Chairman and Managing Director’s Statement

The financial year 2021 has proved to be very difficult from its previous years mainly due to onset of the dreaded coronavirus. This besides impacting and posing a grave threat for the humanity has also affected the livelihood and the economies in general. India is no exception and had to bear the brunt of this pandemic.

The resilience that the Indian economy has displayed during the COVID pandemic has reinforced my faith in its strong fundamentals and its capacity to bounce back from hardship.

The pandemic has impacted us gravely, but the prompt response to this adversity will define our future growth journey. Proactive measures from the Government, RBI and other stakeholders have been instrumental in the success of our fight-back. I am convinced that there could not have been a better opportunity than now, to ignite the transformational journey of a self-reliant India under the Atmanirbhar Bharat Mission. A growth journey based on our own capabilities and internal strength will be more inclusive and, undeniably, more stable.

At SIDBI, we have focused on supporting the MSMEs during the crises spawned by COVID; the most prominent and satisfying achievement of our organization is that we have been able to support MSMEs, Financial Intermediaries and other stakeholders through myriad initiatives. We concentrated on providing customized solutions for the varied needs of MSMEs. With the onset of the pandemic in March 2020, the Bank was one of the first institutions to introduce specialized funding schemes at softer rates to support those MSMEs directly engaged in fighting the pandemic. We continued these efforts and rolled out additional schemes when the second wave of the pandemic struck. In these challenging times, more than ever, the promotional and developmental role of the Bank stand geared towards promoting entrepreneurship, engaging with stakeholders and handholding budding entrepreneurs.

The COVID pandemic has been the biggest driver of tech adoption on all fronts, be it in the lending space or in market-connect for business. The Bank, as the apex financial institution of the MSME sector, too has shifted gears, enhancing technology adoption for lending operations, as well as initiating constructive engagements on the digital front with stakeholders so as to create an enabling digital ecosystem for MSMEs. Aligning our efforts with the Government and regulator’s digital initiatives, we aim to become a digital Bank in Direct and Institutional lending for MSMEs.

I am proud of the mettle that the Bank’s employees have displayed in the face of adversity, and would like to thank them all for their commendable efforts to serve the MSME sector even better.

Financial Performance

Despite the challenges posed by the pandemic, the Bank has continued its growth trajectory during the fiscal. Key financial highlights are as below:

• The Asset Base of the Bank stood at ₹1,92,322 crore at the end of FY 2021, a Y-o-Y growth of 2.6%
• Loans and Advances stood at ₹1,56,233 crore at the end of FY 2021, a decline of 5.6% as compared to FY 2020.
• Net Interest Income for FY 2021 grew by 11.5% to ₹3,678 crore, driven by a 0.10% growth in Net Interest Margin.
• The Bank registered its highest ever Net Profit of ₹2,398 crore during FY 2021, an increase of 3.6% as compared to FY 2020.
• Earnings per Share (EPS) increased to ₹45.09 in FY 2021 from ₹43.51 in FY 2020.

Business Performance

Institutional Finance accounts for 92% of the total outstanding portfolio of the Bank, which includes Refinance to Banks & FIs (84%), Assistance to NBFCs (7%) and Assistance to MFIs (1%). As at end of FY 2021, the Institutional Finance book stood at ₹1,44,628 crore, with 31 commercial banks, 10 SFBs, 71 NBFCs and 78 MFIs as live customers.

The Bank also provided liquidity support to financial intermediaries under RBI Special Liquidity Facility (SLF) Tranche-I of ₹15,000 crore. The facility has since been utilized by the Bank. In consideration of the Bank’s request, RBI has further provided SLF-II of ₹15,000 crore to address liquidity concerns of intermediaries during FY 2022, 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 aims to assist smaller NBFCs and MFIs operating in unserved/underserved regions, directly or through intermediation, in order to reach out to a large number of MSMEs.

Direct Finance operations of the Bank have been instrumental in supporting MSMEs in these challenging times. The Bank addresses varied needs of MSMEs with its wide product bouquet and partnership arrangements, through simple processing and quick turnaround time. During the fiscal year, the outstanding portfolio under Direct Finance (excluding RFS) grew by 17.4% to ₹11,581 crore, and the customer base increased by 19.9% to 7,910. The highlight of the operations during the fiscal was specialised products rolled out at softer rates to help MSMEs stand up to the pandemic. The Bank also rolled out two new schemes to support MSMEs during the second wave, viz., SHWAS and AROG.

As I mentioned, going forward, we aim to provide a seamless digital credit experience to MSMEs from loan origination to credit delivery with the use of data and superior risk modelling in both credit underwriting as well as monitoring stages.

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, 2021, under FFS, cumulative approvals to the tune of ₹5,409.45 crore and disbursements of ₹1,484.75 crore have been made to 71 AIFs. Under UP Startup Fund, as on March 31, 2021, ₹20 crore have been committed to two AIFs.

Promotional and Developmental Initiatives

The Promotional and Development 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. A slew of initiatives is being undertaken under P&D operations for kindling entrepreneurship in youth, and towards inclusive and innovative engagements for reaching out to micro and budding entrepreneurs in the underserved segment. We have an umbrella mission, Swavalamban, under which various initiatives are undertaken to transform the youth from being job seekers to job creators, from being dependent on others to becoming self-reliant, from being employees to becoming entrepreneurs – in short, becoming Swavalambi.

The five pillars of Mission Swavalamban, viz., Sampark, Samwad, Suraksha, Sampreshan and Sangam, are the key guiding themes of the Bank’s P&D activities. As the name suggests, initiatives are set-up under each guiding theme, and then stepped-up depending on the impact and scalability of the initiative. These initiatives are undertaken by leveraging the visible networks at the national, regional and local levels, and the outcomes are aligned with the national/state development missions.

Some key initiatives that have been scaled up include setting up of Swavalamban Silai Schools in partnership with Usha International in 1,638 villages, Swavalamban Connect Kendra in 100 districts, organizing 15 E-Udyam Sangyan on new-age digital platforms and corporate governance, organizing Bank Sakhi Programme in 36 districts of Bihar, setting up Swavalamban walls and clubs in colleges, bringing the EU Switch Asia Bamboo Project to nine backward states including five in NER, holding the Swavalamban Mela, etc.

The Bank has also set up Project Management Units in 11 states for strengthening the MSME ecosystem and for transferring good practices of one state to another through learning sessions. The Swavalamban Crisis Responsive Fund set up by the Bank aims to support free on-boarding of MSMEs on the TReDS platform. The Bank has on-boarded 11,600-plus MSMEs on the TReDS platform. We shall continue to explore new initiatives to address non-financial needs of the MSME ecosystem.

As I mentioned, going forward, we aim to provide a seamless digital credit experience to MSMEs from loan origination to credit delivery with the use of data and superior risk modelling in both credit underwriting as well as monitoring stages.

Thought Leader & Facilitator Role

As a Thought Leader, we have 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 MSMEoriented schemes. Apart from schemes such as CLCSS, MSME-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.

Subsidiaries/Associates Network

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 channelled credit to 51.42 lakh MSE loan accounts, with loan amount of ₹2.58 lakh crore disbursed as on March 31, 2021. MUDRA has provided refinance support of ₹12,303 crore during FY 2021, with special focus on NBFC and NBFC-MFIs. The RXIL TReDS platform has financed over 4,96,102 invoices, aggregating to ₹10,318.93 crore. SVCL currently acts as the investment manager for eight funds, with an outstanding corpus of ₹794 crore as of March 31, 2021. Rating agency ACUITÉ has assigned 50,000-plus SME ratings and 8,700-plus Bank Loan Ratings up to March 31, 2021. On the PSBLoansin59minutes platform, 3.97 lakh MSMEs have obtained inprinciple approvals from the lender, out of which 3.15 lakh MSMEs have obtained their final sanctions as on March 31, 2021.

Way Ahead

Going forward, we will continue to explore new engagements for the holistic development of the MSME sector, and will work to ensure that the growth journey of MSMEs in the wake of the pandemic is smooth and robust. At organizational level, our focus will be to enhance our reach through technology adoption and the skill enhancement of our employees.