FINANCING SOURCES FOR FINANCING SOURCES FOR SMALL SCALE INDUSTRIESSMALL SCALE INDUSTRIES

By:Miss. Priyanka R. Wandhe

“No SSI unit can take off without monetary support.”

1. 1. Financing from Central Government:Financing from Central Government: Established Small Industries Development Bank of India (SIDBI). Operations mainly classified into 3 heads:

Indirect Finance: Provides finance to commercial banks who gives finance and enable them to provide short term loans, credit to SSI, provides bill discounting facilities.

Direct finance: Provided for setting up new units, modernisation & upgradation of existing units,for developing marketing networking, for export promotion, for infrastructure development.

Promotional & Development Activities: SIDBI aims at-: Technology upgradation, market promotion, quality management, HR

Development, guarantee free credit for long term & working capital financing.

2. Financing from State government:2. Financing from State government:State Financial corporation (SFC):State Financial corporation (SFC): Provides long Provides long term credit to SSI. Function to achieve Socio-economic term credit to SSI. Function to achieve Socio-economic goals set by State Govt. Amount financed by SFC to SSI goals set by State Govt. Amount financed by SFC to SSI is 73% of total sanctions to SSI.is 73% of total sanctions to SSI.

State Small Industries Development corporation State Small Industries Development corporation (SSIDC):(SSIDC): Provides assistance to small cottage and tiny Provides assistance to small cottage and tiny industries to procure & distribute scarce raw materials, industries to procure & distribute scarce raw materials, hire purchase facilities to purchase machinery.hire purchase facilities to purchase machinery.

State Industrial Development Corporation State Industrial Development Corporation (SIDIC):(SIDIC):

Undertaking wholly owned by State Govt. Acts as a Undertaking wholly owned by State Govt. Acts as a catalyst for state wise industrial development.catalyst for state wise industrial development.

Mainly engaged in infrastructure development. Mainly engaged in infrastructure development.

3. Financing from Banks: 3. Financing from Banks: From Commercial Banks: Gives priority to finance From Commercial Banks: Gives priority to finance short, medium & long term needs of SSI. They provide short, medium & long term needs of SSI. They provide finance in the following ways:- cash credit, bill finance in the following ways:- cash credit, bill discounting & purchasing, term loans, demand loans.discounting & purchasing, term loans, demand loans.

Regional Rural Banks (RRB): To develop rural Regional Rural Banks (RRB): To develop rural economy by financing agricultural & rural activities. economy by financing agricultural & rural activities. Provides major loans to rural artisians, village & Provides major loans to rural artisians, village & cottage industries.cottage industries.

Co-operative Banks: Finances the SSI in urban areas Co-operative Banks: Finances the SSI in urban areas and gives credit to priority sector.and gives credit to priority sector.

4. Financing from statutory Boards: 4. Financing from statutory Boards: Set up to ensure co-ordination between SSISet up to ensure co-ordination between SSI sector, various financial institutions & Govt.sector, various financial institutions & Govt. It renders advice to the Govt. on variousIt renders advice to the Govt. on various policy matters & other issue of SSI.policy matters & other issue of SSI.

5. 5. Financing by statutory Corporations:Financing by statutory Corporations:

National Small Industries Corporation (NSIC):National Small Industries Corporation (NSIC): Provides assitance in export, training in industrial Provides assitance in export, training in industrial

trade, marketing support, supply of indeginous & trade, marketing support, supply of indeginous & imported machines on hire purchase or leasing imported machines on hire purchase or leasing basis.basis.

North Eastern Development Finance North Eastern Development Finance Corporation Limited (NEFDI): Corporation Limited (NEFDI): Provides research Provides research facilities. It helps for international funding.facilities. It helps for international funding.

Khadi and Village Commission (KVIC):Khadi and Village Commission (KVIC):

Finance schemes are:-Finance schemes are:-

a). a). Interest subsidy scheme of bank finance:Interest subsidy scheme of bank finance: (Interest subsidy eligibility certificate) can raise loans from (Interest subsidy eligibility certificate) can raise loans from

bank to the extent of amount mentioned in the certificate, bank to the extent of amount mentioned in the certificate, can be used for short & long term finance.can be used for short & long term finance.

b). b). Margin Money schemeMargin Money scheme: Commercial banks & State KVI : Commercial banks & State KVI provides margin money to the enterpreneurs of mainly provides margin money to the enterpreneurs of mainly village industry.village industry.

6. Additional State Govt. Agencies:6. Additional State Govt. Agencies:State Commissioner or Director of Industries & State Commissioner or Director of Industries & District Industries Centres (DIC):District Industries Centres (DIC):

Implements the Govt. policies for development of Implements the Govt. policies for development of SSI.SSI.

Set up to implement centrally sponsored scheme. Set up to implement centrally sponsored scheme.

Recently, set up single window clearance system for Recently, set up single window clearance system for the benefit of SSI enterpreneurs.the benefit of SSI enterpreneurs.

7. Other Agencies:7. Other Agencies:Non Govt. organisation (NGO): Non Govt. organisation (NGO): Registered under Registered under Society’s Registrations Act & they are non profit Society’s Registrations Act & they are non profit organisations.organisations.

Involved in various activities like:-Involved in various activities like:- Training of management assistants, setting up of Training of management assistants, setting up of

testing centres, etc.testing centres, etc.

Housing Urban Development Corporation Ltd. Housing Urban Development Corporation Ltd. (HUDCO): (HUDCO): Helps in the infrastructure development Helps in the infrastructure development for SSI.for SSI.

THANK YOUTHANK YOU