Chairman and Managing Director’s Statement
With GDP increasing by 8.7% in FY 2022 compared to a fall of 6.6% in FY 2021, the Indian economy is beginning to show signs of a secular recovery. The growth has been supported by increased expenditure towards infrastructure by GoI, strong crop production, buoyant export growth and the supportive policy of the Reserve Bank of India (RBI).
Contact-intensive sectors are also witnessing pick-up in activity due to opening of the economy and vaccination of around 90% of Indian population, with inoculation continuing to be an active work-in-progress. Fiscal policy, focussed on mitigating the adverse impact of COVID pandemic and stepping up capex are likely to guide India in achieving a stable, self-reliant economy with strong fundamentals.
We, at SIDBI, are working towards strengthening and deepening the MSME sector and making it a strong foundation for the recovering economy. SIDBI aims at growing its balance sheet to ₹ 5 trillion in the next two years, and facilitating credit to MSME sector to that effect, in line with the GoI vision of making India a USD 5 trillion economy. Concerted efforts are being made by the Bank to achieve the vision. The Bank has been actively engaging with various stakeholders for development of the MSME ecosystem, simplifying credit delivery and positioning MSMEs as the champions of growth.
Advent of digital lending, supported by advancements in technology is playing an important role in bringing long overdue change in MSME credit narrative. Taking cognizance of the evolving times, the Bank has sharpened focus on making available technology driven financial instruments, products and systems. SIDBI has been pioneer in developing digital interventions like PSBLoansin59minutes and Receivables Exchange of India (RXIL) (TReDS platform). Bringing convergence in the developmental and financing roles of the Bank, SIDBI is developing new channels for credit intervention. One such channel, GST Sahay, a first reference app for invoice-based financing (not invoice discounting) for small businesses, is under development.
Another digital intervention aimed by the Bank is the MSME Formalisation Project, targeted to provide MSMEs better digital access to Governance, Markets and Financial Services through an Udyam Assist Portal for inclusive onboarding of all MSMEs particularly informal sector. Udyam registration is expected to open new doors to informal sector to get financial assistance from banks/institutions, subsidy/incentives, etc. from Government and avail various other benefits under different schemes of Central Government/State Government. Additionally, SIDBI has also been streamlining and digitising its own credit processes creating an end-to-end solution starting from enquiry of loan to disbursement. The goal has been set to reduce the turnaround time and provide low-cost credit to the MSMEs.
SIDBI’s MSME development agenda is being carried forward on the strong base of its employees who have re invented and re-oriented themselves in catering to the MSME sector in these challenging times.
Despite the challenges posed by the pandemic, the Bank has continued its growth trajectory during the fiscal. Key financial highlights are as below:
Institutional Finance accounts for approximately 93% of loans & advances of the Bank. Outstanding under Institutional Finance was at ₹1,87,885 crore at the end of FY 2022 which includes Refinance to Banks & SFBs (88.79%), Assistance to NBFCs (9.55%) and Assistance to MFIs (1.66%).
In consideration of the Bank’s request, RBI had further provided SLF-II of ₹15,000 crore to address liquidity concerns of intermediaries, and SLF III of ₹16,000 crore for innovative schemes to meet short-and medium-term needs of the MSME sector, especially smaller MSMEs, in credit deficient and aspirational districts. Under SLF-III, the Bank has assisted smaller NBFCs and MFIs operating in unserved / underserved regions, directly or through intermediation, in order to reach out to larger number of MSMEs. The Bank has launched special schemes in FY 2022 viz., ‘SIDBI MSME COVID Response Fund (SMCRF)’ with total corpus size of ₹1,000 crore to provide funding to MSMEs / small businesses / Microfinance borrowers through investment in debt instruments of financial institutions (FIs) such as NBFCs, Fintech companies and Microfinance companies, Partial Guarantee Pool Loan Issuance Scheme wherein the Bank would provide loan to well managed and performing multiple small and mid-sized NBFCs and MFIs, which would be backed by a common partial guarantee provided by a third party / arranger, Scheme of Assistance through Regulated Entities (REs) using two-tier financial Intermediation will provide resource support to rated REs (NBFCs, MFIs, banks / SFBs) for on-lending to relatively smaller and unrated / low rated NBFCs / MFIs.
Direct Finance operations of the Bank during FY 2022 has focussed on continuous improvements / refinements in end-to-end digital credit process integrated across pre-origination, online application, due diligence/ e-KYC, underwriting, sanction, disbursal, monitoring to achieve quicker and parameterised credit dispensation with enhancement in customer delight. In FY 2022, the direct credit portfolio has grown more than 22%. The Bank has been able to achieve significant growth in sanction, disbursements, outstanding and the customer base.
Under venture capital operations, the Bank is running Fund of Funds for Startups (FFS), ASPIRE Fund (AF) and UP Startup Fund. As on March 31, 2022, under FFS, SIDBI has achieved cumulative sanctions of ₹7,225.45 crore and disbursements of ₹2,492.24 crore to 86 AIFs.
The Promotional and Development (P&D) activities of the Bank are woven around strengthening the enterprise value chain by addressing financial and non-financial gaps in the MSME ecosystem, especially at the bottom of the pyramid. All the initiatives have been woven around Mission Swavalamban, which is an umbrella framework for inducing entrepreneurship culture and supporting various livelihood and entrepreneurship programmes.
A slew of initiatives have been undertaken under P&D operations for kindling entrepreneurship in youth, and towards inclusive and innovative engagements for reaching out to micro-entrepreneurs and budding entrepreneurs in the underserved segment. Some of the key initiatives include –
As a Thought Leader, Bank has embarked upon several initiatives in partnership with the credit bureau to address information asymmetry in the ecosystem. Our Knowledge products, viz., “MSME Pulse”, “Microfinance Pulse”, “CriSidEx”, “Industry Spotlight” and “Fintech Pulse”, are designed to provide key data insights to policymakers and stakeholders. These are being published in various Indian languages to reach a larger audience.
The Bank plays an important role in implementation of the Government’s MSME-oriented schemes. Apart from schemes such as CLCSS, MSE-CDP, Interest Subvention Schemes and the Partial Credit Guarantee Scheme, the Bank has been assigned the role of implementation partner under PMSVANidhi Scheme of MoHUA, GoI, as well as the Animal Husbandry Infrastructure Development Fund (AHIDF) Scheme of MoFAHD, GoI, Project Management Agency for Production Linked Incentive (PLI) Scheme for manufacturing of Telecom and Networking Products of Department of Telecom and Production Linked Incentive (PLI) Scheme for Pharmaceuticals of Department of Pharmaceuticals.
I would like to acknowledge the role of Associate and Subsidiary networks of the Bank, which creates the all-encompassing MSME ecosystem for meeting varied needs of the sector. CGTMSE has cumulatively helped in creating 58.59 lakh MSE loan accounts for loan amount of ₹3.14 lakh crore till March 31, 2022. The units supported by CGTMSE have generated employment to the tune of 155 lakh and contributed ₹24,033 crore towards exports. MUDRA has extended cumulative financial assistance by way of Refinance of ₹53,051 crore in last 7 years to various Member Lending Institutions (MLIs). The RXIL TReDS platform has financed 13,62,327 invoices, aggregating to ₹23,735 crore. SVCL currently acts as the investment manager for eight funds. SVCL is in the process of setting up 3 new Funds, of which 2 Funds are being setup with the Government of Assam and Government of Tripura and the other Fund is a Pan India Fund. Rating agency Acuité has assigned more than 9,000 credit ratings (as on March 31, 2022) to various securities, debt instruments and bank facilities of entities spread across industries in India. On the PSBLoansin59minutes platform, since its launch, 5.01 lakh MSMEs have received In-principle approval of loans of which 3.64 lakh MSMEs have received final sanction of credit facilities from the lenders registered on the platform. Thus, the platform has become a significant digital intervention in providing credit to MSMEs with scope for new interventions in line with an evolving and expanding digital landscape.
We will continue to explore new engagements for the development of the MSME sector. Formalisation of informal sector is high on the agenda of SIDBI to enable these informal enterprises to avail various benefits of government schemes. Leveraging technology for focussed interventions to create a culture of entrepreneurship is the future that needs realisation and SIDBI is committed to delivering the same.
Board of Directors of SIDBI
