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Follow UsKOLKATA, INDIA: Small Industries Development Bank of India (Sidbi) plans to launch three venture capital funds worth 850 crore this fiscal to support small and medium enterprises (SMEs).
“The domestic market for SMEs is buoyant. The funds will support the growth story,” Sidbi managing director S Muhnot told newsmen in Kolkata.
The SME sector grew 11 per cent last year. The largest of the venture funds - the India Opportunity Fund - will be worth 500 crore and will be given to SMEs having a good track record.
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The second one will be worth 50 crore and will be floated to encourage and invest in small units planning to enter the capital market through the proposed SME exchanges.
“We will act as a market maker for the proposed SME exchange. So, we will launch the Nominated Investors Liquidity Fund to this endeavour,” Muhnot said.
Sidbi and the National Stock Exchange have teamed up to build a separate trading platform dedicated to SMEs. Sebi has recently given green signal to both the BSE and NSE to set up SME exchanges to provide them an exclusive window to raise equity from the market and fund growth.
Sidbi's third venture capital fund will be worth 300 crore. “The third fund is under discussion,” the CMD said. It will tap domestic banks to build the three funds.
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The development finance institution plans to grow its outstanding loans 20 per cent to 60,000 crore by March 2012 from 50,000 crore at the end of 2010-11. It has decided to take higher exposure to the beleaguered MFI sector, which is slowly coming out of the woods. It plans to disburse 1,000 crore to micro lenders this year, 20 per cent higher than what it did in 2010-11.
“The government and the Reserve Bank of India have laid out a long-term growth path for the MFI sector. The MFIs should see orderly growth in the future,” Muhnot said. The RBI has recently unveiled operational guidelines for MFIs and capped lending rates at 26 per cent a year. The government, on the other hand, has prepared a draft MFI bill which proposed RBI as the central regulator for the sector.