Mission:

To empower the Micro, Small and Medium Enterprises (MSME) sector with a view to contributing to the
process of economic growth, employment generation and balanced regional development
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×bjective

Bills Finance Scheme involves provision of medium and short-term finance for the benefit of the
small-scale sector. Bills Finance seeks to provide finance, to manufacturers of indigenous machinery,
capital equipment, components sub-assemblies etc, based on compliance to the various eligibility criteria,
norms etc as applicable to the respective schemes.

To be eligible under the various bills schemes, one of the parties to the transactions to the scheme has
to be an industrial unit in the small-scale sector within the meaning of Section 2(h) of the SIDBI Act,
1989.

The various sub schemes that have been introduced are as listed on the menu, on the left.

Small Industries Development Bank of India (SIDBI)

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Small Industries Development Bank of India (SIDBI) was established in April 1990 under an Act of Indian Parliament
as the principal financial institution for :

Oc Promotioncc
Oc inancing cc
Oc Development of industry in the small scale sector cc
Oc èo-ordinating the functions of other institutions engaged in similar activities cc

Since its inception, SIDBI has been assisting the entire spectrum of SSI Sector including the tiny, village and cottage
industries through suitable schemes tailored to meet the requireme nt of setting up of new projects, expansion,
diversification, modernisation and rehabilitation of existing units.

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?he Small Scale Industries (SSIs) sector is a vibrant and dynamic sector of the Indian economy. ?he sector presently
occupies an important place and its contribution in terms of generation of employment, output and exports is quite
significant. ?he Small Scale Industries sector including tiny units, comprises the domain of SIDBI's business. Besides,
the projects in the services sector with total cost upto Rs.250 million are also taken within the area of SIDBI's
operations. ?he Bank also finances industrial infrastructure projects for the development of SSI sector.

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  cc

SIDBI's financial assistance to small sc ale sector have three major dimensions:

ëc Indirect assistance to primary lending institutions (PLIs); cc

c Direct assistance to small units; and cc
c Development and Support Servicescc

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SIDBI's Schemes of indirect assistance envisages credit to SSIs through a large network of 913 PLIs spread across the
country with a branch network of over 65000. ?he assistance is provided by way of refinance, bills rediscounting, and
resource support in the form of short term loans/Line of èredit (Loè) in lieu o f refinance, etc.
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?he objective behind SIDBI's direct assistance schemes has been to supplement the efforts of PLIs by identifying the
gaps in the existing credit delivery mechanism for Small Scale Industries. Direct assistance is provid ed under several
tailor made schemes through SIDBI's 41 Regional/Branch offices spread across the country.

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?he Bank extends development and support services in the form of loans and grants to different agencies working for
the promotion and development of SSIs and tiny industries. Over the years, the initiatives of SIDBI under promotional
and developmental activities have crystallised into the following important areas:

Oc @nterprise Promotion with emphasis on Rural Industria lisationcc

Oc uman Resource Development to suit the SSI sector needs cc
Oc ?echnology Upgradationcc
Oc Muality and @nvironment Managementcc
Oc Marketing and Promotion and cc
Oc Information Dissemination. cc

Mission
SIDBI Foundation for Micro Credit (SFMC) was launched by the Bank in January 1999 for channelising
funds to the poor in line with the success of pilot phase of Micro Credit Scheme. SFMC's mission is to create
a national network of strong, viable and sustainable Micro Finance Institutions (MFIs) from the informal and
formal financial sector to provide micro finance services to the poor, especially women.

Approach
SFMC is 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) including two-tier MFIs so as to facilitate their development into
financially sustainable entities, besides developing a network of service providers for the sector. SFMC is
also playing significant role in advocating appropriate policies and regulations and to act as a platform for
exchange of information across the sector. The launch of SFMC by SIDBI has been with a clear focus and
strategy to make it as the main purveyor of micro finance in the country. Operations of SFMC in the coming
years, are not only expected to contribute significantly towards development of a more formal, extensive and
effective micro finance sector serving the poor in India, but also ensure sustainability at all levels viz. at the
apex level (SFMC), at the MFI level and at the client level to ensure continuance of such arrangement. Most
importantly, SFMC has strived to create a mechanism in which there should be no barriers to growth. Under
the dispensation, there is focus on innovation and action research.

- Uniqueness

Rating of MFIs
Most micro finance programmes are being operated by NGOs and are not subjected to regulation and
supervision as they are registered as Societies or Trusts. Non-regulation of these institutions has worked to
their detriment and these institutions are not able to have smooth access to funds from the financial sector
which is vary of lending to such entities. This constraint, coupled with the fact that SFMC was launched with
a view to upscale the flow of micro credit with enabling policy modifications relating to simplification of the
procedures in availment of assistance and substantial relaxation in the security/ collateral requirement posed a
difficult challenge. Therefore, to meet the requirements of the revised dispensation which called for selection
of suitable micro finance intermediaries which could be trusted with bulk assistance without collateral
constraints, Capacity Assessment Rating [CAR] was introduced by SFMC as a supplementary tool to assess
the risk perception. On SFMC's initiative, the rating of MFIs have been started by four agencies. Till March
31, 2009, 497 ratings have been commissioned to MCRIL/ CRISIL/ CARE/ Access Development Services
(ADS). SFMC has also organized trainings on CAMEL methodology of ACCION to build the internal
capacity of SFMC officers.
 èustomized Support to MFIs
MFIs are provided annual need based assistance. One of the unique features of the scheme is the
comprehensive Capacity Building Support being provided to the MFIs/ NGOs to expand their operations as
well as to increase their efficiency. Customized financial support comprising of loans, capacity building grant
as well as equity/ quasi equity is being provided to the client institutions.

Minimal Security Requirement

Credit worthiness is based on the rating of the borrowing institutions rather than availability of security/
collateral requirements. Term Deposit Receipts (TDRs) issued by Scheduled Commercial Banks/ SIDBI for
an amount equivalent to 10% /5% /2.5% (depending upon geographical area of operation and duration of
partnership with SIDBI).
Methodology Neutral
SIDBI's support is not for any specific methodology. MFIs may on lend directly to SHGs/ individuals or route
their assistance through their partner NGOs & MFIs. They may also adopt any other lending channel so as to
effectively reach financial assistance to the poor clients.

èapacity Building Support for the sector

SFMC's capacity building efforts are directed not only towards MFIs but also towards smaller/ grassroot
institutions engaged in micro finance operations, training, consultancy, rating and impact assessment etc., and
other service providers in the form of training, seminars, workshops, orientation and exposure visits.

Innovation & Action Research

SIDBI has taken a number of initiatives in launching / facilitating introduction / market -making of new
concepts in the sector. The launch of an electronic portal for information dissemination and knowledge
sharing within the sector and development of MIS software for MFIs are some such initiatives. Other major
initiatives include developing a common charter of accounts for the sector, creating gender and environment
awareness, promoting innovations and action research on emerging concepts etc. The environment appraisal
of SFMC activities was carried out by the Society for Participatory Research in Asia (PRA), New Delhi and
covered areas like identification of environmental risks associated with some of the most relevant activities
funded through the SFMC microfinance route, developing a format for identifying these risks in micro-
project identification and drawing up some simple guidelines on risk mitigation. The appraisal covered 15
partner MFIs of the Bank located in and around Chennai, Hyderabad, Bhubaneswar and Kolkata.

×pening of specialised Microfinance branches

Seven dedicated microfinance branches have been opened by the Bank at Lucknow, Chennai, Hyderabad,
Bangalore, Kolkata, Bhubaneswar and Guwahati to deliver micro finance services through intermediaries in a
timely and customer-friendly manner. While Hyderabad, Chennai, Bangalore are major hubs of microfinance
activity in the country, the other centres viz. Lucknow, Kolkata, Bhubaneswar and Guwahati have been
targeted with the primary objective of giving an impetus to microfinance programmes in the underserved
areas.
c

istory

Established in April 2,1990

Principal Development Financial Institution for :

-- Promotion
-- Financing and
-- Development of Industries in the small scale sector and
--Co-ordinating the functions of other institutions engaged in similar activities.

Provision of èharter

SIDBI was established on April 2, 1990. The Charter establishing it, The Small Industries Development
Bank of India Act, 1989 envisaged SIDBI to be "the principal financial institution for the promotion,
financing and development of industry in the small scale sector and to co-ordinate the functions of the
institutions engaged in the promotion and financing or developing industry in the small scale sector and for
matters connected therewith or incidental thereto.

Business Domain of SIDBI

The business domain of SIDBI consists of small scale industrial units, which contribute significantly to the
national economy in terms of production, employment and exports. Small scale industries are the industrial
units in which the investment in plant and machinery does not exceed Rs.10 million . About 3.1 million
such units, employing 17.2 million persons account for a share of 36 per cent of India's exports and 40 per
cent of industrial manufacture. In addition, SIDBI's assistance flows to the transport, health care and
tourism sectors and also to the professional and self-employed persons setting up small-sized professional
ventures.

SIDBI Among Top 30 Development Banks of the World

SIDBI retained its position in the top 30 Development Banks of the World in the latest ranking of The
Banker, London. As per the May 2001 issue of The Banker, London, SIDBI ranked 25th both in terms of
Capital and Assets