SIDBI, History, Functions, Benefits

The Small Industries Development Bank of India (SIDBI) is a financial institution established in 1990 to promote, finance, and develop the Micro, Small, and Medium Enterprises (MSME) sector in India. SIDBI provides direct and indirect financial assistance, including loans, refinancing, venture capital, and credit guarantees, to support MSMEs in expanding their businesses. It collaborates with banks, financial institutions, and government agencies to implement various schemes for entrepreneurship development. SIDBI also plays a crucial role in promoting technology adoption, skill development, and sustainable finance for small businesses, fostering economic growth and employment generation in India’s industrial sector.

History of SIDBI:

The Small Industries Development Bank of India (SIDBI) was established on April 2, 1990, as a wholly-owned subsidiary of the Industrial Development Bank of India (IDBI). It was set up under the SIDBI Act, 1989, to support the Micro, Small, and Medium Enterprises (MSME) sector in India. Initially, SIDBI focused on refinancing loans provided by banks and financial institutions to small-scale industries.

In 1999, SIDBI was delinked from IDBI and became an independent financial institution, broadening its role in direct lending, venture capital, and credit guarantees for MSMEs. Over the years, SIDBI introduced several initiatives, including the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the Fund of Funds for Startups (FFS), which promoted entrepreneurship and financial inclusion.

SIDBI has played a significant role in fostering technological innovation, skill development, and green financing for sustainable growth in the MSME sector. It has also partnered with the Reserve Bank of India (RBI), government agencies, and international financial institutions to implement various financial schemes. Today, SIDBI continues to be a key player in strengthening India’s MSME ecosystem, supporting startups, and promoting inclusive economic development.

Finance Facilities Offered by SIDBI

Small Industries Development Bank of India, offers the following facilities to its customers:

1. Direct Finance

SIDBI offers Working Capital Assistance, Term Loan Assistance, Foreign Currency Loan, Support against Receivables, equity support, Energy Saving scheme for the MSME sector, etc.

2. Indirect Finance

 SIDBI offers indirect assistance by providing Refinance to PLIs (Primary Lending Institutions), comprising of banks, State Level Financial Institutions, etc. with an extensive branch network across the country. The key objective of the refinancing scheme is to raise the resource position of Primary Lending Institutions that would ultimately enable the flow of credit to the MSME sector.

3. Micro Finance

Small Industries Development Bank of India offers microfinance to small businessmen and entrepreneurs for establishing their business.

Benefits of SIDBI:

1. Custom-made

SIDBI policies loans as per the requirements of your businesses. If your requirement doesn’t fall into the ordinary and usual category, Small Industries Development Bank of India would assist funding you in the right way.

2. Dedicated Size

Credit and loans are modified as per the size of the business. So, MSMEs could avail different types of loans custom-made for suiting their business requirement.

3. Attractive Interest Rates

It has a tie-up with several banks and financial institutions world over and could offer concessional interest rates. The SIDBI has tie-ups with World Bank and the Japan International Cooperation Agency.

4. Assistance

It not just give provides a loan, it also offers assistance and much-required advice. It’s relationship managers assist entrepreneurs in making the right decisions and offering assistance till loan process ends.

5. Security Free

Businesspersons could get up to INR 100 lakhs without providing security.

6. Capital Growth

Without tempering the ownership of a company, the entrepreneurs could acquire adequate capital for meeting their growth requirements.

7. Equity and Venture Funding

It has a subsidiary known as SIDBI Venture Capital Limited which is wholly owned that offers growth capital as equity through the venture capital funds which focusses on MSMEs.

8. Subsidies

SIDBI offers various schemes which have concessional interest rates and comfortable terms. SIDBI has an in-depth knowledge and a wider understanding of schemes and loans available and could help enterprises in making the best decision for their businesses.

9. Transparency

Its processes and the rate structure are transparent. There aren’t any hidden charges.