Sidbi To Directly Lend To Ssis

The Small Industries Development Bank of India (Sidbi) has decided to aggressively get into direct lending to small scale industries (SSIs) as funds-flush banks have reduced their dependence on it for obtaining refinance. Refinance extended by Sidbi in fiscal 2001-02 came down by 22 per cent to Rs 6,300 crore compared with Rs 8,088 crore in the previous year.

"As the primary lending institutions (banks) liquidity position is comfortable, they have reduced their dependence on Sidbi for their refinance requirements. Hence, we will be stepping up direct assistance this year through our 38 regional/branch offices," P B Nimbalkar, chairman and managing director, said.

Almost 75 per cent of the development bank's overall assistance is by way of indirect assistance. Indirect assistance is extended by way of refinance, granting line of credit, and rediscounting bills of primary lending institutions such as banks.

New areas identified by Sidbi for its direct financing thrust include annuity-based road projects that will directly benefit SSIs clusters, entertainment industry (setting up multiplexes and water parks), shopping malls that exhibit SSI products and tourism-related activities.

The development bank at present extends direct financial assistance for setting up new SSI units, small hotels, hospitals and nursing homes, for developing infrastructure for SSIs, export credit for the SSIs and for market development activities.

In FY 2001-02, Sidbi's sanctions were down by 16.59 per cent at Rs 9,025 crore (Rs 10,821 crore in 2000-01) and disbursements fell by 8.10 per cent to Rs 5,919 crore (Rs 6,441 crore) due to the general economic slowdown.

Meanwhile, the bank is firming up its maiden long-term capital gains (Section 54 EC) issue for raising Rs 1,000 crore on tap. The issue, which will give investors the choice of two tenors - three years and five years, is slated to open next month. The bank is working out details of coupon rate on the issue. Further, during the year, it plans to raise Rs 500 crore via the priority sector bonds issue.