need based.
Debt equity ratio not more than 2:1 for the borrowing concern.
Repayment ‑ maximum 5 years including an initial moratorium upto
12 months
Scheme for Development of Industrial
Infrastructure SSI Sector (DII)
Setting up of industrial estates/development of industrial areas
including such projects found eligible under KVIC model.
Strengthening of existing industrial clusters /estates by providing
increased amenities for smooth working of the industrial units. Setting up of
warehousing facilities for SSI products/units.
Providing support services viz., common utility centres such as
convention halls, trade centres, raw material depots, warehousing, tool
room/testing centres, housing for industrial workers, etc. Any other
infrastructure facilities which will benefit predominantly SSI
units/entrepreneurs.
All forms of organisations such as Public/Pvt. Ltd. Companies;
Registered Societies/Trusts; Government Corporations; Corporates/Co‑operative
entities/accredited NGOs approved by KVIC.
Cost of Project: Not to exceed Rs. 100 million.
Debt Equity Ratio: Not more than 3:1
Repayment Period ‑ Not exceeding 10 years including initial
moratorium period of upto 3 years.
Integrated Infrastructural Development
(IID)
For setting up of IID centres with facilities like water supply, power,
telecommunication, common services centre including for technological back up
services for small-scale industries in rural backward areas as envisaged under
the policy for promoting and strengthening small, tiny village enterprises
announced by Govt. of India (GOI) on August 6, 1991.
The cost of improving/upgrading the deficient infrastructural facilities
to increase the productivity and optimum utilisation of the existing
centres/clusters in backward/rural areas may also be covered under the scheme.
Implementing agencies (a public sector corporation or a corporate body
or a good NGO having sound financial position) entrusted with the task of
implementing the scheme by the concerned State / Union Territory (UT) Govt.
Selection of IID centre should be preceded by a comprehensive industrial
potential survey of the area.
Suitable land would be provided by State / U.T. Govt, cost of which may
be recovered from implementing agencies. Normally, agricultural sand may not be
used for setting up of an IID centre.
The size of IID centre would be about 15 to 20 hectares. The centre
should provide for various facilities like water supply, power,
telecommunication, effluent treatment etc.
The ceiling on project cost is Rs.50 million. Cost in excess of Rs.50
million may be met by State/UT.
Govt. Cost of Rs.50 million to be financed by Grant from Govt. of India
(GOI) Rs.20 million and loan from SIDBI of Rs.30 million. In case of North‑Eastern
Region, the amount of Grant from GOI and loan from SIDBI would be Rs.40 million
and Rs.10 million respectively. State Government guarantee shall be furnished
as security for the loan.
Credit Linked Capital Subsidy Scheme
(CLCSS)
The objective of the scheme is to facilitate technology upgradation of
tiny and SSI units in the specified products/sub‑ sectors as indicated
below by providing 12% capital subsidy for induction of proven technologies
approved under the scheme, viz., leather and leather products including
footwear and garments; food processing (including ice‑cream
manufacturing); Information and Technology (Hardware);drugs and pharmaceuticals;
autoparts and components; electronic industry particularly relating to design
and measuring; glass and ceramic items including tiles; dyes and
intermediaries; toys; tyres; hand tools; bicycle parts; foundries ‑
ferrous and cast iron; and stone industry (including Marble Mining Industry).
|
SL. Existing investment limit Maximum ceiling Maximum subsidy No. of
loan eligible for available
under the subsidy* scheme |
|
1.
Tiny units with investment Rs. 8 lakh Rs 0.96 lakh in plant and machinery less than
Rs. 10 lakh 2.
Tiny units with investment Rs. 20 lakh Rs. 2.40 lakh in
plant and machinery between
Rs. 10 lakh and
Rs. 25 lakh 3.
SSI units with investment Rs. 40 lakh Rs. 4.80 lakh in plant and machinery above
Rs. 25 lakh. |
(a) Existing
SSI units registered with the State Directorate of Industries which upgrade
with the state‑of‑the‑art technology, with or without
expansion.
(b) New SSI
units which am registered with the State Directorate of Industries and which
set up their facilities only with the appropriate eligible and proven
technology duly approved by the GTAB.
Scheduled commercial banks and National Small Industries Corporation
(NSIC) and State Financial Corporations (SFCs).
Technology upgradation would ordinarily mean induction of state‑of‑art
or near state‑of‑the‑art technology. It would also include
installation of improved environmental conditions, including work environment
for the unit, installation of improved packaging techniques, anti‑pollution
measures and energy conservation machinery.
The scheme will be in operation for a period of five years from October
1, 2000 to September 30, 2005, or till the time sanctions of capital subsidy by
the nodal agency reach Rs.600 crate, whichever is earlier.
To help SSI units in starting their commercial production without
difficulty and during their upscaling of operations.
All the assisted units of SIDBI covered under the proposed scheme shall.
however, be required to eventually switch over to commercial banks within a
reasonable time frame (say 3‑5 years) for meeting their regular working
capital requirements.
New or existing SSI units whether or not assisted by SIDBI including
units graduating to medium scale.
The venture outlay (i.e. project cost + work capital) should he beyond
Rs. 1 crore and upto Rs. 3 crore. Lower
ceiling maybe considered in respect of units assisted under SIDBI's schemes
viz., ancillary TDMFS, ISO 9000, Vendor Development, Marketing Equipment
finance Scheme etc.
Debt Equity Ratio ‑ Not exceeding 2:1 for total venture outlay.
Vendor Development Scheme (VDS)
To encourage SSI vendors/sub contracting units to acquire capital
equipment, as also the requisite technology (including know how, designs, drawings,
etc) for building up of export capabilities/import substitution including the
cost of TQM and acquisition of ISO 9000 series certification and for expansion
of capacity inclusive of need based additions / modifications to existing
building and additional margin money for working capital requirement for
execution of bulk orders etc.
Registered new or existing well run SSI vendor units. Preference will be
given to limited companies. Registered partnership/proprietary concerns with good
track record may also be considered selectively.
Requirement of loan should not be less than Rs.5 lakh per unit.
Debt Equity Ratio ‑ Not more than 2:1
Promoters’ contribution minimum 20%.
Term loan in Rupee/Foreign currency. Direct subscription to equity if
outlay more than Rs. 1 crore and clear exit route available.
Direct Discounting Scheme ‑ Equipment
(DDS‑E)
To enable manufacturers ‑ sellers in SSI sector/selling agents to
offer deferred payment terms for credit sales and realise sale proceeds by
discounting bills of exchange/promissory notes arising out of such sales.
Limits are sanctioned by SIDBI to well established concerns/corporate
bodies buying machinery/capital equipment from SSI units. Limits am also
sanctioned to well-established SSI manufacturers ‑ sellers.
Usance of Bills- Normally 3‑5 years
Minimum transaction value ‑ Rs,1,00,000
Direct Discounting Scheme ‑
Components (DDS‑C)
To enable SSI units selling components, parts, etc., to realise the sate
proceeds quickly.
Limits are sanctioned by SIDBI to well established industrial units
using components/parts/sub‑assemblies/accessories manufactured by SSI
units. Direct seller‑wise limits can also be considered for established
SSI units.
Unexpired usance ‑ Not more than 90 days.
Bills Rediscounting Scheme ‑
Equipment (BRS-E)
For sale/acquisition of machinery on deferred payment terms for setting up
of new SSI units as also for expansion, diversification, modernisation,
replacement, addition of balancing equipment etc.
Manufacturer‑sellers/purchaser‑users of indigenous
machinery/capital equipment one of whom should be in the small-scale sector.
Scheme operated through scheduled commercial banks.
Bills Rediscounting Scheme (Inland Supply
Bills)
To encourage bills
culture as a method of working capital financing so as to ensure timely payment. Trade bills arising out of supply
of goods by SSI units and discounted with commercial banks either by the drawer
(seller) or the drawee (buyer) are rediscounted by the banks with SIDBI.
SSI suppliers
Scheme operated through scheduled commercial banks.
Refinance scheme is introduced for catering to the need of funds of
Primary Lending Institutes for financing small‑scale industries. Under the
scheme, SIDBI grants refinance against term loans granted by the eligible PLIs
to industrial concerns for setting up industrial projects in the small-scale
sector as also for their expansion/modernisation/diversification.
Term loans granted by the PLIs for other specified eligible activities/
purposes are also eligible for refinance.
Ceiling on refinanceable term loan under the scheme is given below:
|
Type
of PLI Ceiling
(Rs. Lakh) |
|
|
Scheduled Commercial Banks and State Co‑operative
Banks 300 Other
Co‑operative Banks/Urban Co‑operative Banks 50 Regional
Rural banks 20 |
|
|
Type
of PLI Category[Amount
in Rs. Lakh] A
B C |
|
SFC 500* 500* 500 SIDC 400 250 150 TFIDC 240 150 100 |
* The limit of
accommodation per individual borrower can be enhanced to Rs. 1000 lakh with
prior approval of SIDBI.
Refinance business of
SIDBI is carried on under various Lines of Businesses which are;
·
ARS is available to all eligible banks.
·
The objective of ARS is to expedite the flow of
assistance under refinance scheme.
·
Schemes covered under ARS ‑ Composite
Loan Scheme(CLS), Single Window Scheme (SWS), Refinance for Small Road Transport
operators (SRTOs), Refinance Scheme for Technology Development and
Modernisation (RTDM), Refinance Scheme for Acquisition of ISO series
Certification, by SSI unit (RISO 9000), Refinance Scheme for Rehabilitation of
Sick Industrial Units (RSR), Relief refinance Scheme (RRS), National Equity
Scheme (NEF), Mahila Udyam Nidhi (MUN) and General Refinance Scheme (GRS).
·
SIDBI does not carry out any appraisal of the
proposal and completely relies on the scrutiny carried out by Primary Lending
Institutions.
·
Ceiling on refinanceable amount under ARS is as
follows:
|
(Rs.
in Lakhs) Type
of PLI Ceiling |
|
|
Scheduled Commercial Banks 200 State Co‑operative Banks/Urban Co‑operative
Banks 50 Other Co‑operative Banks/Regional Rural
Banks 20 |
|
·
NRS is available to all eligible banks,
·
All eligible proposals over and above the
ceiling mentioned in ARS are covered under NRS
·
Schemes covered under NRS ‑ Single Window
Scheme (SWS), Refinance Scheme for Rehabilitation of Sick Industrial Units
(RSR), National Equity Scheme(NEF) and General Refinance Scheme (GRS).
·
SIDBI carries out re‑appraisal of
proposals submitted under NRS based on the appraisals done by the PLIs.
·
Line of Credit is available to all eligible
financial institutions,
·
The objective of LOC is to provide a consistent
credit facility to all eligible financial institutions.
·
Schemes covered under LOC ‑ Composite
Loan Scheme (CLS), Single Window Scheme (SWS), Refinance for Small Road
Transport operators (SRTOs). Refinance Scheme for Technology Development and
Modernisation (RTDM), Refinance Scheme for Acquisition of ISO series
Certification by SSI unit (RISO 9000), Refinance Scheme for Rehabilitation of
Sick Industrial Units (RSR), Relief refinance Scheme (RRS), National Equity
Scheme (NEF), Mahila Udyam Nidhi (MUN), Self Employment for Ex‑servicemen
Scheme (SEMI7EX) and General Refinance Scheme (GRS).
·
SIDBI does not carry out any appraisal of the
proposal and completely relies on the Scrutiny carried out by Primary Lending
Institutions.
General Refinance Scheme (GRS)
For setting up new small-scale units or expansion, modernisation,
diversification etc. of existing units and for all activities eligible for
assistance under the scheme including professional practice/consultancy venture
and service sector units such as tourism related activities/hospitals/ nursing
homes/ polyclinics/hotels/restaurants/marketing and industrial infirastructural
projects.
All form of organisations in the small-scale sector (i.e., proprietary,
partnership/ company, co‑operative society) etc.
For infrastructure development ‑All forms of organisations such as
public/pvt. ltd, cos., partnerships, sole proprietary, municipalities, SIDCs.
Scheme operated through SFCs/SIDCs/banks.
Cost of project in respect of service sector units not to exceed
Rs.200million for banks and as prescribed by IDBI.
National Equity Fund Scheme (NEF)
To meet gap in prescribed minimum promoters’ contribution and/or in
equity.
Small entrepreneurs for setting up new projects in tiny/small scale
sector and rehabilitation of potentially viable sick SSI units irrespective of
the location. Existing tiny and small-scale industrial units and service
enterprises [tiny enterprises would include all industrial units and service
industries (except Road Transport Operators) satisfying the investment ceiling
prescribed for tiny enterprises] undertaking expansion, Modernisation,
technology upgradation and diversification can also be considered irrespective
of the location.
Scheme operated through SFCs/twin function SIDCs/Scheduled Commercial
Banks/Select Urban Co‑operative Banks
Cost of project ‑ Not to exceed Rs.5 million
Soft Loan limit ‑ 25% of
cost of project subject to a maximum of Rs. 10,00,000 per project.
Service Charges ‑ 5% p. a. on soft loan.
To meet gap in equity.
Women entrepreneurs for setting up new projects in tiny/small-scale
sector and rehabilitation of viable sick SSI units. Existing tiny and
small-scale industrial units & service enterprises [tiny enterprises would
include all industrial units and service industries (except Road Transport
Operators) satisfying the investment ceiling prescribed for tiny enterprises]
undertaking expansion, modernisation technology upgradation
&diversification can also be considered.
Scheme operated through SFCs/twin function SIDCs/Scheduled Commercial
Banks/Select Urban Co‑operative Banks
Cost of Project ‑ Not to exceed Rs. 1 million.
Soft Loan Limit ‑ 25% of cost of Project subject to a maximum of
Rs.2,50,000 per project.
Service charges ‑ 1 % p.a. on soft loan.
Refinance for Small Road Transport
Operators (SRTOs)
To meet expenditure towards cost of chassis, body building, initial
taxes/ insurance and working capital. Second hand vehicles are not eligible for
assistance.
Small road transport operators
Loan limit ‑ Need based
(20 vehicles per operator including existing vehicles)
Refinance Scheme
for Technology Development and Modernisation (RTDM)
Assistance under the scheme would be available for meeting die
expenditure on
(a) purchase of capital
equipment need based civil works and acquisition of additional land
(b) acquisition
of technical know‑how, designs, drawings and fashion forecast where
relevant to specific product group
(c) upgradation
of process technology and products with thrust on quality improvement
comparable with acceptable domestic and international standards
(d) Improvement in packaging
(e) cost of TQM and
acquisition of ISO 9000 series certification
(f) need based additional/incremental
margin money for working capital
Sole Proprietorships, Partnerships, Co‑operative Societies,
Private and Public Limited Companies
Scheme operated through all eligible Primary Lending Institutions except
Regional Rural Banks
Project outlay ‑ Not to exceed Rs. 10 million
Preliminary and pre‑operative expenses shall not be covered as a
part of the cost of the project
Refinance Scheme
for Textile Industry Under Technology Upgradation Fund (RTUF)
To provide encouragement to textile industrial units (including units in
the Cotton Ginning and Pressing sectors) in the small wale sector for taking up
technology upgradation and to modernise their production facilities, The scheme
envisages interest incentive of 5 percentage points on the loans availed by
small-scale units from eligible Primary Lending Institutions (PLIs) for
undertaking technology upgradation/modernisation. New units being set up with
technology as per the guidelines of the scheme would also be eligible for the
above incentive.
However, availment of Refinance from SIDBI is not compulsory in respect
of SFCs, Scheduled Commercial Banks and select co‑opted Co‑operative
Banks. In case Refinance is availed from SIDBI, such proposals shall conform to
norms and parameters stipulated by SID131 in addition to the guidelines
prescribed by GOI.
Assistance under the scheme would be available for installation of
specified types of machinery (to fall in line with definition laid down by
Government of India (GOI) for technology upgradation) in a new unit or in an
existing unit by way of replacement of existing machinery and/or expansion will
be eligible for coverage under RTUF scheme (details of list of machinery are
furnished in Section 4 of Technology Upgradation Fund Scheme booklet issued by
GOI).
(i) The
following investments will also he eligible to the extent necessary for the
plant and equipment to be installed for Technology Upgradation and the total of
such investments will not normally exceed 25% of the total investment in such
plant and machinery:
(a) Land
and factory building including renovation of factory building and electrical
installations.
(b) Energy saving devices
(c) Effluent treatment plant
(ETP)
(d) Water
treatment plant for captive industrial use
(e) Captive power generation
(ii) Investments in the
installation of the following facilities including necessary equipment;
(a)
In‑house R & D including designs
studio
(b)
Information Technology including ERP
(c) Total
quality management including adoption of appropriate ISO/ BIS standards.
(iii) Investment in the
acquisition of technical know‑how.
Lending in excess lending rates.
Investments in common infrastructure facilities owned by the
association, trust or co‑operative society of the units participating in
the RTUP scheme, to the extent necessary for this purpose, including the
following:
(i) Common utilities, viz. water supply,
power substation, etc.
(ii)
Common captive power generation
(iii)
Common effluent treatment plant
Any additional investments would attract the normal lending rates.
Sole Proprietorships, Partnerships, Co‑operative Societies,
Private and Public Limited Companies in the textile and cotton ginning and
pressing industries. The textile industry comprises the following activities:
(a) silk reeling and twisting, ,
(b) wool scouring and combing,
(c) synthetic filament yarn texturing,
crimping and twisting,
(d) spinning,
(e) viscose filament yarn (VFY),
(f) weaving, knitting including
non‑wovens, fabric embroidery and technical textiles,
(g) garment/ made‑up manufacturing,
(h) processing of fibres, yarns, fabrics,
garments and made ups
The scheme would be in operation for a period of five years from April
1, 1999 to March 31, 2004.
Refinance from SIDBI is not compulsory (except for State Co‑operative
Banks and other Scheduled Co‑operative Banks). However, where refinance
is availed from SIDBI such proposals shall conform to norms and parameters
stipulated by SIDBI, in addition to the guidelines prescribed by Government of
India (GOI).
Amount of loan ‑
need based
Promoters'
contribution ‑ Minimum 20% of the project cost
DER ‑ Shall not
be more than 2 : 1 for the unit as a whole
Further details are furnished in Technology Upgradation Fund Scheme
booklet issued by GOI.
Refinance Scheme
for Acquisition of ISO Series
Certification by SSI Unit (RISO 9000)
Expenses on consultancy documentation, audit, certification fees,
equipment and calibrating instruments required would be taken into account for
determining the loan requirement.
Existing industrial concerns in the SSI sector having a good record of
past performance and sound financial position. The concerns should :
(a) have been in operation for
a period of at low two years;
(b) have
earned profit and/or declared dividend during the preceding two financial
years; and,
(c) not be in default to
institutions/banks in payment of their dues
Scheme operated through all eligible Primary Lending Institutions except
Regional Rural Banks.
Assistance for equipment and/or working capital as also for work sheds.
Artisans.
Self Employment for Ex‑Servicemen
Scheme (SEMFEX)
For setting up small industrial projects including service industries
and specified transport activities which are eligible for finance as per SSI
norms.
Ex‑servicemen (including widows of ex‑servicemen) sponsored
by Director General (Resettlement), Ministry of Defence, Government of India.
Scheme operated through SFCs/twin function IDCs.
Cost of project ‑ Not to exceed Rs. 1.5 million.
Soft Loan ‑ Limited to meet gap in equity subject to a maximum of
Rs. 2,25,000 per project.
Service Charges ‑ 1% p.a. during moratorium period; thereafter,
interest @ 6% p.a. on soft loan.
To provide both term loan for fixed assets and loan for working capital
through the same agency. The total working capital requirement of such units
inclusive of all fund based facilities may be taken into account for
determining the working capital facility eligible for refinance.
Entrepreneurs setting up new projects in SSI/tiny sector, new promoters
acquiring unencumbered fixed assets of existing SSI concerns from PLIs, as also
existing well run units undertaking modernisation/technology upgradation and
potentially viable sick units undertaking rehabilitation scheme.
Scheme operated through SFCs/twin function IDCs/scheduled commercial
bank/eligible state co‑operative banks/scheduled urban co‑operative
banks.
Term Loan ‑ Not to exceed Rs. 20 million.
Refinance Scheme for Rehabilitation of Sick
Industrial Units (RSR)
For providing assistance for rehabilitation of potentially viable sick
units.
Potentially viable SSI units including units in cottage and village
industries and in tiny sector, conforming to definition of sick SSI unit as
prescribed in RBI guidelines. The assistance is meant for sick SSI units for
which proper rehabilitation packages have been drawn up. Units eligible for
rehabilitation assistance should be capable of being restored to normal health
within a reasonable time.
Scheme operated through Primary Lending Institutions [PLIs],
Post‑Shipment Credit in Foreign
Currency (EBF) Rupee (PSCR)
To provide post‑shipment
credit in foreign currency at internationally competitive rates of interest by
discounting of usance export bills/ purchase of sight/demand export bills and
negotiation of bills under LCs.
All SSI units and Export/Trading houses which have been sanctioned PCFC
limits by SIDBI.
Sanction of EBF limits can also be considered independent of sanction of
PCFC limits.
Need based limit, depending on the normal trade terms and credit period
given to overseas buyers by exporters not exceeding 180 days. Assistance in
rupees can also be considered selectively.
Rate of interest for EBF ‑ Not exceeding 1% over 6 Month LIBOR For
PSCR ‑As per RBI guidelines.
Pre‑Shipment Credit In Foreign
Currency (PCFC) /Rupee (PCR)
To enable small-scale industries to raise finance at internationally
competitive rates as per Reserve Bank of India guidelines to fulfil their
export commitments
Industrial concerns in the small-scale sector with good track record and
Government recognised Export/ Trading Houses sourcing their requirement for
export from SSI sector.
Pre‑shipment Credit in Foreign Currency (PCFC) is being extended
in USD, DEM & EURO Currencies. Assistance in Rupees can also be considered
selectively.
Quantum ‑ need based linked to working capital gap.
Period of Credit ‑linked to production cycle (Maximum ‑ 180
day's)
Margin ‑ minimum 10%
Repayment ‑ by discounting/ negotiation of export bills within a
maximum period of 180 days.
Rate of interest ‑ For PCFC ‑ Not exceeding 1 % over 6 Month
LIBOR. For PCR ‑ As per RBI guidelines.
Foreign Currency Teem Loan Scheme (FCTL)
FCTL will be extended in USD, DEM & EURO Currencies
Rate of interest ‑ USD ‑ 3% over 6 Month LIBOR. EURO/DEM ‑
2.5% over 6 Month LIBOR
For setting up new projects m well as for expansion, diversification,
technology upgradation and modernisation of existing units with good track
record. The units should preferably be export‑oriented.
Industrial concerns in the small-scale sector.
Repayment ‑ maximum 5 years with a moratorium of 1 year, linked to
the cash flow of the unit.
For meeting working capital requirements, both indigenous and imported.
SSI units and Export/Trading Houses sourcing their requirements for
export from SSI sector and having consistent export performance.
Repayment ‑ maximum 5 years.
Opening of Foreign Letters of Credit (FLCs)
To enable small-scale industries to import capital equipment for new
projects/expansion, diversification, technology upgradation and modernisation
of existing units. To enable import of raw materials, consumables etc. by SSI
units and Export/ Trading Houses sourcing their requirements for export from
SSIs.
Industrial concerns in the small-scale sector and Export/Trading Houses
sourcing their requirements from SSI sector.
Currency ‑ any convertible currency.
Margin‑ 100% or backed by a w m loan sanctioned by SIDBI/Primary
lending Institutions.
Amount ‑ minimum of USD 25,OW or equivalent, however FLCs for
lesser amounts may be considered on case to case basis.
Margin ‑ 100% or backed by a term loan or Pre‑shipment
credit limits sanctioned by SIDBI/Primary Lending Institutions
Charges ‑ As per FEDAI guidelines.
Line of Credit in Foreign Currency to
Commercial Banks (LOCFC)
For providing resource support to banks for extending pre/post shipment
credit to SSI exporters.
All Commercial bank in private and public sector.
Currency –
USD/EURO/DEM
Amount ‑ Need
based
Validity ‑ One
year from the date of sanction.
Rate of interest -
Not exceeding 1 % over 6 Month LIBOR.
To provide SIDBI's clients with the facility of hedging of foreign
exchange risks related to their import/export transactions.
Assisted borrowers having exposure in foreign currency.
Currency ‑ Presently can be booked in USD/EURO/JPY
Amount ‑ Minimum of USD 25,000 or equivalent. However Forward
Contracts for lesser amounts may be considered on cue to case basis.
Charges ‑ As per FEDAI guidelines.
·
To provide financial assistance to SSI units to
undertake various activities necessary to increase their sales turnover in the
domestic and export markets.
·
To finance corporate entities to enable them to
provide support services and/or infrastructural facilities to small-scale
sector to improve its marketing capabilities
·
Existing SSI units in the small-scale sector
with a good track record and sound financial position are eligible for
assistance under the scheme. New units could also be considered on a selective
basis.
·
Specialised organisations incorporated as
corporate entities and providing marketing assistance, infrastructure and
support services to industrial concerns in the small-scale sector.
·
Assistance under the scheme may be availed of
for undertaking various marketing related activities such as;
1. Marketing research.
2. R & D product upgradation and
standardisation.
3. Preparation of strategic marketing plan
4. Advertising, branding, catalogue
preparation, production of audio visual aids, etc.
5. Participation in trade fairs
and exhibitions, undertaking sales promotion tours, etc.
6. Establishing
distribution network including showrooms/retail outlets and warehousing
facilities,
7. Training of personnel in
activities relevant to marketing etc.
·
For setting up new showrooms and/or renovation
of existing showrooms for marketing predominantly small-scale, cottage and
village industry products. Such showrooms could be set up within the country or
abroad.
·
Development of infrastructure like permanent
exhibition centres, industrial parks e.g garment and software parks, marketing
emporia, design and fashion forecasting studios/ auction houses (say for
floriculture products), container depots and container freight stations
and trade centres
(within India and abroad). Such infrastructural projects should largely benefit
the small-scale, cottage and village industries.
·
Setting up of facilities for providing
marketing support to SSI units, e,g. data bank, libraries, internet services,
etc.
·
Any other activity directed towards promoting
the marketing of SSI products in domestic or international markets,
Would be need based,
but would not normally be below Rs. 10 lakh per borrower.
As may be requested
to arrive at a Debt Equity Ratio of not more than 2: 1.
May be fixed in a
broad band up to 3.5% above the applicable prime lending rate.
Exclusive charge over
the assets acquired out of the loam first/second charge on existing fixed
assets and other collateral security as may be deemed necessary.
This may vary from
three to eight years with a moratorium up to one year.
The assistance under the Fund is available to women entrepreneurs and
organisations involved in marketing of products manufactured by women
entrepreneurs to increase their reach, both in domestic and international
markets.
·
SSI units managed by women entrepreneurs.
·
Marketing related service providers
Organisations/units in the corporate/ co‑operative/NGO sectors which are
providing support services like internet, trade related information,
advertising, marketing research, warehousing, common testing centres, etc. to
enterprises owned and managed by women.
·
Marketing related service providers
Organisations/units in the corporate/co‑operative/NGO sectors which are
providing support services like internet/trade related information, advertising,
marketing research, warehousing, common testing centres, etc, to enterprises
owned and managed by women.
Organisations/Associations/Women Groups/Marketing Consortia that have an
exclusive marketing mandate and have, m their vendor base a wide range of small
and tiny units owned and managed by women entrepreneurs. While the terms and
conditions for sanction of assistance would be flexible/ they would essentially
depend upon the soundness of the management, track record of performance and
viability of future operations.
Besides providing financial assistance as mentioned above, SIDBI could
also consider, on a selective basis, developmental assistance by way of soft
loans/grants for organising group activities and programmes such as trade
fairs, exhibitions, buyer‑seller meets, seminars, workshops, training
programmes, etc. to promote marketing of products manufactured by women
entrepreneurs.
As an apex financial institution for promotion, financing and
development of industry in the small-scale sector, SIDBI meets the varied
developmental needs of the Indian SSI sector by its wide‑ranging
Promotional and Developmental (P &D) activities.
P&D initiatives of the Bank aim at improving the inherent strength
of small scale sector on one hand as also economic development of poor through
promotion of micro‑enterprises.
SIDBI has identified the following thrust areas of P& D activities,
which am being undertaken in partnership with various institutions, agencies,
and NGOs.
1. SIDBI Foundation for Micro Credit (SFMC)
Small Industries Development Bank of India (SIDBI), an apex financial
institution for promotion, financing and development of small-scale industries
in India, has launched a major project christened "SIDBI Foundation for
Micro Credit"(SFMC) as a proactive step to facilitate accelerated and
orderly growth of the micro finance sector in India. SFMC is envisaged to
emerge m the apex wholesaler for micro finance in India providing a complete
range of financial and non‑financial services such as loan funds, grant
support, equity and institution building support to the retailing Micro Finance
Institutions (MFIs) so as to facilitate their development into financially
sustainable entities, besides developing a network of service providers for the
sector. SFMC is also poised to play a significant role in advocating
appropriate policies and regulations and to act as a platform for exchange of
information across the sector. Operations of SFMC in the next few years, are
expected to contribute significantly towards development of a more formal,
extensive and effective micro finance sector serving the poor in India.
Small Industries Development Bank of India (SIDBI), an apex financial
institution for promotion, financing and development of small wale industries
in India, has launched a major project christened "SIDBI Foundation for
Micro Credit" (SFMC) as a proactive step to facilitate accelerated and
orderly growth of the micro finance sector in India. SFMC is envisaged to
emerge as the apex wholesaler for micro finance in India providing a complete
range of financial and non‑financial services such as loan funds grant
support equity and institution building support to the retailing Micro Finance
Institutions (MFIs) so as to facilitate their development into financially
sustainable entities, besides developing a network of service providers for the
sector. SFMC is also poised to play a significant role in advocating
appropriate policies and regulations and to act as a platform for exchange of
information across the sector. Operations of SFMC in the next few years, are
expected to contribute significantly towards development of a more formal,
extensive and effective micro finance sector serving the poor in India. SIDBI
Foundation for Micro Credit(SFMC) has been operating as a specialised
Department of Small Industries Development Bank of India from January 1, 1999.
SFMC is striving to accelerate the credit flow to the Micro finance
sector by working in close partnership with the Micro Finance Institutions in
the country. SFMC is also in the process of working towards building up the
capacity of its partner MEs, so as to make them sustainable providers of the
financial services to the poor.
SFMC keeps the partners informed about the important happenings at SFMC
through its publication, the SFMC newsletter.
SFMC has chalked out a strategy for ensuring long term sustainable
training inputs to the MFIs in the country, in consultation with Prof. Malcolm
Harper, an expert in the area. SFMC is in contact with leading academic
institutions such as IRMA, XIMB and IIFM to ensure that the scope of their
current programmes are enhanced to capture the current trends and meet the
demands of the sector. The following programmes are noteworthy and are expected
to provide quality manpower to serve the sector :
·
IIFM is offering an elective on Micro Finance
in its PGDFM programme
·
XIMB is currently offering an elective on Micro
Finance in its PGDRM programme and plans to offer a second elective soon.
·
IRMA is currently offering a part elective on
Rural Finance Management in its PGDRM programme, which has a major focus on Micro
Finance
SFMC has already facilitated technical inputs for value enhancement
of the programme offered by XIMB, while
it is in the process of tying up technical assistance to enhance the scope of
the programmes being currently offered by IRMA. Opportunities were made
available to faculty members from the select training institutions to attend
advanced training programmes in Micro Finance both in India and abroad. On the
other hand, SFMC is also in the process of encouraging practitioner lead short
term training programmes to meet the specific technical training requirements
of MFIs. The short term events are listed separately in the section on
forthcoming events. It is expected that the SFMC partners would use the
Capacity Building (CB) grant assistance to attend the programmes of their
choice. In the unlikely event of any partner MFI not having received the CB
support as yet, SFMC would pay the fee to the
concerned Training Institutions, on request, SFMC has also launched
Young Professionals Programme’ to assist MFIs in campus recruitment.
Under the new approach and dispensation, SFMC is following a multi-pronged strategy aimed at the overall growth of the micro finance sector in India. SFMC is providing need based financial assistance to select partner MFIs for meeting their on‑tending requirements as also for their institutional capacity building to enable them to transform themselves into 'state‑of the‑art' financial institutions for meeting the financial needs of the poor in the country. In addition, SFMC is striving to develop a market of service providers, consultants, rating agencies. micro finance training institutions, mentors etc. through a number of initiatives. SFMC is playing an active role in policy advocacy with a view to facilitating formulation of effective policy and coherent regulatory framework for the sector. SFMC is also planning to provide equity support to select eligible corporate MFIs.
SFMC has entered into a collaboration with the Department for
International Development (DFID), U.K. for various capacity building
initiatives.
Guidelines for Loan Assistance
Eligibility
·
the MFI has been in existence for at least five
years and /or it has a demonstrated track record of running a successful micro‑credit
programme at least for the last three years. However, any new MFI desirous of
initiating a micro-credit programme may also be considered for assistance if it
has been promoted and managed by experienced micro finance professionals with
experience of at least three years in micro credit.
·
the MFI has achieved minimum outreach of 3000
poor members (through individual lending/SHGs/partner NGOs or MFIs) or
demonstrates the capability to reach this scale within a period of next twelve
months or so.
·
it should choose clients irrespective of class,
creed and religion and its activities should be secular in nature.
·
it
maintains a satisfactory and transparent accounting, MIS and internal audit
system or is willing to adopt such practices with SIDBI assistance.
·
it has
a relatively low risk portfolio or has a definite plan to further improve its
recovery performance.
·
Societies registered under Societies Act, 1860
or similar State Acts.
·
Trusts Registered under Public Trusts Act, 1920
or similar Acts.
·
Companies registered under the Companies Act,
1956 including Section 25 Companies.
·
Non Banking Finance Companies providing
financial services to the poor.
·
Specialised and other Co‑operatives such
as Mutually Aided Co-operative Societies etc.
·
Any other type of institutions that offer micro
finance and related services may be considered on merit.
MFIs may on‑tend
directly to SHGs/individuals or route their assistance through their partner
NGOs and MFIs. They may also adopt any other lending channel so as to
effectively reach financial assistance to the poor clients,
MFIs may on‑lend
directly to SHGs/individuals or route their assistance through their partner
NGOs and MFIs. They may also adopt any other lending channel so as to
effectively reach financial assistance to the poor clients.
MFIs may on‑lend
directly to SHGs/individuals or route their assistance through their partner
NGOs and MFIs. They may also adopt any other lending channel so as to
effectively reach financial assistance to the poor clients.
Loans are available to MFIs @ 11 % p.a. (subject to revision). MFIs, in
turn, may determine the interest rates for on‑tending keeping in view the
cost of operation and in consultation with their partners/SHGs/clients.
MFIs are required to repay the loan to SIDBI generally within a period
of 4 years on quarterly basis including an initial moratorium on the principal
of 6-12 months from the date of first disbursement. Interest payments and
principal repayments me required to he made on quarterly basis on March 01,
June 01, September 01 and December 01 of each year.
Term Deposit Receipts (TDRs) equivalent to 10% of the loan amount
together with interest accrued thereon, are required to be pledged as security.
The TDRs should be for a minimum duration of 4 years or currency of the loan,
whichever is later.
Capacity Assessment Rating of MFIs is undertaken prior to each
assistance.
One of the major reasons for slow growth of the micro finance sector in
India has been the lack of proper and appropriate regulation for such
institutions which have come to play an important role in provision of credit
to the poor. MFIs are now in the process of experimenting with more appropriate
organisational forms.
As a prelude to this and also to encourage MFIs to transform to a more
formal organisational set‑up, SFMC plans to provide equity support to
well managed and eligible corporate MFIs. This would enable the MFIs to
consolidate and expand their operations and eventually help them to leverage
funds from other national and international financial institutions.
The MFIs will, however, be encouraged to subsequently build up their
equity from the savings of members not only to give ownership to their clients
but also to reduce the dependence of MFIs on external borrowings.
In order for the partner MFIs to move profitably on the growth path and
achieve financial self sufficiency, it is imperative to lay equal and sustained
emphasis on building the capacities of these institutions. Financial assistance
by way of grant is provided to partner MFIs for meeting their capacity building
needs encompassing all areas of operational, organisational and managerial
aspects with a view to making them sustainable corporate entity serving the
poor, in doe course. It is hoped that initial doses of operational support and
technical assistance, increase in the volume of business and efficient
financial management, would gradually enable and equip the MFIs to cover their
costs.
The capacity building support to partner MFIs is provided after an intensive
needs assessment exercise which is generally done with an external
professional. Based on the findings of the assessment exercise, suitable
capacity building package is provided comprising Operational Support for partly
meeting the operational deficits of the MFI for 2‑3 years on a tapering
basis and Technical Assistance for automation, MIS development, recruitment of
specialists, training, consultancy services, business development services,
action research, etc .
SFMC has also launched a Young Professionals Programme (YPP) for the
micro finance sector to strengthen the human resource of MFIs by providing a
steady supply of trained and professionally qualified manpower as also to
provide opportunities to graduates from reputed rural management institutions
to build expertise in micro finance. The programme has been initially launched
in collaboration with four management institutions. More institutions would be
added in due course. Under this scheme, SFMC provides salary support for the
young professional to the extent of Rs. 5,000/‑ or 60% of the total
monthly emoluments, whichever is lower.
In order to help its partner MFIs in streamlining their systems and
procedures and to effectively manage their business operations, SFMC is striving
to develop a market for Decision Support and Management Information System
software for MFIs. While on the one hand, software developer shaving good and
robust MIS software for micro finance am being encouraged to innovate and
upgrade, on the other hand the partner MFIs are encouraged to adopt advanced
MIS software suiting to their needs and requirements.
In addition to the specific capacity building support to the partner
institutions, SFMC also places equal emphasis on developing the capacity of the
entire micro finance sector.
In order to institutionalise the system of micro finance training in
India, SFMC is providing need based capacity building support to select
management and training institutions to enable them to offer training courses
in micro finance that are at par with international standards. SFMC is also
providing financial support to MFIs to enable them to attend training
programmes offered by these institutions in the areas of management, finance
and accounting, MIS, etc. Transfer of expertise from the established MFIs to
the emerging institutions is also an important component of the capacity
building strategy of SFMC.
Capacity Assessment Rating (CAR) is an important component of selection
criteria for MFIs. CAR serves as a decision making and evaluation tool for
assessing credit worthiness, absorption capacity and business intent of both
potential and existing clients. So far, 71 MFIs have been rated by SFMC.
Efforts are also being made to build the capacity of service providers,
consultants, technical personnel etc. to ensure faster and qualitative growth
of the sector.
Policy Advocacy, Action Research &
Other Services
In keeping with SIDBI’s role of an apex institution for the small-scale
and micro sector. SFMC also supports the process of dialogues and deliberations
at state and national levels aimed at formulation of appropriate and coherent
policy guidelines and regulatory norms for the sector. International, national
and regional level workshops are organised/supported to discuss policy and
regulatory issues.
New innovative ideas in areas such as micro finance practices, credit
delivery techniques and methodologies, products etc. are supported as part of
the Action Research plan which includes support towards studies, field testing
pilot implementation and commercialisation of feasible ideas.
The micro finance networks which have begun playing an active role in
creating awareness, information dissemination, research, experience sharing
etc. are also being supported by SFMC. Considering the growing reach of IT
networks in India, SFMC is supporting an electronic network which provides a platform for information
sharing and exchange of ideas.
SFMC has commissioned an impact (socio‑economic) assessment study
of its micro credit programme. The study is being done using modern statistical
tools on both qualitative and quantitative parameters. It will be done on an
ongoing basis over a large and representative sample size covering the entire
country,
The findings of the study especially pertaining to the socio‑economic:
impact of micro finance on poor will allow key stakeholders such as partner
MFIs and SFMC to improve their delivery processes and financial products
offered to end users. It would also facilitate SFMC to play a more effective
policy advocacy role for formulation of appropriate legal and regulatory
framework for the micro finance sector in India.
MahilaVikas Nidhi (MVN) is SIDBI's specially designed Fund for economic
development of women, especially the rural poor, by providing them avenues for
training and employment opportunities.
A judicious mix of loan and grant is extended to accredited NGOs for creation
of training and other infrastructural facilities. The basic activity involves
setting up of Training‑cum‑Production Centres (TPCs) by the
assisted NGOs to ensure that women are provided with training and employment
opportunities.
In addition, activities like vocational training, strengthening of
marketing set up for the products of the beneficiary group, arrangements for
supply of improved inputs, production and technology improvement are also
covered under the MVN scheme. Assistance is given mainly towards capital
expenditure and support of a recurring nature is discouraged.
NGOs that:
·
have been in existence for at least 5 years,
should be registered with properly constituted bye‑laws, memorandum and
articles of association, governing body, broad‑based management and
properly maintained accounts.
·
have good track records.
Assistance by way of concessional loan and grant is provided. Grant
support is mainly towards strengthening the managerial capability of NGOs. Loan
is extended on following terms:
·
NGOs to pay a concessional rate of interest (@
13% p.a. at present).
·
Repayment period is normally up to 5 years and
is fixed on case to case basis. Initial moratorium of one/one and a half year
is considered.
·
Security-Normally secured by way of
rnortgage/hypothecation of assets created out of loan assistance.
3. Rural
Industries Programmes
Development of viable and self‑sustaining enterprises in rural and
semi-urban areas has been identified for an intensive thrust by the Bank with a
view to addressing problems such as rural unemployment, urban migration, under
utilisation of physical resources and skills of rural areas.
The Rural Industries Programme (RIP) of the Bank provides a cohesive and
integrated package of basic inputs like information, motivation, training and
credit, backed by appropriate technology and market linkages for the purpose of
enterprise promotion.
Implementing agencies such as NGOs, development professionals, Technical
Consultancy Organisations etc. are identified and assigned the task of
developing RIP. The implementing agency either by itself or by networking with
the appropriate agencies, provides the following professional services:
·
identification and motivation of potential
entrepreneurs in the rural areas .
·
identifying potential investment opportunities
for these entrepreneurs.
·
facilitating skill upgradation.
·
assistance in securing finance from banks and
other lending institutions.
·
helping entrepreneurs in selection, sourcing,
installation and operation of machinery.
·
arranging market support wherever necessary and
·
guiding entrepreneurs till their units commence
commercial production.
SIDBI is encouraging a sub‑sectoral approach under RIP to provide
necessary technology and marketing linkages as relevant to specific industrial
segment and rural clusters.
SIDBI meets part of the manpower cost of the implementing agency, mainly
in the form of a performance fee. The fee is linked to units actually grounded
by the identified rural entrepreneurs. In deserving cases, the Bank even
provides some start-up expenses to the implementing agencies apart from the
performance fee.
Mahila Udyam Mitra (MUM)
The Bank has recently launch a variant of its Rural Industries programme
targeted exclusively at women. Christened as the Mahila Udyam Mitra, the
program envisages support to prospective women entrepreneurs by way of proiect
ideas, assistance in setting‑up the unit. These services are provided by
a specialist agency engaged by the Bank and positioned in identified districts
to assist prospective women entrepreneurs. The programme had been test launched
in a few districts in Andhra Pradesh and within the span of one year, 350 units
have been promoted, The coverage of MUM has been extended to Kerala and the
programme is expected to result in promotion of 500 women enterprises over the
next two years.
4. Entrepreneurship Development Programmes
(EDPs)
EDPs aim at training various target groups in entrepreneurial traits so
that they obtain adequate information, motivation and guidance in setting up
their own enterprises. In order to maintain a homogeneous nature of
participating groups, EDPs focus on rural entrepreneurs, women and SC/ST.
The EDPs are normally of 4‑6 weeks duration coupled with proper
practical training inputs. Training Agencies specialising in conducting EDPs,
NonGovernmental Organisations (NG0s) and specialised technical institutes are
extended assistance for conduct of product specific EDPs.
In an effort to attract more professional and result oriented
institutions into the EDP fold, the Bank has made the scheme more performance
oriented by extending reasonable support towards training cost and encouraging
the institutions to earn performance fee by grounding units.
5. Management Development Programmes
Management Development in SSIs has been identified as a crucial area of
intervention for the viability, competitiveness and profitability of SSI units.
in this direction SIDBI has launched two programmes namely Small Industries
Management Programme (SIMAP) targeted at qualified unemployed as well as
industry sponsored candidates to provide low cost and competent managers to SSI
units and Skill‑cum‑Technology Upgradation Programme (STUP) for
(i) Small Industries Management
Programme (SIMAP)
The objective of SIMAP is to develop a cadre of industrial managers
specifically trained to assist the SSI entrepreneurs in their multiple
responsibilities. It also seeks to open up new avenues of productive employment
for young graduates who are otherwise not professionally qualified.
This programme is targeted at unemployed non‑technical graduates,
diploma holders and industry sponsored participants for management
strengthening. To ensure involvement of the participants and to obviate drop
out at later stages, the participants are required to pay some fee for the
course.
The programme is conducted in three phases, normally over a period of
14-18 weeks. The first phase consists of classroom sessions for about 5‑8
weeks. Inputs essentially cover information, knowledge and skills pertaining to
management of the SSI units. This is followed by the second phase of 8 weeks
wherein on‑the‑job practical training is provided in the SSI units.
The final phase of 1‑2 weeks is basically a refresher/debriefing course
before the candidates are awarded their course certificates.
(ii) Skill‑cum Technology
Upgradation Programme (STUP)
The programme is structured to improve the performance of existing SSI
units by developing/ strengthening managerial skills and technical competence
of the entrepreneurs and senior executives of the small enterprises. It also
aims to create awareness amongst the SSI units on process improvements,
technological developments etc. and to induce the units to upgrade their
technological level.
The programme is designed for homogeneous groups of entrepreneur/ senior
executive in terms of the size of the units, owner profile, nature of industry
and present financial/working status. The participants are required to pay
about one‑third of the fee for the course to ensure their involvement.
The duration of the programme is for a period of 2‑6 days on full
time basis or 4‑12 days on part‑time basis. The programme content
is tailored depending upon the participants and/or the industry group
represented by them. Due to the technical nature of the programme the focus is
more on specific aspects or on specialised fields rather than on general
management topics.
The Bank has started extending corpus support to regionally dispersed
reputed institutes, which conduct programmes regularly out of the interest
income charging reasonable participant fee.
6. Technology Upgradation Programmes
SIDBI's efforts broadly aim at:
·
Creation of awareness on new product/process
technologies
·
Skill upgradation
·
Development of technology related common
facilities for the cluster
·
Provision of unit‑specific modernisation
package
·
Energy conservation and introduction of
environment friendly technologies
·
Quality upgradation in terms of systems and
products
The first step involves the selection of clusters, which have certain
homogeneity in terms of status of technology, products, production levels,
trade practices, and capacity to absorb improved technology. Individual
clusters are then assigned to expert consultancy agencies that assess the
technology upgradation needs and prepare unit‑specific modernisation
packages including scope for consolidation of technical capabilities of
existing units.
SIDBI provides support and co‑ordinates the services of
consultants, and backs up their efforts for arranging financial assistance,
through banks or State Financial Corporations (SFCs), under its refinance
assistance schemes. The Bank also provides direct financial assistance through
its Rs. 2 billion Technology Development and Modernisation Fund (TDMF). Regular
follow‑up and monitoring of the programmes is undertaken by the Bank and
the implementing agencies are suitably compensated by way of professional fee
for undertaking the assignment.
7. Quality & Environment Management
Programmes
(i) Quality Management
As the small-scale sector has been slow to respond to the importance of
quality, the Bank launched a major campaign to organise participate workshops
all over the country to sensitise the SSI units about the issue and to create
awareness about concepts such as ‘Total Quality Management” and ‘ISO 9000’ as
also to assist the SSI units in acquiring ISO‑9000 certification by
making available to them all the major inputs which are required viz. expert
guidance, escort services and finance.
The approach of the Bank has been to retain associations like FICCI,
ASSOCHAM, CII and specialists agencies like TQM International. (P) Ltd. and ABC
Consultants (P) Ltd., employing qualified and experienced lead assessors and
auditors to conduct 2‑day workshops all over the country with the
ultimate objective of identifying units, which could be motivated, persuaded
and assisted to achieve ISO‑9000 certification. These units are then
provided with necessary financial assistance for acquiring ISO‑9000
certification.
The funding of the awareness programmes is extended by the Bank with the
SSI units paying a token amount as participation fee. For providing escort
services to SSI units operating in clusters for achieving certification, the
Bank subsidises to a reasonable extent the professional charges of consultants.
Besides this, the cluster approach to ISO‑9000 certification also reduces
the overall expenses of the certification exercise and makes the whole
programme very affordable for the SSI units. In addition, the bank also
positions consultancy organisations to provide escort services to SSI units to
enable them to acquire ISO‑9000 certification.
(ii) Environment Management
The environment management initiative of the Bank has been launched with
the objective to make the SSI units aware of environmental issues and to assist
them to acquire a green image by finding solutions to their pollution problems.
The two pronged approach aims at increasing awareness on the important
issues of environment management and supporting the setting up of demonstration
projects in homogeneous cluster of SSI units.
The conduct of awareness programmes is entrusted to professional
agencies. These agencies conduct interactive and focused programmes, which
endeavour to provide solutions to the multifarious problems afflicting SSI
units. The objective of this exercise was to educate the SSI units about the
environmental regulations, which need to be adhered to, and the steps, which
need to be adopted to operate within prescribed norms.
Demonstration projects are implemented by professional agencies by
providing select units in homogenous clusters with escort services. The agency
helps in setting up projects which not only reduce pollution levels but also
bring‑in benefits like improved quality, reduced processing time and
material conservation.
The funding for the awareness programmes is provided by the Bank with
the SSI units paying a token amount as participation fee. For demonstration
projects, the Bank subsidises to some extent, the professional charges of the
consultants and also provides the beneficiary units with financial assistance
to partially meet the cost of equipment.
8. Scheme for Domestic Factoring (FCA)
To provide factoring service to the manufacturers in SSI sector
supplying their products on credit terms to various purchasers in the domestic
market with a view to assisting them in their receivable management as also
providing them with finance against the receivables factored.
Facilities are extended to existing units in SSI sector ‑ with
good track record of performance and sound financial position ‑ supplying
components/ parts/accessories/sub‑assemblies etc. on short term credit to
well established purchasers units. They should have been in operation for at
least three years and have earned profits and16r declared dividend during the
two years prior to taking up the scheme.
Sales of the unit should preferably be spread over a minimum of 5
customers with maximum sales concentration in a single buyer being less than
30%. Maximum credit period shall be of 90 days.
1.
Advertising Agencies
2. Marketing Consultancy
3. Industrial Consultancy
4. Equipment Rental & Leasing
5. Typing Centres
6. Photocopying Centres (Xeroxing)
7. Industrial photography
8. Industrial R & D Labs
9. Industrial Testing Labs
10.
Desk Top Publishing
11.
Internet Browsing/setting up of cyber cafes
12. Auto repair services and garages
13. Documentary films m
themes like family planning, social forestry, energy conservation and
commercial advertising.
14. laboratories engaged in Testing of Raw
Materials/Finished products.
15. ‘Servicing Industry’
Undertakings; engaged in maintenance repair, testing or servicing of all types
of vehicles and machinery, of my description including Electronic/Electrical
equipment/instrument i.e. measuring/control instruments televisions tape
recorders. VCRs, radios, transformers, motor, watches etc.
16.
Laundry & Dry‑cleaning.
17. X‑Ray Clinic
18. Tailoring
19. Servicing of Agriculture farm equipment
e.g. Tractor, Pump, Rig, Boring Machine etc.
20. Weigh Bridge.
21. Photographic Lab.
22. Blue printing and enlargement of
drawing/designs facilities.
23. ISD/STD Booths.
24. Teleprinter/Fax services
25. Sub‑contracting Exchange (SCXs)
established by Industry Association.
26. EDP Institute established by Voluntary
Association/Non-Government Organisations.
27. Coloured and Black and White Studios,
equipped with processing laboratory.
28. Rope‑way in hilly
areas.
29. Cable T.V. Services
1nsudlation & Operation of Cable T. V. Networks".
30. Operating EPABX under franchises
31. Beauty parlours and
creches.
Note: Computerised Design and Drafting Creation of Database suitable for
foreign/Indian markets and Computer Software Development which were earlier
registered as SSSBE, have since been deleted from the list m Computer Software
Development and Software Services (including computer graphics engineering
design, computerised design and drafting) have since been recognised as
industrial activity eligible for registration as Small-scale Industries.
Illustrative List of Activities which are not recognised as Small Scale Industry/Business (Industry Related) Enterprises, i.e. SSSBE's
1. Transportation
2. Storage (except cold storage which is
recognised m SSI )
3. Retail/wholesale trade establishments.
4. General Merchandise Stores.
5. Health services including pathological
laboratories.
6. Legal Services.
7. Educational services.
8. Social services.
9. Hotels
Interest Rates wider SIDBI Schemes
Prime Lending Rates (% p.a.)
Prim Landing Rate
(PLR) 11.50%
Short Term PLR 10.00%
Interest
(%) p.a. by the PLIs to the borrower
(A) Term Loam and working capital advances to SSI units
(i)
Upto Rs.50,000 Not
exceeding 11.25%
(ii)
Above Rs.50.000 & Upto Rs. 2,00,000 Not
exceeding 11.75%
(iii)
Over Rs. 2.00,000 As
may be decided by
the PLI
(B) Assistance in respect or projects/activities
eligible for assistance under RTDM and ISO
9000 Schemes
(i) Upto Rs.50,000
(ii) Above Rs.50.000 & Upto Rs.2.00,000
(iii)
Over Rs. 2,00,000
1. Rupee finance
(a)
All schemes [*]other than special PLR +/- 2% i.e.
schemes
viz. ISO 9000, TDMF, 9.5% -13.5%
Infra
and Large Value projects
(b) TDMF & ISO 9000 Schemes PLR(Presently 11.50%)
for
all periods
(c)
Project related Financing under 11.5% - 14.5%
Infrastructure Schemes [viz. IlD
and
infrastructure Development
Scheme)
and others including
service
sector Projects.
2. Assistance in Foreign Currency
(a) Foreign Currency Term
Loan Market
related rates 6 to
3.50% to 4.00%
over month LIBOR for
USD & Euro.
Addresses of Offices of Small Industries Development
Bank of India (SIDBI)
Head Office: 10/10 Madan
Mohan Malviya Mug. Lucknow‑226 001
Mumbai Office: Nariman
Bhavan, 227, Vinay K. Shah Marg,
Nariman Point, Mumbai‑400
021.
|
Regional/Branch Office; Agartala: Bijoy
Kumar Chowmuhani, Krishna
Nagar Harish Thakur Road, Agartala‑799
001. |
JammuOB‑26,
Ground Floor, Grid
Bhawan Rail Head Complex, Jammu‑180012. |
AhmedabadNavjivan
Amrit Jayanthi Bhavan, 1st
& 2nd Floor, Post Bag No.10, Navjivan
Post, Ahmedabad
‑ 380 014. |
JamshedpurShantiniketan
Building, (1st Floor) , Bistupur
Main Road, . Jamshedpur
–831 001. |
Aizawl'Mardin
Tuikhuahtlang' Aizawl 796 001. |
Jodhpur117/3,
PWD Colony, 1st Floor, P.B.No.
107, Jodhpur –342 001. |
BangaloreCentenary
Building, 6th Floor, No
28, M.G.Road, Bangalore 560 001, |
KanpurKrishna
Tower, First
Floor, 15/63,
Civil Lines, Kanpur
‑ 208 00 1. |
Baroda1st
Floor, Land Mark Building, Race
Course Circle, Post
Box No.3711 Baroda~390
007. |
KochiMercy
Estate, 2nd Floor, Ravipuram
Post Box 1672, M.G.Road,
Kochi ‑ 682 015. |
BhopalShikhar
Varta Building, 3rd
Floor, Press Complex, Maharana
Pratap Nagar Zone 1 Post
Box No.24, Bhopal
462 011. |
Kolkata11,
Dr.U.N.Brahmachari Street(8th Floor), Opp.La Martiniere Girls' School, Kolkata
‑ 700 017. |
BhubaneswarOCHC
Buidling, 4th Floor, Near
Ram Mandir Janpath, Bhubaneshwar 751 001. |
LucknowTaj
Plaza, 3Way Road, Madan
Mohan Malviya Marg, Lucknow
‑ 226 001. |
ChandigarhSCO
145‑146, Ist, 2nd & 3rd Floors Sector
17C, Post Box No.92, Chandigarh 160 017. |
LudhianaSavitri
Complex, 4th Floor, Dholewal
Chowk G.T.Road,
Ludhiana
141003. |
Chennai480,
Anna Salai, P.B.No.1312, Nandanam,
Chennai ‑ 600 035. |
Nagpur6th
Floor, Usha Complex, 345,
Kingsway Nagpur
– 440 001. |
CoimbatoreGowtham
Centre, 1055/7, Avanashi
Road, Post
Box No.4033, Coimbatore
641 018. |
New Delhi10th
& 11th Floor, Videocon Tower, E‑1 Ram Jhansi Road, Jhandewalan Ext. New
Delhi 110 055. |
DimapurIDC
House, Kohima
Road, P.B.No.45, Dimapur
797 112. |
PanajiEDC
House, 6th Floor, Dr.Atmaram
Borkar Road, Panaji
‑403 001. |
FaridabadN.H.5‑R/2,
Ground Floor, Neelam
Badshah Khan Road, N.I.T Faridabad 121 001. |
PatnaHotel
Minar Building, Part II, 2nd
Floor, Exhibition Road, Post
Bag No. 220, Patna‑800
001. |
GangtokRagasha
Building, Nam‑Nam
Road , Gangtok
‑ 737 101. |
Pondicheery
1st
Floor,,99 Ambalathadayar Madam Street, Post
Bag No. 113, Pondicheery
–605 001 |
GuwahatiIDBI
Building, 2nd & 3rd Floors, Opp.Sentinel
Press, G.S.Road. Guwahati 781005 |
PuneSuryakiran
Hotel Building, First
Floor, C‑8 Mumbai Pune Road, Chinchwad,
Pune –411 019. |
Hyderabad5‑9‑89/1
&2, 3rd Floor, Chapel
Road Post Box No. 130, Hyderabad
‑500 001. |
ShillongMorello
Building, M.G.Road, P.B.No.
101, Shillong ‑793001. |
ImphalImphal
Urban Co‑operative Bank Building M.G.Avenue.
Post Box No. 14, Imphal ‑ 795 001. |
ShimlaJeevan
Jyoti, Lala Lajpat Rai Chowk, The
Mall, Post Box No.58, Shimla
‑ 17 1001 |
Indore'CommenceHouse'
I st Floor, 7
Race Course Road, New Palasia, Indore
‑452 001. |
TirupurChidambaram
Complex, 29, Kumaran
Road, 2nd Floor, P.B.No.5
, Tirupur ‑ 641 601. |
ItanagarInjo’s Complex, 1st floor, VIP Road Bank Tinali Itanagar – 791 111 |
Varanasi3rd
Floor, Anant Complex, D‑64/132‑K. Sigra, Varanasi‑
22 1010. |
Jaipur1st
& 2nd Floor, Umrao Complex, Sansar
Chandra Road, Post
Bag No.46, Jaipur ‑302 001, |
VisakhapatnamDoor
No.47‑ 15‑5, Gupta Buildings, 2nd
Floor, Diamond Park Road, Dwarakanagar, Visakhapatnam
530 016. |
[R1] Ministry of
Commerce & Industry Press Note No. 3 of 2000. dt. 14.3.2000.
[R2] Ministry of
Commerce & Industry Press Note No. 4 of 2000, dt. 23.3.2000.
[R3] RPCD. No. Plan
BC. 42A/04.09.0112002‑2603, dt. 11.11.2002.
[R4] Notification
No. SO 857(13), dt. 30. 12.1997.
[R5] Reduced from
Rs. three crore vide Notification No. S.O. 1288 (E), dt. 24.12.1999.
[R6]
Vide Notification No. S.O. 1013(E), dt.
9.10.2001.
[R7] RPCD.
PLNFS.BC.No. 39/06.02.80/2003‑04, dt. 3.11.2003.
[R8] Prescription
of MPBF has since been withdrawn by Reserve Bank of India and the banks have
been granted full
operational
freedom in the assessment of working capital. However banks generally find
system of MPBF more convenient for use.
[R9] However, this
limit has been reduced to Rs. 1.00 crore vide Order No. S.O. 1288 (E), dt.
24.12.1999.
[R10] The eligible subsidy would be calculated on
the actual loan amount or maximum ceiling on loan eligible for subsidy,
whichever is lower.
[R11] All schemes viz. Project Finance Equipment Finance, Short Term Loan to SSI units, Vendor Development, Working Capital Tem Low, TUFS and Tannery Modernisation. CLCSS. Marketing and General Direct Credit Scheme consequent upon its implementation (except ISO 9000 TDMF Infra and Large Value Projects).