Pune: To boost the funding available to Micro and Small Enterprises (MSE), the Small Industries Development Bank of India (SIDBI) has signed a Memorandum of Understanding (MoU) with AU Small Finance Bank and Suryoday Small Finance Bank. The MoU makes way for a Joint Lending Programme to make available timely and adequate credit at affordable rates to MSE units and to augment credit flow to MSE sector.
Officials said that the arrangement involving joint lending by SIDBI and these Small Finance Banks (SFB) shall principally be in the nature of co-origination wherein both the parties shall jointly sanction loans and will share the term loan equally on common terms with all arrangements under a single application.
“While SIDBI will bring in its expertise spanning two decades on the subject of MSME finance, SFBs network will facilitate credit flow to MSEs located in unserved and underserved areas. The arrangement would enable MSEs to get affordable finance at competitive rates and also help them avail full financial services in the underserved areas under a single window. The arrangement would cover loans ranging from Rs 25 lakh to Rs 2 crore, which will be shared equally between SIDBI and SFB. In addition, SIDBI would also help in financial education, skill development and capacity building of MSEs covered under the programme, by providing need-based promotional and developmental support,” officials explained.
Speaking on the occasion, Chairman and Managing Director, SIDBI, Mohammad Mustafa (IAS) said, “The MoU with SFBs is a continuum of series of SIDBI’s effort in addressing the gaps in the MSME ecosystem. This initiative will act as a catalyst to improve financial inclusion of hitherto under-served sectors of the nation. On successful operationalisation, this could be a milestone in the MSME financing in the country.”
MD and CEO, AU Small Finance Bank, Sanjay Agrawal said, “Our cordial relationship with SIDBI started in September 2010 when they provided credit facility of Rs 10 crore for the promotion and development of MSME sector units in rural and semi-urban areas which has now reached Rs1,000 crore and will strengthen further in times to come. SIDBI has always been our one of prime lender and partner in terms of extending credit as and when needed to support Micro and SME Sector in unserved areas towards financial inclusion. Further, under the able support of SIDBI, we were able to build our MSME portfolio to this level. We look forward to the same support to us at our banking platform as well. This joint financing programme with SIDBI will be crucial step and milestone in this direction to build values as well.”
Commenting on the occasion, MD and CEO, Suryoday SFB, Baskar Babu said, “Suryoday Small Finance Bank is happy to partner with SIDBI for a co-lending initiative. We expect this collaboration to help us build a robust MSME portfolio. In this programme, we see an excellent opportunity to complement SIDBI’s expertise in the sector with our outreach at the field level. We are confident this initiative will help strengthen the MSME ecosystem.”