MSME loans: MSME lender Small Industries Development Bank of India (SIDBI) and the Technology Development Board (TDB) (under the Department of Science and Technology) have formalized a memorandum of understanding (MoU) to enable easier access to credit for MSMEs engaged in the development and commercial application of indigenous or imported technology for wider domestic applications.
Under the agreement, TDB and SIDBI will refer additional funding needs of companies they have previously funded to each other. “With dedicated key contacts, both organizations will streamline coordination for seamless referral exchange. TDB and SIDBI will also provide financial support to eligible MSMEs, following their respective policy guidelines,” the Ministry of Science and Technology said in a statement.
Apart from financial support, SIDBI and TDB will also look at outreach/marketing activities to promote the initiative and reach a wider audience. The ministry said that the collaboration is expected to pave the way for increased innovation, job creation, and overall economic development in the MSME sector.
Rajesh Kumar Pathak, Secretary, TDB said, “This collaboration with SIDBI marks a significant milestone in our mission to promote technology development. By combining our strengths, we aim to create a conducive environment for MSMEs engaged in innovative endeavours, fostering entrepreneurship and economic growth.”
Importantly, SIDBI had partnered with financial advisory and technology company Jocata last week to launch an MSME Economic Activity Index – Sumpoorn. The move was aimed at addressing the MSME knowledge gap and supporting lenders, policymakers, economists and researchers to strategize credit flow to MSMEs and formulate policies for the sustainable growth of MSMEs.
The index uses consent-led and anonymized monthly sales data reflected in official GSTN returns of more than 50,000 MSMEs seeking credit from financial institutions.
In the recent past, SIDBI had forged alliances with multiple ecosystem enablers including lenders, governments, private entities and more such as J&K government, India Post Payments Bank, Shell Foundation, NITI Aayog, Tata Power Solar, GAME, and more to support MSMEs with different credit products.
In October, Finance Minister Nirmala Sitharaman had said that there is a requirement to increase SIDBI’s share in direct finance in credit to MSMEs to meet the growing need for capital of such enterprises. Sitharaman mentioned that while SIDBI was predominantly doing indirect finance as mandated and it reached out to the MSMEs through Banks, NBFCs, MFI etc., it has now felt that the financial needs of MSMEs are dynamic and need to be met in a timely and cost-effective manner.