Sidbi Refinance Disbursements Take A Knock

The 4.5 per cent decline in the growth of loan disbursement by Small Industries Development Bank of India (Sidbi) in 1996-97 may have been largely due to the sharp fall in disbursements under its refinance facility.

Sidbi's disbursements last year had declined to Rs 4,585 crore from Rs 4,800 crore in 1995-96. Its sanctions, however, had recorded a 6.9 per cent increase from Rs 6,065 crore in 1995-96 to Rs 6,485 crore.

Disbursements under its refinance facility went down from Rs 2,609 crore in 1995-96 to Rs 2,451 crore in 1996-97 making a dent on its overall disbursements.

However, its other performance indices in 1996-97 were impressive .Its income rose to Rs 1290 crore, an increase of 13.7 per cent. Net profit rose from Rs 261 crore to Rs 315 crore, an increase of 20.7 per cent. Net worth rose to Rs 1256 crore from Rs 1026 crore, a rise of 22.4 per cent. Total assets at Rs 13,041 crore showed a rise of 12.4 per cent. Paid up capital has remained at Rs 450 crore.

 

Sidbi could not entirely beat the debilitating effect of the overall fall in rates of growth of the economy. Shailendra Narain, managing director, said that the industrial growth rate has come down from 11.7 per cent in 1995-'96 to about an estimated 10 per cent in 1996-'97. The services sector growth was lower at 7.4 per cent against 8.8 per cent in fiscal 1995-'96. The export growth has also come down. In this scenario, the SSI sector, too, suffered. Their growth rate came down to 9.1 per cent as against 11.4 per cent in 1995-'96.

Exports from SSIs have remained at about 38 per cent of the total output, and its growth has remained stagnant at around 10.6 per cent.

All this had a cumulative effect on the SSI sector, and the demand for funds has gone down. The result was that the liquidity with the banks improved, and therefore refinance went down. Although money was available, says Narain, it was not utilised.

However, Sidbi can take comfort from the fact that the target fixed for it by the Naik committee for the Eighth Plan were overhauled by it.

The Naik committee had estimated the total term loan requirements of SSIs at Rs 13,700 crore of which Rs 2000 crore were to be funded by Nabard and the rest of Rs 11,700 crore was to be provided by Sidbi.

Sidbi's cumulative sanctions have crossed Rs 13,000 crore, and if the bill discounting figure of Rs 4500 crore is included, the figure would exceed Rs 17,000 cr.

Narain says that as far as term loans are concerned, there should not be any problem of availability although it could be a little different in the case of short-term loans, especially working capital loans. He said that Sidbi will be able to achieve the targets for the Ninth Plan as well.

He said that the Abid Hussain Committee recommendations that the limit of investments in plant and machinery for SSI should be raised to Rs 3 crore from Rs 50 lakh and for tiny sector to Rs 25 lakh will soon go on the statute books, and Sidbi is set to give loans to the increased and varied demands from the SSIs.

The bank has paid out Rs 54 crore as dividend at 12 per cent for the third year in running to IDBI for its investment of Rs 450 crore in its equity.

During last year, Sidbi has increased its corpus in the venture capital fund from Rs 40 to Rs 60 crore since it has already sanctioned Rs 38 crore under this scheme. In 1996-'97, the sanctions have gone up to Rs 12.4 crore, and disbursements have doubled to Rs 8 crore.

The bank reduced its prime lending rate twice in the last financial year. It has also started a scheme for the SSIs to get credit rating for which it will provide grants.

The ratio of its direct and indirect disbursements was 58: 42 as against last year when it was 52: 48. 96 per cent assets of the bank are of standard category. Non performing assets accounted for 4 per cent as against 2.4 per cent last year.

Sidbi does not plan to raise fresh funds till December 97.