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Micro Enterprise Loan

The general terms and conditions for assistance under this scheme are:

Minimum Rs 25 lac shall be provided to those MFIs having professional experience and competency to manage on-lending transactions.

The loan shall be sanctioned as per the credit rating by professional agency and flexible security norms.

Responsible Micro Finance Under this initiative, SIDBI has created a Lenders Forum in order to increase cooperation and to maintain better coordination among MFI lenders. This initiative increases the ability of MFI to invest and earn a higher return across the sector. SIDBI developed a list of five agencies to perform Code of Conduct Assessment (COCA) of assisted MFIs by providing them credit services, recovery of credit etc. In addition the bank creates awareness among MFIs through educating them on client protection principles and assists them to implement best practices under its smart campaign partnership.

Salient Features of Micro Finance Programme

This programme asserts the following activities:

a) Arranging Fixed Deposit for MFIs/NGOs The bank is providing micro-finance through its network of eligible MFIs/NGOs. To avail loan from SIDBI under this scheme, security deposits are required from MFIs/NGOs. For this purpose, the Government of India (GoI) will provide funds to SIDBI which is known as Portfolio Risk Fund. This fund will be utilised by SIDBI as a security deposit in return of the loan amount given to MFIs/NGOs. Then 10 per cent of the loan amount is retained by SIDBI as fixed deposit. The MFIs/NGOs contributes 25 per cent of the loan amount and balance 75 per cent of the loan amount would be met out of the funds given by GoI. The SIDBI will pay interest to the Government at the same rate as applicable to NGOs/MFIs and the bank is responsible for the recovery of loan as well as interest amount. If loan was not recovered, the bank would adjust fixed deposit and interest accrued on 25 per cent of the loan amount given by MFIs/NGOs and then adjusts 75 per cent of security deposit contributed by GoI with its prior approval. In case of full recovery of loan, either Government contribution would be channelized further as a security or will be returned to the GoI with the prior approval of the Committee.

b) Training on Micro-Finance Programme The Government of India also assists SIDBI in meeting the training requirements of NGOs, MFIs, SHGs etc. to upscale their knowledge about Micro Finance Programmes. c) Institution building for Intermediaries for identification of viable projects The GoI also help MFIs/NGOs through identification of intermediary organisations. These organisations provide guidelines to respective MFIs/NGOs in product identification, project report formulation, developing forward and backward linkages, market exposure etc.

The bank has provided MF assistance to about 322 lac disadvantaged people especially women as on March 31, 2013. The total sanctions and disbursements under micro finance operations of SIDBI are shown in Table 5.5. Table 4.5 shows that micro finance sanctions made by SIDBI increased from Rs 9.9 crore in 1995-96 to Rs 852.14 crore in 2012-13 and registered growth of 29.96 per cent during the period. The micro finance disbursements also showed an increasing trend and the amount increased from Rs 4.71 crore in 1995-96 to Rs 323.03 crore in 2012-13 and recorded a growth of 28.24 per cent during the period. The average amount of micro finance sanctions and disbursements were Rs 528.43 crore and Rs 419.95 crore over the period. Further, the growth in disbursements showed a lower degree of consistency (CV=169.94) as compared to total sanctions (CV=149.76) during the reference period. The loan disbursements as percentage of the sanctions were highest (102.52 per cent) in the year 2003-04 and lowest (27.98 per cent) in the year 2011-12.

RESOURCE SUPPORT TO INSTITUTIONS

In order to facilitate larger flow of funds to the MSME sector, the SIDBI extends resource support to the various specialised institutions engaged in the promotion and development of this sector. The bank provides resource support to financial intermediaries through SFCs, SIDCs, Non-Banking Finance Companies (NBFCs), factoring companies, State Electricity Boards (SEBs) and other institutions related with MSME sector. The resource support to these institutions is provided for the purpose of hire purchase, leasing, financing, marketing activities and technological development of the sector. Further, short-term loans to power corporations are extended to meet their credit requirements. The quantum of total sanctions and disbursements under resource support to various institutions extended.

Table 4.6 shows the amount of sanctions extended by SIDBI as resource support to various institutions increased from Rs 75 crore in 1990-91 to Rs 1988.11 crore in 2012-13 and recorded growth of 16.06 per cent during the period. The amount of disbursements under resource support also indicates an impressive growth during the period and the amount increased from Rs 72.1 crore in 1990-91 to Rs 4242.50 crore in 2012-13 and registered a growth of 20.35 per cent over the period. The average amount of sanctions and disbursements under the scheme were Rs 971.78 crore and Rs 844.39 crore during the period. The growth rate of disbursements was highest (20.35 per cent) as compared to sanctions (16.06 per cent) during the period of study. Further, a high degree of variation has been observed in growth of disbursements (CV=101.93) as compared to the sanctions (CV=60.89) during the reference period. The loan disbursements as percentage of the sanctions were maximum (213.39 per cent) in 2012-13 and minimum (44.45 per cent) in the year 1994-95.

SANCTIONS UNDER DIRECT AND INDIRECT CREDIT TO TOTAL SANCTIONS

The proportion of loan sanctions made by SIDBI under its direct and indirect assistance schemes out of the total amount of loan sanctioned are shown in Table 5.7. Table 4.7 reveals that the total amount of sanctions under direct credit assistance increased from Rs 274.40 crore in 1990-91 to Rs 24852.06 crore in 2012- 13 and recorded growth rate of 22.73 per cent during the period. The total amount of sanctions under indirect credit assistance also increased from Rs 2134.30 crore in 1990-91 to Rs 34621.77 crore in 2012-13 and registered growth of 13.50 per cent during the period. The average amount of sanctions under direct credit and indirect credit were Rs 5345.71 crore and Rs 10376.55 crore during the reference period. It has been further observed that total sanctions of the bank increased from Rs 2408.7 crore in 1990-91 to Rs 59473.82 crore in 2012-13 and showed an impressive growth of 15.69 per cent during the period. The growth of sanctions under direct credit showed a high degree of variation (CV=123.30) as compared to the total sanctions (CV=103.93) and sanctions under indirect credit (CV=96.38) over the period of study. The sanctions under direct credit as percentage of total sanctions were highest (56.47 per cent) in the year 1994-95 and lowest (11.39 per cent) in the year 1990-91. The sanctions under indirect credit as percentage of total sanctions were highest (88.61 per cent) in the year 1990-91 and lowest (43.35 per cent) in the year 1994-95