In an attempt to help out Dalit and women entrepreneurs, the Small Industries Development Bank of India (Sidbi) is reportedly raising the proposed ₹10,000 crore corpus for ‘Stand Up In India Fund’ from the RBI.
Sidbi, founded in April 1990, is an independent financial institution that aims to aid the growth and development of micro, small and medium-scale enterprises. Headquartered in Lucknow, the bank is owned by 33 Government owned or controlled institutions and provides refinance facilities and short term lending to industries.
Certificate of deposits, commercial papers, non-convertible debentures and credit lines from external agencies are sources on which Sidbi depends to raise resources. These sources are apparently becoming more expensive than could be expected, so the company has been focusing on domestic borrowings to get its fundings done. Sidbi Chairman and Managing Director Kshatrapati Shivaji said that Sidbi is constantly on the lookout for instruments to lower fund raising costs.
Most of our financing is in rupee terms for domestic borrowers. So, it does not make commercial sense to borrow in forex at a higher price,
he told Economic Times.
The capital that is to be raised will be utilized refinance loans provided by banks to the backward classes and women entrepreneurs. This comes as part of the ‘Stand Up India‘ scheme announced by the government earlier this year. The initiative aims to boost the entrepreneurial spirit by simplifying regulatory compliance.
We are working to have the corpus in place for the Stand Up India Fund corpus. It will be raised from the Reserve Bank through the priority sector lending shortfalls,
The scheme also states that it is mandatory for each bank branch to extend a loan to one micro-enterprise promoted by a woman and SC/ST entrepreneur.
According to Shivaji, the execution of the plan has already been started. Other plans include schemes which would allow entrepreneurs to pay premiums that could help them get cover in case of a loan default.
Credit Guarantee Fund Trust for Micro and Small Enterprises offered by Sidbi covers up to Rs. 1 crore for MSME loans. The bank is now planning to introduce four new credit schemes. One of them is devoted for educational loans and also the Stand Up In India sector.