BUSINESS ENVIRONMENT

MODULE 3
INDUSTRIAL POLICY OF GOVT. OF
INDIA

Prepared by Prof. C. Krishna Kumar

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SIDBI

Prepared by Prof. C. Krishna Kumar

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Small industrial Development Bank of India
(SIDBI) is a development financial institution in
India headquartered at Lucknow.
Its purpose is to provide refinance facilities and short
term lending to industries, and serves as the
principal financial institution in the Micro, Small
and Medium Enterprises (MSME) sector.
SIDBI also coordinates the functions of institutions
engaged in similar activities.
It was established on April 2, 1990, through an Act
of Parliament.
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SIDBI is regulated and supervised by the
Reserve Bank.
SIDBI in association with TransUnion CIBIL
launched "MSME Pulse", a quarterly report on
MSME credit activity, for closely tracking and
monitoring the MSME segment in the country.
The report is based on a study done on over
five million active MSMEs who have access to
formal credit, with live credit facilities in the
Indian banking system.
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SIDBI makes use of the current banking
network to extend credit facilities to the small
business and micro industries sector.
It provides direct financial assistance to such
banks and institutes which are passed over to
the MSME sector.

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Because of the various tie-ups, the bank has
with other institutions and government backing
it can provide credit and loans at concessional
rates.
The interest rates are never predatory.

Prepared by Prof. C. Krishna Kumar

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SIDBI offers small-scale units with additional
services like leasing, factoring, etc.
It also provides indirect financial assistance via
refinancing facilities, bills discounting, etc.
(Refinancing is replacing an existing loan with
a new loan on better terms of interest or
repayment)

Prepared by Prof. C. Krishna Kumar

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MUDRA Bank:
Micro Units Development and Refinance Agency
Bank is a public sector financial institution in
India.
It is a 100% owned subsidiary of SIDBI.
It provides loans at low rates to micro-finance
institutions and non-banking financial institutions
which then provide credit to MSMEs.
It was launched by Prime Minister Narendra
Modi on 8 April 2015.
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The bank will classify its clients into three
categories and the maximum allowed loan
sums will be based on the category:

Shishu : Loans up to ₹50,000

Kishore: Loans up to ₹5 lakh
Tarun : Loans up to ₹10 lakh

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Those eligible to borrow from MUDRA bank
are
* Small manufacturing unit
* Shopkeepers
* Fruit and vegetable vendors
* Artisans

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University examination questions:

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Q. Examine the role of SIDBI in the
development of the Small Scale Industry in
India (10 marks; Nov 2011)

Prepared by Prof. C. Krishna Kumar

Only for use in ASB Classrooms