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.
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.
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.
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
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 :
(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.
(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.
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.
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.
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 :
(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.
(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
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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)
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
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,
(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.
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.
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.
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],
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.
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.
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.
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.
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.
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
· 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.
· 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.
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.
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.
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
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.
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.
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.
(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.
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
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
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.
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
(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.
Bijoy Kumar Chowmuhani,
Krishna Nagar Harish Thakur Road,
OB‑26, Ground Floor,
Grid Bhawan Rail Head Complex,
Navjivan Amrit Jayanthi Bhavan,
1st & 2nd Floor, Post Bag No.10,
Ahmedabad ‑ 380 014.
Shantiniketan Building, (1st Floor) ,
Bistupur Main Road, .
Jamshedpur –831 001.
Aizawl 796 001.
117/3, PWD Colony, 1st Floor,
P.B.No. 107, Jodhpur –342 001.
Centenary Building, 6th Floor,
No 28, M.G.Road,
Bangalore 560 001,
15/63, Civil Lines,
Kanpur ‑ 208 00 1.
1st Floor, Land Mark Building,
Race Course Circle,
Post Box No.3711
Mercy Estate, 2nd Floor,
Ravipuram Post Box 1672,
M.G.Road, Kochi ‑ 682 015.
Shikhar Varta Building,
3rd Floor, Press Complex,
Maharana Pratap Nagar Zone 1
Post Box No.24,
Bhopal 462 011.
11, Dr.U.N.Brahmachari Street(8th Floor),
Opp.La Martiniere Girls' School,
Kolkata ‑ 700 017.
OCHC Buidling, 4th Floor,
Near Ram Mandir Janpath,
Bhubaneshwar 751 001.
Taj Plaza, 3Way Road,
Madan Mohan Malviya Marg,
Lucknow ‑ 226 001.
SCO 145‑146, Ist, 2nd & 3rd Floors
Sector 17C, Post Box No.92,
Chandigarh 160 017.
Savitri Complex, 4th Floor,
480, Anna Salai, P.B.No.1312,
Chennai ‑ 600 035.
6th Floor, Usha Complex,
Nagpur – 440 001.
Gowtham Centre, 1055/7,
Post Box No.4033,
Coimbatore 641 018.
10th & 11th Floor, Videocon Tower,
E‑1 Ram Jhansi Road, Jhandewalan Ext.
New Delhi 110 055.
Kohima Road, P.B.No.45,
Dimapur 797 112.
EDC House, 6th Floor,
Dr.Atmaram Borkar Road,
Panaji ‑403 001.
N.H.5‑R/2, Ground Floor,
Neelam Badshah Khan Road,
N.I.T Faridabad 121 001.
Hotel Minar Building, Part II,
2nd Floor, Exhibition Road,
Post Bag No. 220,
Nam‑Nam Road ,
Gangtok ‑ 737 101.
1st Floor,,99 Ambalathadayar Madam Street,
Post Bag No. 113,
Pondicheery –605 001
IDBI Building, 2nd & 3rd Floors,
G.S.Road. Guwahati 781005
Suryakiran Hotel Building,
First Floor, C‑8 Mumbai Pune Road,
Chinchwad, Pune –411 019.
5‑9‑89/1 &2, 3rd Floor,
Chapel Road Post Box No. 130,
Hyderabad ‑500 001.
Morello Building, M.G.Road,
P.B.No. 101, Shillong ‑793001.
Imphal Urban Co‑operative Bank Building
M.G.Avenue. Post Box No. 14,
Imphal ‑ 795 001.
Jeevan Jyoti, Lala Lajpat Rai Chowk,
The Mall, Post Box No.58,
Shimla ‑ 17 1001
'CommenceHouse' I st Floor,
7 Race Course Road, New Palasia,
Indore ‑452 001.
Chidambaram Complex, 29,
Kumaran Road, 2nd Floor,
P.B.No.5 , Tirupur ‑ 641 601.
1st floor, VIP Road Bank Tinali
Itanagar – 791 111
3rd Floor, Anant Complex,
Varanasi‑ 22 1010.
1st & 2nd Floor, Umrao Complex,
Sansar Chandra Road,
Post Bag No.46,
Jaipur ‑302 001,
Door No.47‑ 15‑5, Gupta Buildings,
2nd Floor, Diamond Park Road,
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).