SIDBI signs MOU with Regional Rural Banks and Urban Co-operative Banks in Rajasthan for increasing credit flow to “Missing Middle”

Indian MSME sector comprises over 26 million units employing over 70 million people contributes over 45% of India’s industrial production and 40% of Indian exports. However, over 90%of the units do not have access to bank finance especially micro enterprises with loan requirement of over Rs 50,000/- (above microfinance ) – and up to Rs 10 lakhs (normal floor level for bank finance ).

Regional Rural Banks/Urban cooperative banks/District Central Cooperative banks are well suited to meet their requirement but presently do not have the required expertise for lending to micro enterprises.

Considering the importance of capacity Building of RRBs/UCBs/DCCBs across the country, SIDBI is extending capacity building support to select RRBs/UCBs/DCCBs for micro enterprises loans. Towards this goal, a MoU was executed on pilot basis with 6 RRBs and 4 UCBs of Rajasthan at SIDBI Jaipur Regional office. It aims at training their staff on project appraisal, monitoring and collection as also providing them free access to software on Downscaling Methodology developed for lending to micro enterprises. This methodology focuses on cash flow base landing instead of the traditional security based lending adopted by banks.

The MoU was signed by Jaipur Regional Head Shri M K Sharma, in the graceful presence of CMD of SIDBI Shri Sushil Muhnot on Nov 26, 2012. It is expected that this MoU signing will strengthen relations between SIDBI and RRBs/UCBs and also take ahead the MEL financing to the missing middle segment of economy.

About SIDBI

Established on April 2, 1990, under the Small Industries Development Bank of India Act, 1989 SIDBI is "the principal financial institution for the promotion, financing and development of industry in the micro, small & medium enterprises sector and to co-ordinate the functions of institutions engaged in similar activities and for matters connected therewith or incidental thereto. Micro, small & medium enterprises contribute significantly to the national economy in terms of production, employment and exports. SIDBI has crossed the milestone of cumulative disbursement of Rs 244 lakh crore as on March 31, 2012 benefiting more than 325 lakh people.  The net profit after tax has increased by 10% to Rs 567 crore from Rs. 514 crore. The Networth of the Bank increased to Rs. 6,399 crore and the Earnings per share (EPS) improved to Rs. 12.60 from Rs. 11.42. In 2012, Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) – a DFI fraternity with membership of 116 institutions from 42 countries, honoured SIDBI with two awards under Environmental Development Category and for development and application of “Code of Conduct Assessment (COCA) Tool” under Corporate Governance category