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The Last Word
A Pat for the Minister
Rajen Kumar
May 2011
May 2011
MSME Minister Virbhadra Singh has done well to demand the functioning of the Small Industries Development Bank of India (SIDBI) under the Ministry of Micro, Small and Medium Enterprises (MSMEs) instead of the Ministry of Finance. By doing so, the Minister has lent credence to the fact that SIDBI is not playing its due role in strengthening the credit-hungry MSMEs sector.
SIDBI was established on April 2, 1990 under the Charter which envisaged SIDBI to be "the principal financial institution for the promotion, financing and development of industry in the small scale sector and to co-ordinate the functions of the institutions engaged in the promotion and financing or developing industry in the small scale sector and for matters connected therewith or incidental thereto.”
It was an illogical decision to place the Bank under the Finance Ministry as the very domain of the SIDBI “consists of small scale industrial units, which contribute significantly to the national economy in terms of production, employment and exports.”
Since the time SIDBI was established, the MSMEs sector in India has inflated manifold and has been facing credit crunch especially when the commercial banks have failed to meet the financial demands of the sector.
Over the years, SIDBI has been able to accumulate reserves to the tune of a whopping over Rs.5,000 crores even while the sector is plagued with the problems of finance. Over 30 millions MSMEs which form the backbone of our economy are facing constraints ranging from technology up-gradation, marketing, modernisation etc. which cannot happen without finance. We have ushered into an era of stiff global competition and this is time for the sector to perform or perish.
SIDBI was never constituted with the objective to earn laurels on the international front for attaining a position in the top 30 Development Banks of the World. The real laurel that the Bank could earn is in being the most 'delivering bank'.
Let SIDBI not sing its own songs even while the shortage of funds is proving to be a major bottleneck in the growth of the micro and small enterprises, which have been declared as a "priority sector". The MSMEs are the second largest employers in the country after the agriculture sector. As many as 60 million people are employed in the sector, which contribute to eight per cent of India's Gross Domestic Product and 40 per cent of exports.
The working of SIDBI needs to be more transparent with its lending profile for priority sector made public every month. Is it too much we are asking?
We have reason to congratulate the MSME Minister who has realized the complexities and has come out with a very valid demand. The sector would remain indebted to the Minister if the SIDBI is made answerable to the sector. Better late than never!
Read The Last Word -2 : Ganga: Can Batters become Saviours?
http://www.smeworld.org/story/last-word/ganga-can-batters-become-saviours.php
1 Comments >>
Raj Pathak
16 May 2011 (04:14:24)
Minister needs a pat so do you for raising this very important issue of "Role of SIDBI" over last 2 decades of its being formed.I think all media people and others who wish good of the MSME sector should demand a "White Paper" on the role of SIDBI.Not only SIDBI the role of CGTSME is also doubtful.The Govt established CGTMSE for lending collateral free laons to first generation entrepreneurs and i speak from insiders knowledge that large chunk of the CGTMSE Scheme goes to existing enterprises and NOT to first generation entrepreneurs.
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The Last Word
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