In the backdrop of the central government thrust on Micro, Small and Medium Enterprises (MSME) for boosting economic activities and creating millions of jobs, the Small Industries Development Bank of India (SIDBI) is targetting total lending of almost Rs 1.40 trillion during the current fiscal.
This would be a growth of over 30% compared to total advances of Rs 1.09 trillion during 2017-18.
Besides, the central refinance agency is also working on its roadmap of tapping the large yet 'unquantified' lending in the informal or unorganised sector by facilitating cheaper credit to micro and small units.
"The lending rates are much steeper in the informal sector, as high as 20-25% compared to the formal economy, where credit rates are cheaper and loams are easier to get. Our target is to provide such loans at around 15% interest rate," SIDBI CMD Mohammed Mustafa said.
The Bank would work closely with micro finance institutions (MFI) and non banking financial companies (NBFC) to 'institutionalise' the informal sector lending, since this space has yet not been focussed upon by any top central financial body.
Replying to a Business Standard query over the capital crunch being faced by the commercial banks, he replied SIDBI being a refinance agency was not facing any resource crunch, owing to its low-risk banking norms and due diligence.
Despite the domestic banking being plagued with asset quality deterioration, SIDBI has seen its non performing assets (NPA) ratio declining from 1.2% in 2016-17 to 0.94% in 2017-18, which reflected robust asset management. Likewise, the net NPA stood at a lower level of 0.26%.
Meanwhile, SIDBI held its 20th annual general meeting (AGM) here today, where its Board reiterated to implement SIDBI Vision 2.0, which envisages a broader integrated credit and development support, multiplier effect and aggregator roles for the Bank going forward.
Mustafa informed the Bank was working towards conducting a comprehensive MSME Census in consort with different banks and financial institutions to ascertain their actual status and funding requirements, so as to devise an appropriate strategy to address the gaps.
Besides, SIDBI is in talks with Indian Institute of Management, Bangalore (IIM-B) for creating a startup ecosystem on the lines of one it forged with IIM Lucknow last year. “We are discussing the issue with IIM Bangalore and a decision would soon be taken.” Similar tie-ups with other premier institutions are also on the agenda to promote entrepreneurship.
Further, the Bank is working closely with the Uttar Pradesh government to offer financial advisory services and adopting 10 districts for state-of-art credit interventions.
SIDBI is onboard with the Yogi Adityanath dispensation with regards to the flagship One District, One Product (ODOP) scheme, that seeks to promote traditional industries and handicrafts in the state. UP is home to over 5 millions MSMEs.