SIDBI Small Industries Development Bank of India 

The SIDBI stands for Small Industries Development Bank of India and it is a wholly-owned subsidiary of the IDBI (Industrial Development Bank of India), which was established by a special Act of Parliament in 1988 and went into effect on April 2, 1990.

What is SIDBI?

SIDBI was given responsibility for administering the Small Industries Development Fund and the National Equity Fund, which were previously administered by IDBI.

SIDBI is the primary financial institution for the promotion, development, and financing of the MSME (Micro, Small, and Medium Enterprise) sector. SIDBI promotes cleaner production and energy efficiency in addition to focusing on the development of the Micro, Small, and Medium Enterprise sector.

SIDBI assists MSMEs in obtaining the funds they need to expand, market, develop, and commercialize their innovative technologies and products. The bank offers several schemes as well as financial services and products to meet the needs of individuals in various businesses.

SIDBI Provides Financing Options

Customers of the Small Industries Development Bank of India can take advantage of the following services:

  • SIDBI’s Venture Capital

  • This loan program covers some major initiatives that provide start-up funding. This includes the Start-up Life Cycle, as well as SIDBI interventions such as Funds of Funds for Start-ups, Aspire Fund, and India Aspiration Fund.

  • Start-ups The lifecycle, as well as SIDBI interventions: There are new start-ups and ventures in the business world that require funding from time to time. This initiative assists in the provision of funds with the assistance of banks, NBFCs, and SFBs.

  • Funds of Funds for Start-ups: The Government of India launched this initiative to support various Alternate Investment Funds (AIFs) with the hope of assisting start-up businesses. Its goal is to foster the growth and development of innovative businesses.

  • Aspire Fund: The Aspire Fund focuses on providing financial support to start-ups in the early stages of establishing manufacturing and service businesses.

  • India Aspiration Fund: The India Aspiration Fund was established with the support of the RBI in order to promote equity and equity-based investments in start-ups and the MSME sector.

  • Financing Direct

Under its various direct finance loan schemes, SIDBI provides Working Capital Assistance, Term Loan Assistance, Foreign Currency Loan, Support against Receivables, equity support, and an Energy Saving Scheme for the MSME sector, among other things.

  • Indirect Finance

  • SIDBI provides indirect assistance by refinancing PLIs (Primary Lending Institutions), which include banks, State Level Financial Institutions, and others with a large branch network across the country.

  • The primary goal of the refinancing scheme is to strengthen the resource position of Primary Lending Institutions, allowing credit to flow to the MSME sector.

  • Small-Scale Finance

Small Industries Development Bank of India provides microfinance to small businessmen and entrepreneurs to help them get started.

Functions of SIDBI

  • Small Industries Development Bank of India refinances loans made by PLIs to small-scale industrial units and also provides them with resources.

  • It offers bill discounts and rediscounts.

  • It also aids in the expansion of marketing channels for SSI (Small Scale Industries) sector products in both domestic and international markets.

  • It provides factoring, leasing, and other services to small-scale industrial concerns.

  • It encourages employment-oriented industries, particularly in semi-urban areas, in order to create job opportunities and prevent people from relocating to cities.

  • It also initiates steps for modernization and technological advancement of existing units.

  • In collaboration with commercial banks, it also enables the timely flow of credit for working capital as well as term loans to Small Scale Industries.

  • It also works with state-level venture funds to promote them.

Benefits of SIDBI

Customized SIDBI policies and loans based on your company's needs. If your requirement does not fall into the ordinary and usual category, the Small Industries Development Bank of India can help you get the funding you need.

  • Dedicated Dimensions

Credit and loans are tailored to the size of the company. As a result, MSMEs may be able to obtain various types of loans that are tailored to their specific business needs. Security Without providing security, free business people could receive up to Rs.100 lakhs.

  • Capital Gains

Entrepreneurs could acquire adequate capital for meeting their growth requirements without tempering their ownership of a company.

  • Equity and Venture Capital

It has a wholly-owned subsidiary, SIDBI Venture Capital Limited, that provides growth capital as equity through venture capital funds that focus on MSMEs.

  • Subsidies schemes

SIDBI offers a variety of schemes with low-interest rates and flexible terms. SIDBI has in-depth knowledge and a broader understanding of available schemes and loans, which can assist enterprises in making the best decision for their businesses. 

  • Transparency

Its processes and rate structure are open to the public. There are no additional fees.

How to Apply for a SIDBI Loan?

An entrepreneur would have to go through the following steps to obtain a loan from the Small Industries Development Bank of India:

  • Step 1: Recognized consultants appointed by the SIDBI would prepare the necessary documents. The consultants would create a BIM-based on the requirements and information provided by the MSMEs (Basic Information Memorandum). This document would contain all information about rating agencies and banks.

  • Step 2: The MSME entrepreneur approves the Basic Information Memorandum. The Basic Information Memorandum would then be submitted to the Small Industries Development Bank of India by the accredited consultants.

  • Step 3: If necessary, the proposal will be rated by a rating agency approved by the Reserve Bank of India.

  • Step 4: SIDBI would handle the following cases directly:

  • SIDBI would provide equity or quasi-equity to existing growth-oriented units.

  • The bank would lend money to service-related businesses.

  • It would provide credit to MSMEs for cleaner and more energy-efficient manufacturing processes.

  • Step 5: In all other cases, the loan application would be submitted to public-sector banks. For loan issuance, SIDBI (Small Industries Development Bank of India) has an MOU (memorandum of understanding) with public-sector banks.

The Small Industries Development Bank of India would assist the entrepreneur at every stage until the loan was approved. MSMEs have a better chance of receiving the loan on time and can avoid unnecessary delays.

SIDBI - Related FAQs

SIDBI full form is Small Industries Development Bank of India (SIDBI) which promotes, develops, and finances India's MSME sector. Through their various loan schemes, SIDBI loans provide financial assistance to MSMEs. 

No, SIDBI is not a nationalized bank; however, as a wholly-owned subsidiary of IDBI, it is classified as a development bank (Industrial Development Bank of India).

The maximum loan amount available under the SIDBI loan is Rs. 2 crores.

The SIDBI loan has a maximum repayment period of 10 years.

SIDBI was previously owned by IDBI (Industrial Development Bank of India), but it is now completely self-sufficient.

The primary function of SIDBI is to manage the Small Industries Development Fund and the National Equity Fund, which were previously managed by IDBI.