Page 203 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes 6. It maintains links with research and development institutions for upgradation of
technology, quality improvement, industrial training etc.
7. It conducts artisans training programmes.

8. It has been assigned operation responsibility for special schemes to provide self-
employment to educated unemployed youths.

13.2.4 Small Industries Development Bank of India (SIDBI)

Of all the elements that go into a business, credit is perhaps the most crucial. The best of plans
can come to naught if adequate finance is not available at the right time. SSIs need credit support
not only for running the enterprise and operational requirements but also for diversification,
modernization/ up gradation of facilities, capacity expansion etc. In respect of SSIs, the problem
of credit becomes all the more critical when ever any episodic event occurs such as a large order,
rejection of consignment, inordinate delay in payment etc. In general, SSIs operate on tight
budgets, often financed through owner’s own contribution, loans from friends and relatives and
some bank credit.
Government of India recognized the need for a focused credit policy for SSIs in the early days of
promotion of SSIs and RBI has been instrumental in devising a multi-stage approach/financial
system for credit dispensation to different sectors of the economy, for example, agriculture,
industry, exports, SSIs etc. The SIDBI was established in 1990 as the apex refinance bank. The
SIDBI is operating different programmes and schemes through five Regional Offices and
33 Branch Offices. The financial assistance of SIDBI to the small scale sector is channelized
through the two routes – direct and indirect.

Indirect Assistance

(a) SIDBI’s financial assistance to small sector is primarily channelized through the existing
credit delivery system, which consists of state level institutions, rural and commercial
banks.
(b) SIDBI provides refinance to and discounts bills of Primarily Lending Institutions (PLI).
(c) The assistance is available for

Marketing of SSI product
Setting up of new ventures

Availability of working capital
Expansion
Modernization
Human resource development
Diversification of existing units for all activities

Direct Assistance

(a) The loans are available for new ventures, diversification technology upgradation,
modernization and expansion of well run small scale enterprises. Assistance is also available
for private sector.

(b) Small scale sector is eligible for maximum debt-equity ratio of 3:1.

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