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SIDBI and functions (IBPS PO /Clerk Banking Awareness)

SIDBI Objectives and functions.Small Industries bank of India (SIDBI) was established in the year 1990 to rejuvenate the small scale industries and to help MSME grow in the country. There were various objectives for which it was formed and here are some of the details which the candidates need to know about the same.

IBPS Banking Awareness

SIDBI is formed under the principal of financial institution for promotion, financing and development of small, tiny and cottage sector. Currently it has created its chain of financial institutions which are working to provide small scale loan for micros and small industries / banks etc. Candidates who have been preparing for the banking examination should visit the official website and they can check for the exam dates.

Here are some of the details which the candidates need to know about SIDBI for their examination and they will need to pass the written examination at first after which they will be considered for other phases of recruitment. SIDBI was formed in year 1989 by Small Industries Development Bank of India Act 1989 as a subsidiary of Industrial Development Bank of India. Currently MUDRA bank started its operation under the aegis of SIDBI. Here are some of the details.

Capital base of SIDBI

The authorized capital of SIDBI is R. 250crores which would be enhanced upto Rs. 1000 Crore. It also took over the outstanding portfolio of IDBI relating to small scale sector held under Small Industries Development Fund as on 31st March 1990 worth over Rs. 4000 crore.

Various objectives of SIDBI

SIDBI was made operational in 1990 to achieve various objectives which has been given as under.

  1. Technological Up-gradation: Initiating steps for technological up-gradation and modernization of existing units.
  2. Market Expansion: Expanding the channels for marketing the products of the small scale sector.
  3. Employment Oriented Industries: Promotion of employment oriented industries, especially in semi urban areas to create more employment opportunities and thereby checking migration of population to urban areas.
  4. Co-ordination of Activities: To co-ordinate the functions of institutions engaged in similar activities.

Major functions of SIDBI are as under:

Some of the major operations carried out by SIDBI in day to day working are given as under. Candidates need to learn the functions of SIDBI clearly as it is asked in one form or the other.

  • Refinance: It refinances loans and advances provided by the existing lending institutions to the small scale units.
  • Discounting Bills : It discounts and re-discounts bills arising from sale of machinery to and manufactured by small scale industrial units.
  • Seed Capital / Soft Loan : It extends seed capital / soft loan assistance under National Equity Fund, Mahila Udyam Nidhi and Mahila Vikas Nidhi and seed capital schemes.
  • Refinance for Exports : It grants direct assistance and refinance loans extended by primary lending institutions for financing exports of products manufactured by small scale units.
  • Factoring Services : It provide services like factoring, leasing, etc, to small units.
  • Financial Support to SSICs : It extends financial support to State Small Industries Corporation for providing scare raw materials to and marketing the products of the small scale units.
  • Assistance to NSIC : It provides financial support to National Small Industries Corporation for providing, leasing, hire-purchase and marketing help to the small scale units.
  • Co-promotes State Level Venture Funds : SIDBI Co Promotes state level venture funds in association with respective state government.
  • Setting Up of Incubation Centers : SIDBI takes initiative for setting up of incubation centers under its National Programmed for Innovation and Incubation for Small Industries with a view to harnessing the entrepreneurial talents.
  • Financing Projects Relating to Transport Health : SIDBI finances projects relating to transport, health care and tourism sectors and also to the professional and self-employed persons setting up small-sized professional ventures.

Refinancing small scale industries is one of the major tasks of the SIDBI and it carries out this on regular basis. It is also regulated by the Reserve bank of India and works directly under the government of India, ministry of Finance.

Promotional roles of SIDBI are as under:

SIDBI also works to promote various activities which are as under:

  1. SIDBI Venture Capital Ltd. 2
  2. Credit Guarantee Fund Trust for Small Industries.
  3. Technology Bureau for Small Enterprises.
  4. SIDBI Foundation for Micro Credit.

Performance of SIDBI

SIDBI has been successful in carrying out its operations and rejuvenating the dead small industries and to carry out entrepreneurship skill tasks across the country for micro and small industries. SIDBI retained its position in the top 30 Development Banks of the World in the latest ranking of The Banker, London (25th Rank).

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