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Unit 7: Non-banking Financial Companies

State Industrial Development Corporations have been established under the Companies Act, Notes
1956, as wholly-owned undertakings of State Governments. They have been set up with the aim
of promoting industrial development in the respective States and providing financial assistance
to small entrepreneurs.
They are also involved in setting up of medium and large industrial projects in the joint sector/
assisted sector in collaboration with private entrepreneurs or wholly-owned subsidiaries. They
are undertaking a variety of promotional activities such as preparation of feasibility reports;
conducting industrial potential surveys; entrepreneurship training and development
programmes; as well as developing industrial areas/estates.

Task Critically evaluate the functioning of SIDCs in India.

7.6 State Industries Development Bank of India (SIDBI)

SIDBI was established on April 2, 1990. The Charter establishing it, The Small Industries
Development Bank of India Act, 1989 envisaged SIDBI to be "the principal financial institution
for the promotion, financing and development of industry in the small scale sector and to
co-ordinate the functions of the institutions engaged in the promotion and financing or developing
industry in the small scale sector and for matters connected therewith or incidental thereto".
The business domain of SIDBI consists of small scale industrial units, which contribute
significantly to the national economy in terms of production, employment and exports. Small
scale industries are the industrial units in which the investment in plant and machinery does not
exceed 10 millions. About 3.1 millions such units, employing 17.2 millions persons account for
a share of 36 per cent of India's exports and 40 per cent of industrial manufacture. In addition,
SIDBI's assistance flows to the transport, health care and tourism sectors and also to the
professional and self-employed persons setting up small-sized professional ventures.

7.6.1 Introduction

SIDBI was established to empower the Micro, Small and Medium Enterprises (MSME) sector
with a view to contributing to the process of economic growth, employment generation and
balanced regional development.

The vision of SIDBI is to emerge as a single window for meeting the financial and developmental
needs of the MSME sector to make it strong, vibrant and globally competitive, to position SIDBI
Brand as the preferred and customer-friendly institution and for enhancement of share-holder
wealth and highest corporate values through modern technology platform four basic objectives
are set out in the SIDBI Charter. They are:
1. Financing

2. Promotion
3. Development
4. Co-ordination
SIDBI was established for orderly growth of industry in the small scale sector. The Charter has
provided SIDBI considerable flexibility in adopting appropriate operational strategies to meet
these objectives. The activities of SIDBI, as they have evolved over the period of time, now meet

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