Small Industries Development Bank of India (SIDBI) is planning to raise R10,000 crore through bonds or convertible debentures. Speaking to reporters on the sidelines of signing of an MoU with Indian Overseas Bank (IOB) on MSME financing, Sushil Muhnot, chairman and managing director, Sidbi said, ?We have a R50,000-crore loan disbursement balance sheet and are expecting a 15% to 20% growth. As we need huge money to lend to small industries, fund-raising is a continuous process and we will be raising around R10,000 crore in another three months. As we have been getting tremendous response to our existing two venture capital funds, we are launching yet another new fund soon.?
Stating that the MSME sector has been witnessing a slowdown due multiple factors such as high interest rates and wages, Muhnot added that the new initiative of Sidbi to provide growth capital to MSMEs through banks will go a long way to lift the fortunes of the sector.
?Present studies have revealed that there is a huge gap in equity financing eco-system for MSMEs. In order to address this gap, Sidbi has taken an initiative by providing such assistance to MSME units under the risk capital fund.
It has decided to partner with select banks to enhance the reach. The MoU with IOB is the first such initiative wherein Sidbi and IOB shall reach out to MSMEs across India,? Muhnot said, adding that he was in talks with other banks to forge similar alliances.
Under the MoU, Sidbi will initially provide a line of credit of R100 crore to IOB for a period of seven years from the risk capital fund. The loan will be utilised to provide capital to deserving MSMEs for requirements such as project funding, brand building , R&D and working capital margin among others.