SIDBI to help SMEs raise funds

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SME Times News Bureau | 25 Jun, 2011
Small Industries Development Bank of India (SIDBI) chief has recently said that Small and medium enterprises (SMEs) can hope to tap the stock market for raising resources this fiscal.

"The Micro, small and medium enterprises (MSME) sector has avenues to raise debt, but when it comes to raising equity they face a problem. SIDBI would also set up an SME exchange with the National Stock Exchange for providing small and medium companies easy access to capital markets. They have already received the approval of SEBI to set up the exchange, which would start functioning in the current fiscal," Mr Sushil Muhnot, Chairman and Managing Director, SIDBI said.

This is in addition to the traditional sources of funding - banks and non-banking finance companies.

The SIDBI chief said that a separate trading platform for the SME Exchange has already been created by the NSE, and market infrastructure in terms of attracting sponsors for initial public offers and market-makers are being tied up.

SMEs intending to mobilise up to Rs 25 crore through initial public offers can get listed on the SME Exchange, the report added.

On the exit option for SMEs, Mr Muhnot said: "Since the SME Exchange will give international and domestic venture capital funds an exit option, they will be enthused to make investments in SMEs."

Another area of priority that has been identified by SIDBI is direct lending to micro, small and medium enterprises (MSMEs), the report said adding that the financial institution was eyeing a 25 percent growth in this segment in 2011-12.

Meanwhile, SIDBI's outstanding credit to the MSME sector increased by 22% to touch 46,331 crores in the financial year 2010-11 and the bank aims to grow this segment by another 35% in the current fiscal year.
Mr Muhnot said that the interest rate rise would have some effect on the MSME sector, but he was confident that SIDBI's target for the current fiscal would be achievable. He said that the overall growth in the MSME sector besides their plans to cater to the requirement of equity by MSMEs would enable SIDBI to achieve its growth target.

SIDBI had achieved the milestone of cumulative disbursement of Rs 2 lakh crores at the end of March 2011, and the bank expects to grow by 18-20 percent in the current fiscal, Muhnot said at the 13th annual general meeting of the bank in Lucknow on Friday.