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Empowering Micro, Small & Medium Enterprises
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Emerging Opportunities in MSME Financing
September 2, 2015 Mumbai
Presentation by Dr. Kshatrapati Shivaji, I.A.S.
Chairman and Managing Director, Small Industries Development Bank of India
Empowering Micro, Small & Medium Enterprises
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The Theme
• Central Theme of the Programme,
“Financial Inclusion : New Opportunities for the Financial Sector”
• My topic : “Emerging Opportunities in the MSME Financing
• Is there a connect between the two ?
• Yes, the connection runs deep. Either reap
Demographic Dividend or end up with
Demographic Disaster
Empowering Micro, Small & Medium Enterprises
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Financial Exclusion
• Who are the financially excluded ?
• Own Account Enterprises,
• Self employed small businesses
• New age Start-ups
• Idea based enterprises
√Own account enterprises itself – number
around 6 crore. √Negative impact, social consequences of
exclusion – disastrous. √Positive impact of inclusion –
increased national income.
Empowering Micro, Small & Medium Enterprises
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The Players in the Inclusion Space
The Players facilitating financial inclusion;
(i) Banks
(ii) NBFCs
(iii) RRBs
(iv) MFIs
(v) Others forms – Trusts, Societies,
NGOs, UCBs, Cooperatives, Other
entities.
√ What about Money lenders ?
Empowering Micro, Small & Medium Enterprises
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Financial Inclusion
The processes for financial inclusion :
√ Opening of bank account – first step
√ Saving activity by the account holder
√ Financial Literacy
√ Loans extended, overdraft, guarantee
√ Other related services – insurance,
remittance, cheque book, plastic card etc.
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Initiatives in Financial Inclusion - GoI
√ GoI - Mission Mode
√ Universalisation of bank accounts
√ PMJDY – nearly 18 crore bank accounts
√ Various Social Security Schemes
- PM Suraksha Yojana, Atal
Pension Yojana, PM Jeewan Jyoti
Beema Yojana.
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Initiatives in Financial Inclusion - RBI
√ Bank Correspondents / Bank Mitra
√ Payment Banks Licence
√ On way to Small Finance Bank
√ White ATMs / ATMs
√ More Differentiated Banks expected
√ Receptive to New Ideas
Empowering Micro, Small & Medium Enterprises
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Where Does SIDBI Stand
√ SIDBI serves the MSME sector
√ MSME sector is a vibrant and resilient sector
√ Substantial contribution to the national economy
√ Balanced regional development
√ Nursery of Innovation
Empowering Micro, Small & Medium Enterprises
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The Activities of SIDBI
• Positioned itself as a unique institution
• Complements and supplements the efforts of other
players in the MSME eco-system
• Bridges the financial and non-financial gaps
• Introduced a wide array of financial products for the
entire MSME spectrum
• Equity, quasi equity, mezzanine capital, risk capital,
venture capital, venture debt, micro finance, setting
up incubation centres, receivables finance, sustainable
finance, assistance for intangibles and asset light
activities.
Empowering Micro, Small & Medium Enterprises
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SIDBI - Apex institution for MSME in India
Credit
Indirect Finance
Direct Finance
Micro finance
Beyond credit
Enterprise promotion/ skill development
Management Development
Cluster Development
Marketing Support
Policy advocacy
Credit Advisory
Institutional solutions
SVCL- Venture Capital
SMERA- SME Rating
CGTMSE – Collateral Free
Lending
ISTSL-Technology Transfer
ISARC – Asset Reconstruction
MUDRA
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Initiatives in Financial Inclusion – SIDBI
Provided impetus to the MFI led micro finance lending
Benefitted around 33 million disadvantaged individuals, mostly
women
Propagated and institutionalised Responsible Finance Practices in
the MFI sector
Market making role which attracted institutional capital, social
capital and bank lending to the sector
Started Capacity Assessment Rating of MFIs which has since
become industry standard for bank lending
Code of Conduct Assessment (CoCA) has become a valuable tool
for assessing compliance with tenets of responsible lending
Incubated MFIs such as Bandhan, Equitas, SKS and others
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Initiatives in Financial Inclusion – SIDBI
Institutionalised Credit Guarantee Scheme.
Credit Guarantee Trust Fund for Micro and Small
Enterprises (CGTMSE)
Collateral free advances to the extent of approximately
Rupees ONE LAKH Crore benefitting 20 lakh micro and
small units
The above intervention has sustained employment for around 50 lakh on conservative basis
CGTMSE – model, in demand from many countries.
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Initiatives in Financial Inclusion –
MUDRA
Funding the Unfunded.
Micro Units Development & Refinance Agency (MUDRA)
Prosperity the Inclusive Way
Non-corporate Small Business Sector, one of the largest
disaggregated business (around 6 crore) eco-system
Only 4% associated with Institutional Finance
MUDRA–refinance/credit guarantee to eligible institutions
PMMY – Target Rs 1,22,000 crore for FY 2016.
MUDRA has 130 partner institutions. Ten indicative
schemes, covering various entrepreneurial activities.
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Stand Up India
India will Stand Up when the Start ups will prosper.
GoI initiatives of Zero Defect Zero Effect, Make In
India, Skill India culminates in the form of Startup
India.
Small has the potential to make it big.
Potential can be harnessed only with timely, adequate,
right type of financial instrument in a transparent
manner.
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Stand Up India
Assisting each Start up is an act of financial inclusion.
Commercialising an idea, with financial assistance,
which has the potential to disrupt status quo for
betterment of lives is an act of financial inclusion as it
matters most to individuals at BoP, ex. Mobile Banking.
SIDBI has been at the forefront of Start up movement
in India, even prior to the word gaining its popularity
as it is today.
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SIDBI in the Start Up Space
SIDBI has supported nearly 75 different venture funds with
aggregate committments of Rs 1800 crore.
Some assisted enterprises are marquee names likes
Wildcraft, Bill Desk, Smaash Entertainment etc.
SIDBI has recently launched India Aspiration Fund with a
corpus of Rs 2,000 crore.
Empowering Micro, Small & Medium Enterprises
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What is On the Horizon
√Low cost micro payment system is the imperative. √Supporting Start up Culture and Improving Ease of
Doing Business √Technology and related innovation will be the game
changers √Credit Bureau and Data Analytics – Customer profiling,
Default Analysis √Indian economy very dynamic. Banking system has to
be flexible and competitive to keep the dynamics in a sustained manner.
√Improved and friendly regulatory environment.
Empowering Micro, Small & Medium Enterprises
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Thank you!
www.sidbi.in