Sidbi to set up Growth Fund for SME sector

The Small Industries Development Bank of India has decided to set up a 'Growth Fund' with an initial corpus of Rs 100 crore to provide risk capital/ equity support to eligible small and medium enterprises.

The financial institution is also planning to assist units in the SME sector at 9.5 per cent per annum, that is 200 basis points below its prime lending rate, with a view to improve flow of credit to the sector.

Sidbi said the corpus under the growth fund, which is expected to become operational within the next three months, will be raised to Rs 500 crore in the next few years.

In order to provide integrated banking services under one roof, Sidbi has received approval from the union finance ministry for allowing working capital and non-fund facility to SME units.

The financial institution, in a statement, said it is expecting necessary approval from the union SSI ministry shortly, whereafter application will be made to the Reserve Bank of India for allowing these facilities to its constituents.

As per Sidbi,the assistance under the Centre's Rs 10,000-crore mega fund, for the SME sector will be made available through its own 44 branches.