The ownership of Small Industries Development Bank of India (Sidbi) should be transferred from the Industrial Development Bank of India (IDBI) to the Reserve Bank of India (RBI), and strong state level institutions (SLIs) should go public, the Khan group has recommended.
The group has also recommended that the agenda for reform with regard to SLIs should incorporate the eventual merger of SFCs, SIDCs and SSIDCs in each state into a single entity. While the consolidation of SLIs should form part of the short-term agenda of reforms in the financial sector, an immediate-term imperative is the corporatisation of these entities to improve their competitive efficiency.
Following restructuring/re-organisation, strong SFCs could be encouraged to go public by making IPOs. In the process, the state governments holding in these corporations may be allowed to be brought down to below 50%, the group has said.
Since the credit requirements of small scale industries are being taken care of by Sidbi since its establishment in 1990, it would be desirable to transfer the present shareholding of IDBI in these SLIs to Sidbi, the report said.
It should be vested with the overall responsibility for enacting policy and procedural guidelines with regard to the operations of SFCs.
Sidbi should be accorded the same role and status as the nodal and co-ordinating agency for financing of small (and medium) industries as is now available to Nabard in the field of agricultural development. Ownership in Sidbi should, as a logical corollary, stand transferred to RBI or the central government on the same lines as Nabard.
Sidbis role in the state-level institutions should be both as stake-holder as well as resource provider. For this purpose, Sidbi should have access to assured sources of concessional funding from RBI.
