Small Industries Development Bank of India (SIDBI), the principal financial institution in the country for MSMEs, is looking to raise up to Rs 5,000 crore ($596.4 million) through bonds maturing in five years, Reuters reported. This would include a greenshoe of Rs 3,000 crore.
Citing three bankers, the report said SIDBI has invited coupon and commitment bonds from bankers and investors. The bankers said the bank has invited coupon and commitment bids from bankers and investors on Tuesday.
SIDBI’s former Chairman and Managing Director S Ramann on the sidelines of a programme in March this year had announced plans to raise capital from rights issue to fuel business growth.
Ramann had informed that SIDBI had approached the government, its biggest shareholder for participation in the right issue, PTI had reported. Other than government, public sector lender State Bank of India, Life Insurance Corporation of India are the key shareholders in SIDBI.
The capital raising gains significance as SIDBI intends to enhance its direct lending loan book and also increase its share in total MSME lending from reportedly around 16 per cent last year to around 25 per cent in the next few years.
The bank, in March this year, had announced a $120 million Avaana Sustainability Fund for MSMEs and startups working on climate and sustainability solutions.
Importantly, FSIB (Financial Services Institutions Bureau), which recommends persons for appointment as directors and non-executive chairpersons at state-owned banks and financial institutions, had appointed Manoj Mittal, former managing director at the government-owned NBFC IFCI as SIDBI’s new Chairman and MD earlier this year, replacing Ramann.
The government in this year’s full budget had announced 24 new branches to be set up by SIDBI to serve all major MSME clusters within three years and enable direct credit to them. “With the opening of 24 such branches this year, the service coverage will expand to 168 out of 242 major clusters,” Finance Minister Nirmala Sitharaman had said in her budget address.