loan policy sidbi

8/10/2019 Loan Policy Sidbi

1/34

1

AppendixAppendixAppendixAppendix IIII

LOAN POLICYLOAN POLICYLOAN POLICYLOAN POLICY FY 2014FY 2014FY 2014FY 2014

PARAPARAPARAPARA

NO.NO.NO.NO.

CONTENTSCONTENTSCONTENTSCONTENTS PAGEPAGEPAGEPAGE

NO.NO.NO.NO.1111 OVERVIEWOVERVIEWOVERVIEWOVERVIEW 3

1.1 PREFACE 3

1.2 FRAMEWORK OF THE LOAN POLICY 4

1.3 OBJECTIVES OF THE LOAN POLICY 5

1.4 OVERVIEW OF LOAN POLICY 5

1.5 VALIDITY/ AUTHORITY OF LOAN POLICY 6

2222 CREDIT MANAGEMENT POLICYCREDIT MANAGEMENT POLICYCREDIT MANAGEMENT POLICYCREDIT MANAGEMENT POLICY 6

2.1 PRODUCT MANAGEMENT 6

2.2 PROCESS MANAGEMENT 7

2.3 WORKING CAPITAL ASSISTANCE 9

3333 EQUITY & RISK CAPITAL ASSISTANCEEQUITY & RISK CAPITAL ASSISTANCEEQUITY & RISK CAPITAL ASSISTANCEEQUITY & RISK CAPITAL ASSISTANCE 9

3.1 INTRODUCTION 9

3.2 PRODUCT PROFILE 11

3.3 DUE DILIGENCE 12

4444 ASSISTANCE FOR SERVICE SECTASSISTANCE FOR SERVICE SECTASSISTANCE FOR SERVICE SECTASSISTANCE FOR SERVICE SECTOROROROR 12

4.1 INTRODUCTION 12

4.2 ELIGIBLE BORROWERS 12

4.3 THRUST BUSINESS AREAS 13

4.4 APPROACH TO FINANCING SERVICE SECTOR 12

5555 ASSISTANCE FOR ENERGY EFFICIENCYASSISTANCE FOR ENERGY EFFICIENCYASSISTANCE FOR ENERGY EFFICIENCYASSISTANCE FOR ENERGY EFFICIENCY 14

5.1 INTRODUCTION 14

5.2 OBJECTIVES 14

5.3 THRUST BUSINESS AREAS : DIRECT FINANCE 145.4 SUSTAINABLE FINANCE SCHEME 15

6666 ASSISTANCE FOR RECEIVABLE FINANCEASSISTANCE FOR RECEIVABLE FINANCEASSISTANCE FOR RECEIVABLE FINANCEASSISTANCE FOR RECEIVABLE FINANCE 16

6.1 INTRODUCTION 16

6.2 THRUST BUSINESS AREAS 17

6.3 PRODUCT RATIONALISATION 17

7777 INDIRECT LENDINGINDIRECT LENDINGINDIRECT LENDINGINDIRECT LENDING 18

7.1 INTRODUCTION 18

7.2 ASSISTANCE TO STATE FINANCIAL CORPORATIONS (SFCs) 18

7.3 MONITORING OF SFCs 18

7.4 ASSISTANCE TO SCHEDULED COMMERCIAL BANKS 18

7.5 ASSISTANCE TO SCHEDULED COOPERATIVE BANKS (SCBs) &REGIONAL RURAL BANKS (RRBs) 19

7.6 ASSISTANCE TO SIDCs/SIICs 19

7.7 ASSISTANCE TO NBFCs 19

8888 ASSISTANCE FORASSISTANCE FORASSISTANCE FORASSISTANCE FOR INFRASTRUINFRASTRUINFRASTRUINFRASTRUCTURE PROJECTSCTURE PROJECTSCTURE PROJECTSCTURE PROJECTS 20

9999 SIDBI FOUNDATION FOR MICRO CREDIT (SFMC)SIDBI FOUNDATION FOR MICRO CREDIT (SFMC)SIDBI FOUNDATION FOR MICRO CREDIT (SFMC)SIDBI FOUNDATION FOR MICRO CREDIT (SFMC) 21

9.1 INTRODUCTION 21

9.2 FOCUS OF SFMC LOAN POLICY 21

9.3 PRODUCT PROFILE 21


2/34

2

10101010 CREDIT RISK MANAGEMENTCREDIT RISK MANAGEMENTCREDIT RISK MANAGEMENTCREDIT RISK MANAGEMENT 22

10.1 CREDIT RISK STRATEGY 22

10.2 RISK MEASUREMENT 23

10.3 RISK MITIGATION 23

10.4 EXTERNAL RATINGS 24

10.5 PRICING 2410.6 MANAGEMENT OF ASSET CONCENTRATION 24

11111111 CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION 26

ANNEXUREANNEXUREANNEXUREANNEXURE IIII: BENCHMARKS FOR SANCTION AS APPLICABLE FOR GENERALPURPOSE TERM LOANS

27

ANNEXUREANNEXUREANNEXUREANNEXURE II :II :II :II : TERM LOAN TO MFIs & LOAN TO NBFCs FOR ONLENDING TOMICRO ENTERPRISES/MISSING MIDDLE

29

ANNEXUREANNEXUREANNEXUREANNEXURE ---- IIIIIIIIIIII: HIGHER INVESTMENT GRADE RATINGS SELECT SECTORS 32

ANNEXUREANNEXUREANNEXUREANNEXURE IIIIVVVV: EXPOSURE CAPS 33


3/34

3

LOAN POLICYLOAN POLICYLOAN POLICYLOAN POLICY FY 201FY 201FY 201FY 2014444

1. OVERVIEW1. OVERVIEW1. OVERVIEW1. OVERVIEW

1111....1111 PREFACEPREFACEPREFACEPREFACE

The significant role played by the Micro, Small and MediumEnterprises [MSMEs] in the Indian Economy is well known. MSMEsare considered to be the nurseries for entrepreneurship, oftendriven by individual creativity and innovation, and makesignificant contributions to Indias GDP, manufacturing output,exports and employment generation. The MSME sector is thesecond largest contributor to countrys GDP. The geographicdistribution of the MSMEs is also more even. MSMEs are importantfor the national objectives of growth with equity and inclusion. The

Report of the Prime Ministers Task Force on MSMEs (January2010), recommended that all the scheduled commercial banksshould achieve a 20% growth in credit year-on-year to micro andsmall enterprises and 15% in number of micro enterprisesaccounts.

In order to address the challenges of the MSMEs to scale up theirperformance and competitiveness, the Bank has adopted a multi-pronged approach to meet their requirement of capital, receivablefinance, reduced energy consumption, infrastructure (in thecluster), etc., through various instruments/products of assistance.

The new Business Plan of the Bank has identified followingactivities to be the thrust/niche business areas:

Energy efficiency, clean technologies and sustainable financing

Equity products like Risk Capital (including structured debt),contribution to funds, etc.

Service sector

Receivable finance and factoring services

Indirect lending viz. refinance to banks/ Financial Institutions(FIs), assistance to non-banking finance companies (NBFCs),resource support to public financial institutions (PFIs) and

public sector undertakings (PSUs) benefiting MSME sector, etc.

Infrastructure finance

Loan facilitation and syndication

The business of the Bank has been divided into broad products/business streams on the above lines. While the Bank will maintainits emphasis on financing niche areas, it shall continue to provide


4/34

4

financial assistance to all eligible MSMEs to meet their various otherneeds including term lending, working capital financing [both fundbased and non-fund based] and meeting other fund requirements.For manufacturing enterprises, a list of equipments to be excludedfor ascertaining the eligible investment in plant and machinery isalready notified under MSMED Act.

1111....1111....1111The Bank has put in place risk assessment tools for credit ratingwhich have enabled it to directly reach out to smaller customers inthe MSME segment by cutting down the appraisal and processingtime. Meanwhile, with the advent of global standards for riskmanagement, RBI has suitably adopted need based changes inthe risk management practices in the Indian banking system.

1111....1111....2222 Micro, Small and Medium Enterprises Development (MSMED) Act,Micro, Small and Medium Enterprises Development (MSMED) Act,Micro, Small and Medium Enterprises Development (MSMED) Act,Micro, Small and Medium Enterprises Development (MSMED) Act,2006200620062006

The definitions adopted for manufacturing and service sector

activities under MSMED Act are as under:

Further

The activities being financed/to be financed by the Bank, in linewith the new business plan, would include enterprises eligibleunder the definition of MSMED Act, both manufacturing andservice enterprises and also, other Service sector projects asapproved by the Bank.

1.21.21.21.2 FRAMEWORK OF THE LOAN POLICYFRAMEWORK OF THE LOAN POLICYFRAMEWORK OF THE LOAN POLICYFRAMEWORK OF THE LOAN POLICY

1.2.1.2.1.2.1.2.1111 The Policy lays down broad approach, which the Bank adopts inrespect of different credit processes, credit risk management,control and monitoring and is supplemented by specificcirculars, manuals, guidelines issued from time to time. Thepolicy will be amended from time to time in the light ofchanging business and economic environment and will bereviewed annually. The focus of the Loan Policy 201Loan Policy 201Loan Policy 201Loan Policy 2014444 is onquality asset growth, coupled with growth in income in eachsegment of business, maintaining the focus on customer needs.

1.2.21.2.21.2.21.2.2 Looking into the increasing competition and the resultantmargin pressures, the Bank would also put in place a suitablestrategy to rapidly develop and increase the size and scope of

EnterpriseEnterpriseEnterpriseEnterpriseCategoryCategoryCategoryCategory

ManufacturingManufacturingManufacturingManufacturing(Original Investment in(Original Investment in(Original Investment in(Original Investment in

P&M)P&M)P&M)P&M)

ServicesServicesServicesServices(Original Investment in(Original Investment in(Original Investment in(Original Investment in

Equipment)Equipment)Equipment)Equipment)

Micro Up to `25 lakh Up to `10 lakh

Small Upto `500 lakh Upto `200 lakh

Medium Upto `1000 lakh Upto `500 lakh


5/34

5

its portfolio for generating non-interest / fee based income. Asregards indirect finance business, cautious dispensation ofcredit with regard to state level institutions would continue.

1.2.1.2.1.2.1.2.3333 The Loan Policy covers rupee as well as forex lending, riskcapital and micro finance operations of the Bank. Operationsunder Banks Treasury are excluded from the purview of thispolicy, as separate dispensation is required for Treasuryoperations.

1.2.1.2.1.2.1.2.4444 TTTThe Bank would provide financial assistance to MSMEs for theeligible activities, irrespective of the nature of constitution ofthe enterprise. Accordingly, assistance could be extended bythe Bank to an individual, proprietorship, association of persons,partnership firm, limited liability partnership, company, societyor trust.

1.31.31.31.3 OBJECTIVES OF THE LOAN POLICYOBJECTIVES OF THE LOAN POLICYOBJECTIVES OF THE LOAN POLICYOBJECTIVES OF THE LOAN POLICY

The broad objectives of the Loan Policy of the Bank are outlinedhereunder:

(i) To build and sustain a high quality credit portfolio welldiversified in terms of clients, markets and products with anacceptable risk adjusted yield.

(ii) To establish a comprehensive credit strategy to fulfill theCorporate mandate as per the SIDBI Act, 1989, amended fromtime to time, and undertake all such activities, directly orindirectly, that support MSME sector.

(iii) To encourage various functionaries to innovate and evolvecompetitive products based on market requirements.

(iv) To promote inclusive growth through micro finance and riskcapital.

(v) To strengthen the risk management systems for appropriatepricing of credit risks and ensure close monitoring of thecredit portfolio so as to prevent fresh slippages into NPAs.

(vi) To build strong alliances with intermediaries for tapping newbusiness.

1111....4444 OVERVIEW OF LOAN POLICYOVERVIEW OF LOAN POLICYOVERVIEW OF LOAN POLICYOVERVIEW OF LOAN POLICY

The strategy for lending takes into account the Banks approachfor developing a healthy credit portfolio, its management and riskmitigation. Accordingly, the Loan Policy of the Bank broadly coversthe following broad aspects:

Business Policy of Verticals

Credit Management Policy

Credit Risk Management


6/34

6

There continues to be demand for indirect credit from the bankingsector in general. The strategy would be to raise resourcescompetitively given the Banks unique position as the principalfinancial institution for the MSME sector and meet the creditdemand from the banking sector, to the extent possible.

1.51.51.51.5 VALIDITY/ AUTHORITY OF LOAN POLICYVALIDITY/ AUTHORITY OF LOAN POLICYVALIDITY/ AUTHORITY OF LOAN POLICYVALIDITY/ AUTHORITY OF LOAN POLICY1.5.11.5.11.5.11.5.1 The Loan Policy is the principal document for the credit

operations of the Bank, duly approved by the Board of Directorsand is expected to serve as the guiding document for the Bank.

1.5.21.5.21.5.21.5.2 This Loan Policy shall remain in force till the next revision iscarried out and disseminated, which will be on annual basis.

1.5.31.5.31.5.31.5.3 The Regional Offices (ROs)/ Central Loan Processing Cells (CLPCs)/Branch Offices (BOs) including XBOs are authorised to act uponthis Policy on its issuance by Head Office (HO). Clarifications /further guidelines, if needed, would be issued by Risk

Management Vertical (RiMV)/concerned Business Vertical, HO.1.5.1.5.1.5.1.5.4444 The Loan Policy guidelines will be applicable to all the credit

facilities extended to various customers by different verticals.

1.5.51.5.51.5.51.5.5 The Bank will abide by all the guidelines, directives and advices ofReserve Bank of India as may be in force from time to time. Theguidelines in this document should be read in conjunction with theoperational guidelines on the various products/business lines andthe circulars / master circulars / credit manual compiling theprocedural aspects of credit appraisal, processing, sanction,documentation, etc.

2.2.2.2. CREDIT MANAGEMENT POLICYCREDIT MANAGEMENT POLICYCREDIT MANAGEMENT POLICYCREDIT MANAGEMENT POLICY

The business development strategy would be supported by aprudent Credit Management Policy. The market demand toimprove products & processes would be balanced with exercise ofsufficient control on the credit delivery processes so that exerciseof prudence is not sacrificed.

2222.1.1.1.1 PRODUCT MANAGEMENTPRODUCT MANAGEMENTPRODUCT MANAGEMENTPRODUCT MANAGEMENT

2.1.12.1.12.1.12.1.1 BenchmarkBenchmarkBenchmarkBenchmarkssss for Sanctionfor Sanctionfor Sanctionfor Sanction::::

The benchmarks for sanction [BfS] applicable to term loans, ingeneral, are given in Annexure IAnnexure IAnnexure IAnnexure I. The parameters of lending viz.,debt equity ratio, total outside liabilities/tangible net worth,promoters contribution/margin, debt service coverage ratio, assetcoverage ratio, loan repayment period, moratorium, etc., would bevaried for different products, to suit the requirement of differentsectors/ borrower segments.


7/34

7

However, no deserving and bankable proposal shall be deniedfinancial assistance for the mere fact that it falls short ofBenchmarks for Sanction/parameters of schemes.

2222....1111....2222 Facilitation for Product Development /InnovationFacilitation for Product Development /InnovationFacilitation for Product Development /InnovationFacilitation for Product Development /Innovation

The Bank has put in place a suitable mechanism to understandthe business needs of the customer and address them swiftly.Accordingly, Product Innovation and Review Committee (PIRC) atthe HO level considers and approves product innovations and theirtest marketing. A suitable exposure cap could also be fixed forsuch test marketing proposals to be monitored by the BOs/ROsconcerned.

Apart from approving products, PIRC also approves structuring ofspecific arrangements in a cluster or around a large corporate/OEM where several MSMEs are expected to be benefited. Sucharrangements could have different dispensations than those

followed for regular credit products.

The areas generally expected to be amenable to productinnovation are service sector segments like organised retailing, IT& IT enabled services, entertainment, cash flow/ rent discounting,cash flow management products for MSME segment, clusterspecific products, etc.

2222.1..1..1..1.3333.... Coverage under CGTMSECoverage under CGTMSECoverage under CGTMSECoverage under CGTMSE

The credit facilities up to `100 lakh to the eligible MSE customerswould be generally covered under CGTMSE Scheme. In case, aneligible proposal is not getting covered under the CGTMSE

Scheme, justification may be given in the appraisal note whileputting up the proposal to the sanctioning authority (including acomparison of proposed security vis--vis the cover availableunder CGTMSE Scheme or other reasons, if any).

2222.1..1..1..1.4444.... CrossCrossCrossCross----selling with Government Schemesselling with Government Schemesselling with Government Schemesselling with Government Schemes

The products of the Bank would also be dovetailed with theschemes of Government of India and state governments,wherever feasible, to improve the viability of the assisted projectsand growth in overall asset base of the Bank.

2222.2.2.2.2 PROCESS MANAGEMENTPROCESS MANAGEMENTPROCESS MANAGEMENTPROCESS MANAGEMENT

2222.2.1 Delegation of Powers.2.1 Delegation of Powers.2.1 Delegation of Powers.2.1 Delegation of Powers

The key tool for managing the internal processes of the Bank isthe Delegation of Powers (DoP) to the Credit Committees and theindividual functionaries of the Bank. It also puts in place suitablesystem of checks and balances in the credit related decisionprocesses.


8/34

8

2222.2.2 Appraisal process.2.2 Appraisal process.2.2 Appraisal process.2.2 Appraisal process

The existing appraisal process of the Bank would be followed toappraise projects and other assistance. The Credit Appraisal andRating Tool (CART) is in use in the Bank for rating and appraisal ofterm loan proposals from existing profit making units forassistance up to `200 lakh and appraisal of other credit proposalsupto `500 lakh. It has brought standardisation to the creditdecision making process and has considerably reduced theturnaround time. Loan applications outside the purview of CARTare appraised as per laid down detailed appraisal process of theBank. The existing standard formats of appraisal are already inplace in this regard. Rating of exposures above `200 lakh andthose not eligible for rating in CART is undertaken in RiskAssessment Models (RAMs). Appraisal of cash flow based termloan assistance would be carried out in Detailed AppraisalMemorandum with RAM rating.

In view of the recent downturn in the economy and relatively high

NPA levels in the sectors like Textiles, Pharmaceuticals and Iron &Steel, the Bank would adopt a cautious approach for financingunder these sectors with better risk mitigation.

There exist significant opportunities for assistance to CommercialReal Estate (CRE) projects. In view of slowdown in the economyand risks inherent in such projects, risk mitigants at project/proposal specific level would be incorporated with due care whilestructuring the assistance.

The Banks current guidelines on due diligence with regard toobtaining satisfactory credit reports, undertaking visits, duediligence of suppliers /contractors etc., checking of CIBIL databasefor consumer/commercial credit information reports, KYC and AMLnorms, checking of RBI / CIBIL defaulters list, caution advices etc.,guidelines on connected lending, multiple banking arrangements,NOC from existing lenders, etc., wherever applicable, shall befollowed.

2.2.32.2.32.2.32.2.3 Fair Practices Code forFair Practices Code forFair Practices Code forFair Practices Code for lenderslenderslenderslenders//// Code of commitment to Micro andCode of commitment to Micro andCode of commitment to Micro andCode of commitment to Micro andSmall Enterprises [MSEs]Small Enterprises [MSEs]Small Enterprises [MSEs]Small Enterprises [MSEs]:

Fair Practices Code for Lenders, as per RBI guidelines, has beenadopted by the Bank and hosted on Banks website. The Code sets

out the guidelines for processing of loan applications, appraisal,disbursement, post-disbursement supervision, etc. All informationrelating to charges/ fees for processing would be disclosed in theloan application forms. Further, the customer would be informedof all costs to be borne in sourcing finance from SIDBI. The facilityof prepayment of loans would be available and no pre-paymentcharges would be levied for loans upto `50 lakh under fixedinterest rates and no pre-payment charges would be levied forloans, irrespective of amount under floating interest rates. A


9/34

9

Grievance Redressal Mechanism has also been put in place toresolve the disputes arising out of the Fair Practices Code. TheBank has adopted the Code of commitment to Micro and SmallEnterprises of Banking Codes and Standards Board of India(BCSBI).

2.32.32.32.3 WORKING CAPITAL ASSISTANCEWORKING CAPITAL ASSISTANCEWORKING CAPITAL ASSISTANCEWORKING CAPITAL ASSISTANCE

Working Capital Assistance would be considered selectively to:

(i) existing customers who are solely banking with SIDBI(including enhancement);

(ii) existing customers of SIDBI (who are also banking with otherbanks) and have placed major share of immovable securitywith SIDBI, for renewal / enhancement;

(iii) existing well performing entities who are new to SIDBI and donot enjoy working capital facility with any other bank;

(iv) new entities where term loan is considered by SIDBI.Takeover of working capital accounts would notnotnotnot generally beencouraged.

3333 EQUITY & RISK CAPITAL ASSISTANCEEQUITY & RISK CAPITAL ASSISTANCEEQUITY & RISK CAPITAL ASSISTANCEEQUITY & RISK CAPITAL ASSISTANCE

3.13.13.13.1 INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION

3.1.13.1.13.1.13.1.1 The MSMEs have been largely dependent on the promotersresources, borrowings from friends and relatives and secured

loans from banks/financial institutions for meeting their financialrequirements. However, while promoters resources are limited,bank finance is also restricted due to various norms such as assetcoverage ratio, DER, etc., which adversely impact the flow offinancial assistance to MSMEs and in turn puts constraints on theircredit absorption capacity and consequent growth. To facilitateenhanced flow of credit to this sector, the Government and theReserve Bank of India have been taking several measures fromtime to time.

3.1.3.1.3.1.3.1.2222 Focus of Equity & Risk Capital Loan PolicyFocus of Equity & Risk Capital Loan PolicyFocus of Equity & Risk Capital Loan PolicyFocus of Equity & Risk Capital Loan Policy

SIDBI Foundation for Risk Capital for MSMEs was set up in FY

2008-09 with a view to addressing the issues related to existinggaps in the funding of MSMEs. Over last 4 years, SIDBI hasintroduced mezzanine Risk Capital products for MSMEs for variousneeds like meeting financing gaps while implementing capex,intangibles like R&D, marketing, product development expensesetc. and other bonafide financial requirements for growth. Thesimple structure has resulted in acceptance of the product byMSMEs in various geographies across the country. During the


10/34

10

year, SIDBI will continue its efforts for creating awareness of riskcapital products among MSMEs as well as the banking sector.SIDBI would also carry out policy advocacy for wider acceptanceof the products by the institutional players in the country.

In view of the above, the focus of the Equity & Risk Capital LoanPolicy for FY 2014 is aimed at improving the off-take taking intoconsideration the felt needs of the sector, building up of qualityportfolio and management of the same combined with appropriaterisk mitigation measures.

3.1.3.1.3.1.3.1.3333 Direct assistanceDirect assistanceDirect assistanceDirect assistance

The Bank provides risk capital to MSMEs using appropriate riskcapital products based on best practices being followed in otherparts of the world for providing risk capital to MSMEs. The Bankuses a mix of standardised products and structured products(where assistance is customised for each customer on a case tocase basis) for faster dispensation of risk capital to eligible

MSMEs.3.1.3.1.3.1.3.1.4444 Indirect AssistanceIndirect AssistanceIndirect AssistanceIndirect Assistance

The Bank will continue to provide risk capital to MSMEs throughseveral state level and national level venture capital funds andalso through banks and other channel partners. These venturecapital Funds would also be used as channel partners for bringingin mezzanine assistance opportunities.

3.1.3.1.3.1.3.1.5555 Assistance through focused equity funds (VCFs / PEAssistance through focused equity funds (VCFs / PEAssistance through focused equity funds (VCFs / PEAssistance through focused equity funds (VCFs / PE FundFundFundFunds)s)s)s)

The Bank also provides corpus support to MSME focused EquityFunds / Venture Capital Funds / Private Equity (PE) Funds having

relevant expertise and networking in equity transactions,monitoring and hand holding of investee companies. The Bankinvests in such funds as per the policy framework approved by theBoard under the overall guidelines stipulated by RBI from time totime.

3.1.3.1.3.1.3.1.6666 Assistance through BanksAssistance through BanksAssistance through BanksAssistance through Banks

To reach wider segment of MSMEs, efforts are being made toextend resource support to banks under Risk Capital Fund so thatthey can extend risk capital assistance to their customers....

3.13.13.13.1....7777 Partnerships for startup assistancePartnerships for startup assistancePartnerships for startup assistancePartnerships for startup assistance

The major challenge in assisting small startups is propermechanism for project validation and the effort/skill required inmentoring these Start-ups. Therefore, there is a need to develop anetwork of mentor agencies which would help banking sector toprovide credit to start up and early stage enterprises. Towards thisend, the Bank has partnered with various agencies like angelnetworks, incubators and industry bodies like NASSCOM, TiE (TheIndus Entrepreneurs), etc. for developing a framework forsupporting start-up units and would work with other organizations


11/34

11

having relevant mandates in line with the Banks Risk Capitalstrategy.

3.1.8 smallB branches for Innovation Finance3.1.8 smallB branches for Innovation Finance3.1.8 smallB branches for Innovation Finance3.1.8 smallB branches for Innovation Finance

Under the guidance of Government of India, the Bank hasintroduced a financing programme in collaboration with 10 public

sector banks for financing innovative and technology Start-ups.Under the aegis of the programme, 10 banks have opened 10smallB Innovation Finance branches at different locations spreadacross the country. The Bank has provided these branches theknow-how and operating guidelines / processes to handle suchproposals. During the year, the Bank will further strengthen andscale up the programme.

3333....2222 PRODUCT PROFILEPRODUCT PROFILEPRODUCT PROFILEPRODUCT PROFILE

3333....2222.1.1.1.1 StartStartStartStart----up Assistance Scheme (SAS)up Assistance Scheme (SAS)up Assistance Scheme (SAS)up Assistance Scheme (SAS)

The projects where revenues have commenced with productacceptability by customers are normally considered under theScheme. Assistance of a maximum of `100 lakh is considered. Theproduct could be structured flexibly to support the early stageoperations of these Start-ups....

3333....2222.2.2.2.2 Growth Capital and Equity Assistance Scheme for MSMEs (GEMS)Growth Capital and Equity Assistance Scheme for MSMEs (GEMS)Growth Capital and Equity Assistance Scheme for MSMEs (GEMS)Growth Capital and Equity Assistance Scheme for MSMEs (GEMS)

The objective of the Scheme is to provide growth capital todeserving MSMEs for:

aaaa Bridging the gap in the means of finance for expansion/

modernization/ scaling up. New businesses/ diversification byentrepreneurs with established track record can beconsidered, selectively (along-with direct finance assistance).

bbbb Intangibles or non-asset creating investments viz. productdevelopment, marketing related expenditure, R&D, etc.,besides investments in quality control/energy efficiencyequipment etc.

cccc Margin money for working capital. Normal working capitalrequirements should generally be met under normal WCarrangement. However, need based gap in WC requirements(where the customer has arrangements for major part of WCrequirements tied up) could be considered, selectively, based

on merits of the case and with justification.dddd Any other bonafide expenditure required for growth of the

business which may not qualify for assistance through normalbanking channels.

The scheme provides for faster dispensation of risk capitalthrough various instruments viz. debt based instruments likeSubordinated debt, Optionally Convertible Subordinated Debt


12/34

12

(OCSD), Optionally Convertible Debt (OCD) and OptionallyConvertible Debentures (OCDR), and also equity basedinstruments like Optionally Convertible Cumulative PreferenceShares (OCCPS) etc., to the existing customers of the Bank andalso to new customers with good past track record.

3333....3333 DUEDUEDUEDUE----DILIGENCEDILIGENCEDILIGENCEDILIGENCE

The Bank could get an independent due diligence carried out byan external agency viz. rating agency, audit firm, law firm, etc. tosupport the investment process under both direct or indirect RiskCapital assistance.

4.4.4.4. ASSISTANCE FOR SERVICE SECTORASSISTANCE FOR SERVICE SECTORASSISTANCE FOR SERVICE SECTORASSISTANCE FOR SERVICE SECTOR


The service sector contributes more than 60% of the national

GDP. The share of the service sector in the Indian economy iscontinuously increasing. The sector contributes significantly inemployment generation and export earnings. There is substantialgap in funding of service sector enterprises offering immensebusiness potential.

The Service Sector Business Policy for FY 2014 is aimed atidentification of thrust areas for lending under service sector,charting out a focused business development strategy,encouraging product innovation suited to the needs of theindustry, improving credit delivery and having in place a pricingpolicy which supports business growth and links it to risk.

4.2 E4.2 E4.2 E4.2 ELIGIBLE BORROWERSLIGIBLE BORROWERSLIGIBLE BORROWERSLIGIBLE BORROWERS

The Bank would finance service sector enterprises which fallwithin the investment definition under MSMED Act, 2006 and alsobased on SIDBI Act 1989 and various approvals of the Board fromtime to time.

4.3.14.3.14.3.14.3.1 THRUST BUSINESS AREASTHRUST BUSINESS AREASTHRUST BUSINESS AREASTHRUST BUSINESS AREAS

While the Bank would consider support to all eligible servicesector activities, the following areas would be accorded dueemphasis for faster asset growth during the year.

SIDBI will make efforts to provide assistance for variousrequirements (Capex, WC, etc.) to service sector entities invarious segments. Some of the thrust segments proposed to beassisted are given below:

(i) Logistics & Supply chain management(ii) Organised Retail outlets/Dealerships(iii) Hotel /Hospitality sector(iv) Restaurants/Food chains(v) Healthcare


13/34

13

(vi) Lifestyle, media & entertainment(vii)Tourism related services(viii)IT / IT enabled services

4.3.24.3.24.3.24.3.2 Assistance to existing well performing service sector enterprisesfor their varied business needs would be a thrust area of the Bank

4.44.44.44.4 APPROACH TO FINANCING SERVICEAPPROACH TO FINANCING SERVICEAPPROACH TO FINANCING SERVICEAPPROACH TO FINANCING SERVICE SECTORSECTORSECTORSECTOR

For the purpose of this policy, the assistance to service sector has

been broadly divided into five categories viz. (a) asset backed

term loan assistance, (b) Business loan to MSMEs (c) cash flow

based term loan assistance, (d) Assistance for facilitating

payments to MSMEs in Construction Sector (i.e. for CRE exposure)

and (e) Structured Financial Assistance to Franchisees.

((((aaaa)))) Asset backed assistance to service sector enterprisesAsset backed assistance to service sector enterprisesAsset backed assistance to service sector enterprisesAsset backed assistance to service sector enterprises

Asset backed term loan assistance would include assistance

towards projects providing adequate primary and /or collateral

security in the form of fixed assets like immovable properties

and equipment, etc. Hotels, hospitals, warehouses, etc. would

generally fall under this category.

(b)(b)(b)(b) Business loan assistance backed by immovable property as

collateral security would be provided to MSMEs for any

bonafide business expenditure on fast track-basis using

simplified proceses.

(c)(c)(c)(c) Cash flow based term loan assistance to service sectorCash flow based term loan assistance to service sectorCash flow based term loan assistance to service sectorCash flow based term loan assistance to service sector

enterprisesenterprisesenterprisesenterprises

Some of the projects in the service sector do not create

tangible fixed assets and may not meet security related norms,

but these are found to generate comfortable cash flows. These

segments include IT and other knowledge based industries,

organized retail chains, restaurant chains, diagnostic/ speciality

clinics, IT/BPO Services, etc. As there is good potential for

considering assistance to these sectors, proposals of deserving

customers could be considered for Banks financial support

based on assessment of cash-flows and scheme norms

(d)(d)(d)(d) Assistance to CRE/Construction entities for facilitating paymentsAssistance to CRE/Construction entities for facilitating paymentsAssistance to CRE/Construction entities for facilitating paymentsAssistance to CRE/Construction entities for facilitating payments

to MSME suppliers/ Vendors.to MSME suppliers/ Vendors.to MSME suppliers/ Vendors.to MSME suppliers/ Vendors.

The Bank shall selectively consider assistance to construction

sector/ CRE projects for facilitating payments to MSME


14/34

14

suppliers/ vendors. The assistance provided shall be under the

purview of CRE guidelines issued by RBI from time to time.

(e)(e)(e)(e)Structured Financial Assistance to FranchiseesStructured Financial Assistance to FranchiseesStructured Financial Assistance to FranchiseesStructured Financial Assistance to Franchisees

Keeping in view the growth of franchisee model of business in

service sector, assistance to new and existing franchiseeswould be another thrust area for lending. Bank will actively

engage the Franchisor in assessing the Franchisees and

mitigating credit risk. The Bank would actively involve

associations/ domain experts in franchising industry in

identifying bankable proposals under Franchising Model.

5555.... ASSISTANCE FOR ENERGY EFFICIENCYASSISTANCE FOR ENERGY EFFICIENCYASSISTANCE FOR ENERGY EFFICIENCYASSISTANCE FOR ENERGY EFFICIENCY

5555....1111 INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION

SIDBI has recognized financing for energy efficient and cleantechnologies in the MSME sector as one of the high potential areasfor strengthening the competitiveness of MSMEs in India. SIDBIhas been operating Lines of Credit from various multilateral/bilateral agencies viz. Kreditanstalt fur Wiederaufbau (KfW),Germany, Japan International Cooperation Agency (JICA), Japan,Agence Francaise de Developpement (AfD), France, for financingenergy efficient and cleaner environment investments in MSMEs.

5555....2222 OBJECTIVESOBJECTIVESOBJECTIVESOBJECTIVES

(i) To promote the use of energy efficient and cleanertechnologies by MSMEs.

(ii) To reduce energy consumption, enhance energy efficiency,reduce CO2 emissions and improve the profitability of theIndian MSMEs in the long run.

(iii) To support promotion of energy efficiency and sustainabledevelopment in MSME sector under other products / byintroducing new products with an element of someconcessionality in interest rates.

(iv) To encourage innovation in technology, products anddelivery, particularly aimed at supporting the supply side.

5555....3333 THRUTHRUTHRUTHRUST BUSINESS AREAS:ST BUSINESS AREAS:ST BUSINESS AREAS:ST BUSINESS AREAS:

An indicative list of segments in the MSME sector which have highpotential for energy saving/ cleaner production, to be targeted forbusiness thrust, is given below:

(i) Engineering & machine tools


15/34

15

(ii) Auto components

(iii) Electronics and electrical products

(iv) Sponge iron plants

(v) Foundry & Forgings

(vi) Pulp & Paper(vii) Ceramics

(viii)Rice Mills

(ix) Textiles, in particular, readymade garments and hosiery

(x) Drugs and pharmaceuticals

(xi) Food processing & agro based industries

(xii) Hazardous Waste Treatment

(xiii)Common Effluent Treatment plants

(xiv)Transport operators using cleaner energy such as LPG/CNG,etc.

(xv) Commercial Green building

(xvi)Co-generation of energy and use of Renewable EnergySources

(xvii) Units engaged in manufacturing and service of EE/CPproducts/services

(xviii)Any sector- Out phasing of ozone depleting substances

5555....4444 SUSTAINABLE FINANCE SCHEMESUSTAINABLE FINANCE SCHEMESUSTAINABLE FINANCE SCHEMESUSTAINABLE FINANCE SCHEME SFSSFSSFSSFS

There are certain projects which may not meet the eligibilitynorms set by the international lending agencies. But consideringthe fact that these projects also result in energy efficiencyimprovements in the MSMEs and result in abatement of GreenHouse Gas (GHG) emissions that harms the environment, aseparate scheme, viz. Sustainable Finance Scheme (SFS) hasbeen formulated to directly finance such projects. An Illustrativelist of projects which can be covered under SFS are as under:

Renewable energy projects such as solar power plants, windenergy generators, mini hydel power projects, Biomassgassifier power plants, etc.

Investments in green, energy efficient buildings.

Any kind of potential CP investments including wastemanagement, which do not belong to the listed industrialsectors which are eligible to be assisted under the KfW CP-LoC.


16/34

16

Energy Efficient / Green / Environment friendly / Pollutionreducing, waste minimising equipment / measures in servicesector projects like hotels, hospitals, nursing homes, tourismrelated activities, etc.

Green micro finance (micro loans upto `5 lakh to microenterprises for green / energy efficient equipmentmeasures) through various micro finance intermediaries orNBFCs.

Expenditure on energy audit / environment compliance audit/ pollution control & management consultancy services.

Expenditure on green rating, BEE star rating of its product,eco-friendly labeling, etc.

ISO 50001 / 14000 or other accredited environmentalcertification.

CDM registration related expenditure.

6.6.6.6. ASSISTANCE FOR RECEIVABLE FINANCEASSISTANCE FOR RECEIVABLE FINANCEASSISTANCE FOR RECEIVABLE FINANCEASSISTANCE FOR RECEIVABLE FINANCE

6666.1.1.1.1 INTRODUCTION:INTRODUCTION:INTRODUCTION:INTRODUCTION:

Receivable Finance Scheme (RFS) is being operated by theBank for nearly two decades to mitigate the receivablesproblem of MSME sellers and improving their cash flow /liquidity.

RFS covers discounting/purchasing of bills/invoices arising outof sale of indigenous components/ parts/ sub-assemblies/accessories/ intermediates manufactured/ job work done/

services provided by MSMEs and eligible service providers toLarge Purchaser Corporates. The scheme also allows coverageof bills relating to Small Road Transport Operators (SRTOs),being service providers.

The Bank has been making need based modifications/simplifications/ rationalisation in the scheme considering inter-alia the changing business environment, demand of thecustomers, feedback from the operating offices and forincreasing the reach of the Scheme for the benefit of a largenumber of MSMEs.

End-use of funds is verified by undertaking visits to selectMSME beneficiary units and random verification of thepurchased/discounted invoices / bills.

In order to improve the quality of overall portfolio and to addressinadequacies of existing internal rating system, external ratinghas now been made mandatory, in respect of new customersunder MSME RFS, where the limits are not backed by collateralsecurity. Wherever such limits are backed by collateral security,


17/34

17

Fixed Asset Coverage/Asset coverage norms have been codified inaddition to applicable internal rating norms.

6.2 THRUST BUSINESS AREAS:6.2 THRUST BUSINESS AREAS:6.2 THRUST BUSINESS AREAS:6.2 THRUST BUSINESS AREAS:

i) The scheme basically covers bills raised by MSME unitsengaged in manufacturing / job works / service sector. Keepingin view the increasing share of service sector, businessopportunities in these sectors will be identified.

ii) Keeping in view the focus on serving MSMEs, greater thrust isbeing laid, this year, to extend seller-wise receivable finance[SRFS] limits directly to MSMEs to improve the cash flow &liquidity position of MSMEs / Service providers by providingthem with financial assistance against the goods sold and / orservices rendered to purchaser companies with satisfactorymarket standing.

iii) To lay greater emphasis on the quality of the portfolio,emphasis would be to increase the portfolio under securedcategory during the current year.

iv) In line with the national agenda for moving to electronic modeacross all financial products, while efforts would be made toencourage business under e-discounting and enhanceoperations under NSE Trade Receivables Engine for E-discounting in association with SIDBI (NTREES) platform, thebank would focus on bringing more business under direct E-discounting module developed in-house by the Bank.

v) The Bank will facilitate promotion of Factoring servicesincluding increasingly extending debt support to factoringcompanies registered with RBI as per provisions of FactoringRegulation Act. Existing SRFS would be suitably modified,wherever necessary, to extend factoring services, to avail ofthe benefits available to Factors under the recently enactedFactoring Regulation Act 2012.

6666....3333 PRODUCT RATIONALISATION:PRODUCT RATIONALISATION:PRODUCT RATIONALISATION:PRODUCT RATIONALISATION:

Over a period of time, MSME RFS has been improvised to meet thegrowing business requirements, as under:

o

MSME RFS without Bills of Exchange, MSME RFS backed byL/C, Seller wise Receivable Finance Scheme [SRFS], ModifiedInvoice Discounting Scheme & E-discounting under NTREESplatform.


18/34

18

7.7.7.7. INDIRECT LENDINGINDIRECT LENDINGINDIRECT LENDINGINDIRECT LENDING


7.1.17.1.17.1.17.1.1 The indirect lending portfolio of the Bank consists predominantlyof refinance to Primary Lending Institutions (PLIs), comprisingState Financial Corporations (SFCs), State Industrial Development/

Investment Corporations (SIDCs / SIICs) [collectively referred to asState Level Financial Institutions (SLFIs)], Scheduled CommercialBanks, Scheduled Cooperative Banks, Regional Rural Banks andselect financial institutions. In addition, the portfolio also includesresource support/ term loan to Non Banking Financial Companies[NBFCs] and other Public Sector Undertakings benefiting theMSMEs. Term loans for infrastructure projects under consortiumarrangements with Banks are also considered provided suchprojects have linkages to MSMEs.

7777.1.2.1.2.1.2.1.2 The business plan of the Bank for FY 2014 for assistance throughPLIs would take into account the availability of resources with the

Bank.7777.2.2.2.2 ASSISTANCE TO STATE FINANCIAL CORPORATIONSASSISTANCE TO STATE FINANCIAL CORPORATIONSASSISTANCE TO STATE FINANCIAL CORPORATIONSASSISTANCE TO STATE FINANCIAL CORPORATIONS [SFCs][SFCs][SFCs][SFCs]

Broadly, the support to SFCs would continue to be based on theoverall exposure norms, financial health and coverage under MoU.

7.7.7.7.3333 MONITORING OFMONITORING OFMONITORING OFMONITORING OF SFCsSFCsSFCsSFCs

Given the sizeable exposure of the Bank to the SFCs, theperformance of all the SFCs would continue to be closelymonitored both by way of on-site and off-site mechanisms.Further, with a view to bringing about convergence in theregulatory framework, vis--vis the industry practices, the Bank

has been advising the SFCs to comply with prudential normsprescribed by Reserve Bank of India. SFCs shall also comply withother regulatory directives such as adoption of accrual system ofaccounting, income recognition and asset classification [IRAC]norms, KYC / AML norms, industry-wise exposure norms, valuationof assets, etc.

7777....4444 AAAASSISTANCESSISTANCESSISTANCESSISTANCE TOTOTOTO SSSSCHEDULEDCHEDULEDCHEDULEDCHEDULED CCCCOMMERCIALOMMERCIALOMMERCIALOMMERCIAL BBBBANKSANKSANKSANKS

7.4.17.4.17.4.17.4.1 The risk profile of scheduled commercial banks as a whole is low.The scheduled commercial banks generally prefer to avail shortterm refinance assistance. However, looking to the need to createlong term assets under the Scheme, creation of such assets

through refinance to scheduled commercial banks would continueto be the thrust area for FY 2014. Banks would be encouraged toavail longer term refinance having repayment periods of 5 yearsand above. Exposure to the scheduled commercial banks by wayof refinance during FY 2014 would be encouraged but within theindividual counterparty exposure limits fixed by the Bank as givenin AnnexureAnnexureAnnexureAnnexure IVIVIVIV.... The individual bank wise caps are fixed on thebasis of category of the bank, its net worth and risk rating.


19/34

19

7777....5555 ASSISTANCE TO SCHEDULEDASSISTANCE TO SCHEDULEDASSISTANCE TO SCHEDULEDASSISTANCE TO SCHEDULED COOPERATIVE BANKSCOOPERATIVE BANKSCOOPERATIVE BANKSCOOPERATIVE BANKS [SCBs] &[SCBs] &[SCBs] &[SCBs] &REGIONAL RURAL BANKSREGIONAL RURAL BANKSREGIONAL RURAL BANKSREGIONAL RURAL BANKS [RRBs][RRBs][RRBs][RRBs]

Over the years, SCBs have registered significant growth in thenumber, size and volume of business handled. Some of the RRBsare also now profit driven and, in addition to commercial lendingsuch as agriculture and project funding, compete with scheduledcommercial banks for fee and commission incomes such as issueof drafts, sale of insurance products and mutual fund schemes.Counterparty exposure limits to these banks shall be decided on acase to case basis, depending on risk rating and other factorssuch as net worth of the bank, eligible micro and small enterprise[MSE] portfolio, overall financial health, compliance withregulatory directives, etc.

7777.6.6.6.6 ASSISTANCE TO SIDCs/SIICsASSISTANCE TO SIDCs/SIICsASSISTANCE TO SIDCs/SIICsASSISTANCE TO SIDCs/SIICs

The Bank would continue to make a conscious attempt, ashitherto, to reduce / exit from the existing exposures to weaker

SIDCs / SIICs (including TFIDCs).7777....7777 ASSISTANCE TOASSISTANCE TOASSISTANCE TOASSISTANCE TO NBFCsNBFCsNBFCsNBFCs

7.7.7.7.7777.1.1.1.1 The NBFCs (both in the category of Deposit taking and Non Deposit(both in the category of Deposit taking and Non Deposit(both in the category of Deposit taking and Non Deposit(both in the category of Deposit taking and Non Deposittaking)taking)taking)taking) registered with RBI which are engaged in financingenterprises in the micro, small and medium sector [MSME], and inbusiness for the last 5 years, are, prima facie, eligible for resourcesupport from the Bank subject to meeting the prescribedBenchmarks for Sanction (BfS) relating to net owned funds, capitaladequacy ratio, gross NPA, recovery percentage, minimuminvestment grade external rating and compliance with all theprudential guidelines prescribed by the Reserve Bank of India

from time to time. SIDBI provides term loan / resource supportSIDBI provides term loan / resource supportSIDBI provides term loan / resource supportSIDBI provides term loan / resource supportmainly to Asset Finance Companiesmainly to Asset Finance Companiesmainly to Asset Finance Companiesmainly to Asset Finance Companies.

However, the assistance could also be extended to LoanCompanies, if the loan is given for income generating acif the loan is given for income generating acif the loan is given for income generating acif the loan is given for income generating activitiestivitiestivitiestivities(more than 60% of assets deployed in lending and more than 60%(more than 60% of assets deployed in lending and more than 60%(more than 60% of assets deployed in lending and more than 60%(more than 60% of assets deployed in lending and more than 60%of income arising from such assets).of income arising from such assets).of income arising from such assets).of income arising from such assets).

7.7.7.7.7777.2.2.2.2 During FY 2014, the focus of the Bank shall be on providingresource support to NBFCs for on lending to MSMEs for creation ofphysical assets/ to micro and small enterprises for incomegenerating activities.

7.7.7.7.7777.3.3.3.3 The assistance to NBFCs would be secured by, first exclusivecharge on the assets financed / First pari-passu charge with otherlenders by way of hypothecation of book debts of the NBFC withsuitable margin.

7.7.7.7.7777....4444 The RBI guidelines issued to banks for NBFCs lending to MSMEsagainst the security of gold in terms of exposure to single NBFCnot exceeding 7.5% of the banks capital funds, and limiting theLoan to Value [LTV] to 60%, would be followed.


20/34

20

7.7.7.7.7777....5555 The broad eligibility parameters for lending to NBFCs are givenbelow:

Registered with RBI In business for 5 years (could be relaxed upto 3 years)In business for 5 years (could be relaxed upto 3 years)In business for 5 years (could be relaxed upto 3 years)In business for 5 years (could be relaxed upto 3 years) Net profit for last 3 years

Net owned fundsNet owned fundsNet owned fundsNet owned funds minimumminimumminimumminimum `11115555 crorecrorecrorecrore CRAR Not less than 15% Recovery not less than 90% Gross NPA not more than 5% Minimum investment grade rating (SEBI approved rating

agency) for FD and bonds Interest rate broadly linked to External Rating / PLR/Interest rate broadly linked to External Rating / PLR/Interest rate broadly linked to External Rating / PLR/Interest rate broadly linked to External Rating / PLR/ BaseBaseBaseBase

Rate as & when introducedRate as & when introducedRate as & when introducedRate as & when introduced NBFCs to comply with all prudential guidelines laid down by

RBI.

8888.... ASSISTANCE FOR INFRASTRUCTURE PROJECTSASSISTANCE FOR INFRASTRUCTURE PROJECTSASSISTANCE FOR INFRASTRUCTURE PROJECTSASSISTANCE FOR INFRASTRUCTURE PROJECTSAvailability of adequate and quality infrastructure facilities is a keycomponent for speedy growth of the MSME sector. It has positiveimpact in terms of creation of employment, efficiency inoperations and waterfall effect on the entire economy. The Bankhas been providing assistance for infrastructure projects in theareas of industrial parks, transportation, power, telecom, etc. aftersatisfying the MSME linkages of the assisted projects.

The infrastructure sector provides adequate scope for up-scalingof lending by the Bank. While assistance for infrastructure projectsin other areas would be extended through consortium/ multiplebanking arrangements, assistance to industrial infrastructureprojects could be considered on a stand alone basis. Withininfrastructure sector, the projects from ports, energy, gaspipelines, telecommunications, tourism, warehousinginfrastructure, cold chain sub-sectors, having linkage with MSMEs,could be explored.

Further, projects of Common Waste management facilities andeffluent treatment plants at industrial clusters, renewable energyprojects with MSME linkages, may be considered for coverageunder the Schemes after satisfying itself on MSME linkages and

benefits.


21/34

21

9.9.9.9. SIDBI FOUNDATION FOR MICRO CREDITSIDBI FOUNDATION FOR MICRO CREDITSIDBI FOUNDATION FOR MICRO CREDITSIDBI FOUNDATION FOR MICRO CREDIT

9999....1111 INTRODUCINTRODUCINTRODUCINTRODUCTIONIONIONION

Micro finance remains an instrument for the poor to improvelivelihoods and reduce financial vulnerabilities by increasing theirincome and savings. With emphasis on supporting income

generation activities under microfinance, SIDBI continues financialassistance to Micro Finance Institutions (MFIs). In addition to this,SIDBI has entered into the area of providing financial assistance toParticipating Financial Institutions (PFIs), which offer loans withfinancing volumes ranging from INR 50,000 to INR 10,00,000(Missing Middle) to eligible Micro and Small Enterprises .

9.29.29.29.2 FOCUS OF SFMC LOAN POLICYFOCUS OF SFMC LOAN POLICYFOCUS OF SFMC LOAN POLICYFOCUS OF SFMC LOAN POLICY

On asset quality, focus is on risk management through theassessment, monitoring and exposure management. The focus ofthe Bank is on MFIs and NBFCs with track record of resourcemobilization, capital, and strong systems, compliances with newregulatory guidelines and responsible lending practices and longterm sustainability in terms of financial and operationalefficiencies.

9999....3333.... PRODUCT PROFILEPRODUCT PROFILEPRODUCT PROFILEPRODUCT PROFILE

SIDBI Foundation for Micro Credit (SFMC) shall continue with termloan to MFIs for on-lending under microfinance, to intermediariesfor on-lending to micro enterprises and to marketing serviceproviders. Suitable changes are made in the eligibility criteria andguidelines for these products considering the current scenario.Details of eligibility criteria, etc., for various products are at

AnnexureAnnexureAnnexureAnnexure IIIIIIII. The Missing Middle Financing activities of SIDBIthrough PFIs are being funded by ADB and KfW. Under the productsegment, assistance will be extended to PFIs to enable them toextend loans in the Missing Middle segment.

Banks equity and related investments in MFIs will be guided bystatutory guidelines.

Banks Fair Practices Code, Grievance Re-dressal Mechanism andRBIs guidelines to all India FIs on connected lending areapplicable for assistance under SFMC.

10101010.... CCCCREDITREDITREDITREDIT RISK MANAGEMENTRISK MANAGEMENTRISK MANAGEMENTRISK MANAGEMENT

RBI had issued guidelines that the banks should have a robustCredit Risk Management (CRM) system which is sensitive andresponsive to the credit risks emanating from its dealings withindividuals, corporates, banks, FIs or sovereign. According to theRBI guidelines, banks have to devise a risk managementframework oriented towards their requirements, dictated by size,


22/34

22

complexity of business, risk philosophy, marketing perception,etc.

The dimensions of credit risk to which the Bank is exposed tofundamentally emanate from exposure to MSME enterprises/sector which are characterised by weaknesses in corporate

structure, systems, accounting standards, lack of availability/reliability of information and vulnerability to externaldevelopments, risk concentration in exposure to the MSME sector.

In compliance with the Policy Guidelines on KYC Norms and AntiMoney Laundering (AML) Standards, the process of riskcategorization of customers has been put in place depending upontheir activity, location, constitution, etc.

10.110.110.110.1 CREDIT RISK STRATEGYCREDIT RISK STRATEGYCREDIT RISK STRATEGYCREDIT RISK STRATEGY

In line with the strategy for managing risks in the credit portfolio,

following tenets have been incorporated in the Loan Policy :

(a)Monitoring exposure to SFCs/ SIDCs as a percentage of totalportfolio.

(b)Implementation of internal rating models to measure creditrisk for majority of the customer categories. Use ofinternal/external ratings in the decision making process forlending would eventually lead to improvement in the overallcredit quality and better risk management of the Banksportfolio.

(c)Risk control, inter alia, through implementation of exposure

limit framework for different segments of customers.(d)Implementation of processes to ensure that initiative to

increase lending by innovation in products, target clients,etc., does not lead to deterioration of the asset quality of theBanks portfolio.

(e)Installation of an enabling framework capable of grading therisk and eventually linking pricing to internal ratings as suitedto the Banks requirements.

10.210.210.210.2 RISK MEASUREMENTRISK MEASUREMENTRISK MEASUREMENTRISK MEASUREMENT

10.2.110.2.110.2.110.2.1 Internal Credit Rating SyInternal Credit Rating SyInternal Credit Rating SyInternal Credit Rating Systemsstemsstemsstems

The Bank uses Credit Appraisal and Rating Tool [CART] toprocess loan proposals covering exposures up to ` 500 lakh andrate loan proposals covering exposures up to ` 200 lakh,received from existing units fulfilling certain criteria.

For loans outside the purview of rating in CART, Risk AssessmentModels (RAMs) are being used for customer segments indicatedbelow:


23/34

23

(a) Small and Medium Enterprises (SMEs); Larger SMEs;

(b) Service sector enterprises;

(c) Infrastructure Special Purpose Vehicles (SPVs) Road,Power, Telecom and Port;

(d) Banks (public/ private sector/ foreign banks, etc.) and

financial institutions;

(e) State Financial Corporations, State Industrial DevelopmentCorporations;

(f) Large companies / corporate entities having financiallinkages with the MSME sector, State Electricity Boards,other State/Central level specialized Corporations, etc. andfor RFS limits.

10.2.2 Investment Grades10.2.2 Investment Grades10.2.2 Investment Grades10.2.2 Investment Grades

Proposals with internal risk rating at the time of appraisalbetween CR1 to CR5 on the combined scale in RAM (CAAA to CAin CART) are considered as investment grade i.e. suitable forextending credit facility. However, in respect of certain sectors,higher investment grade ratings have been stipulated for greaterselectivity and credit quality as indicated in AnnexureAnnexureAnnexureAnnexure IIIIIIIIIIII withminimum internal rating grade specified.

Such higher investment grades shall not be applicable forassistance to infrastructure projects/ joint financing proposals[consortium/ multiple banking arrangement], other than powersector projects which will be considered with a minimum ratingof CR4 only.

10.10.10.10.3333 RISK MITIGATIONRISK MITIGATIONRISK MITIGATIONRISK MITIGATIONThe present credit risk mitigation strategies in vogue would becontinued which are primarily being applied at two levels. At theproject specific level [transaction level], efforts are made toidentify critical risk factors and suitable mitigation measures areexplored and stipulated, wherever possible. Risk rating would beused for objective grading of risk. At the portfolio level, the Bankhas been following a strategy of exposure management andprudential caps on credit exposures under various activity/industry /type of customer. The Bank has also been working outthe portfolio rating of the operating offices on an annual basis forinternal purposes.

10.410.410.410.4 EEEEXTERNAL RATINGSXTERNAL RATINGSXTERNAL RATINGSXTERNAL RATINGS

In respect of MSME-RFS limits without collateral security andresource support to NBFCs, external rating (Long term rating) byRBI accredited rating agencies is considered for the purpose ofeligibility and pricing with minimum specified external ratinggrade.


24/34

24

10.510.510.510.5 PRICINGPRICINGPRICINGPRICING

10.5.110.5.110.5.110.5.1 In the scenario of dynamic interest rates, competition and theneed for the Bank to expand the direct finance portfolio withaddition of quality assets, a dynamic pricing strategy hasbecome sine qua non. The pricing of loans is carried out as perthe gradation of risk determined by the internal ratings forvarious customer segments. With a view to remainingcompetitive in the market, the existing practice of fixing theinterest/ discount rate depending upon competitiveness/demand, asset cover and such other factors, may continue. Asregards assistance sanctioned to infrastructure projects andsuch other projects under joint finance / consortiumarrangement, the interest rate stipulated by the lead institution /other banks would normally be followed.

10.5.210.5.210.5.210.5.2 In case of projects involving multiple/joint/consortium financing,interest rate reset clauses would be in line with the practice

obtaining with other banks / institutions.

11110000....6666 MANAGEMENT OF ASSETMANAGEMENT OF ASSETMANAGEMENT OF ASSETMANAGEMENT OF ASSET CONCENCONCENCONCENCONCENTRATIONTRATIONTRATIONTRATION

11110000....6666.1.1.1.1EEEExposurexposurexposurexposure1CapsCapsCapsCaps

Asset concentration is being managed by the Bank by way ofvarious exposure caps/ norms for credit deployment which havebeen fixed, as under, taking into account the norms prescribedby RBI.

11110000....6666.1.1.1.1.1.1.1.1Individual / Group ExIndividual / Group ExIndividual / Group ExIndividual / Group Exposureposureposureposure

(a) In respect of schemes of direct assistance to MSMEs andspecialized organizations marketing MSME products, the individual/ group exposures shall be as follows:

ParticularsParticularsParticularsParticulars CapCapCapCap

For Single Borrowers 3% of capital funds of SIDBI

For Group Exposure 6% of capital funds of SIDBI

b) The exposure cap applicable in respect of assistance to NBFCs/private sector corporations shall be as under:

ParticularsParticularsParticularsParticulars CapCapCapCap RBI GuidelinesRBI GuidelinesRBI GuidelinesRBI Guidelines

For SingleBorrower

I. 15% of capital funds ofSIDBI AFCs

15% of capitalfunds

1Exposure has been defined as under:

Product Exposure computationFund based & Non-fund basedfacilities

Limit sanctioned or outstandingwhichever is higher.


25/34

25

II. 10% of capital funds ofSIDBI Others

I. 7.50% of capital funds ofSIDBI Gold Loan

companies

For Group

Exposure

40 % of capital funds of

SIDBI

40% of capital

funds

c) The exposure cap applicable in respect of MSME ReceivableFinance Scheme (MSME-RFS), direct resource support and suchother forms of bulk lending (except refinance and BRS) to publicfinancial institutions and public sector undertakings shall be asunder:

ParticularsParticularsParticularsParticulars CapCapCapCap RBI GuidelinesRBI GuidelinesRBI GuidelinesRBI Guidelines

For SingleBorrowers

15% of capital funds ofSIDBI

15% of capitalfunds

For GroupExposure 25% of capital funds ofSIDBI 40% of capitalfunds

Though SIDBI is a refinancing institution, from the prudentialperspective and in accordance with RBIs suggestions, suitableinternal caps have been put in place for the refinance portfolio.

The Bank has in place overall exposure caps for SFCs and SIDCs,which are perceived to be relatively higher risk segment of thisportfolio. Keeping in view the RBIs policy on Exposure Norms forFinancial Institutions, the exposure, inter alia, has been related tocapital funds of SIDBI.

11110000....6666.1.2.1.2.1.2.1.2 CCCCounterparty / Activity / Industry exposureounterparty / Activity / Industry exposureounterparty / Activity / Industry exposureounterparty / Activity / Industry exposure

Internal caps have been laid down in respect of different schemesof direct assistance and for various industrial sectors assummarised in the table at AnnexureAnnexureAnnexureAnnexure IIIIVVVV

10101010....6666....2222 Restricted industriesRestricted industriesRestricted industriesRestricted industries

The extant instructions for a cautious approach in respect ofindustries such as chemical dyes & dye intermediates, industrialoxygen, distilleries, etc., would continue.... Assistance to deservingunits in the list could be considered if they have an internal ratingof CR3 or above.

Industries consuming / producing ozone depleting substances viz.Chlorofluorocarbons (CFCs), Halon, Carbon tetrachloride, Methylchloroform, Hydro bromo-fluorocarbons (HBFCs), hydrochloro-fluorocarbons (HCFCs), Methyl bromide, Bromochloromethane(BCM), etc., would notnotnotnot be assisted at all.


26/34

26

11110000....6666....3333 Policy on Group LendingPolicy on Group LendingPolicy on Group LendingPolicy on Group Lending

The Bank considers assistance to large groups only under selectschemes such as MSME-RFS, NBFC and Infrastructure Scheme.Decisions on sanction/ continuation of exposure on a concernwhose group/ associate concern(s) has defaulted to the Bank and /or to other banks/ FIs are being taken on case specific merits. Thepractice would be continued and a final view on such cases wouldbe taken by the delegated sanctioning authorities.

11111111 CCCCONCLONCLONCLONCLUSIONUSIONUSIONUSION

Efficient credit delivery is the key to quality portfolio build up andcustomer retention. The Loan Policy gives adequate flexibility todevelop viable business proposals. The Policy has also put in placea suitable structure for approval / clearance of new products.Hence, any business proposition considered to be viable and

bankable should not be lost on account of non-availability of asuitable scheme/product. It will also be the endeavour of the Bankto further simplify and streamline procedures/processes toexpedite the credit delivery besides making efficient use of IT forinternal credit monitoring. Strategic alliance entered into withcommercial banks would also be utilised for giving better facilitiesand services to the MSME customers. While the Bank has beenmaking efforts in introducing risk management practices on an on-going basis, it would also accord due emphasis in initiating aparadigm transition towards an integrated risk managementframework.


27/34

27

Annexure IAnnexure IAnnexure IAnnexure I

BenchmarkBenchmarkBenchmarkBenchmarkssss for Sanction [BfS]for Sanction [BfS]for Sanction [BfS]for Sanction [BfS] asasasas applicable forapplicable forapplicable forapplicable for general purposegeneral purposegeneral purposegeneral purposeterm loansterm loansterm loansterm loans ((((includingincludingincludingincluding energy efficiency, cleaner production, directenergy efficiency, cleaner production, directenergy efficiency, cleaner production, directenergy efficiency, cleaner production, directcredit, etc.)credit, etc.)credit, etc.)credit, etc.)

Sr.Sr.Sr.Sr.No.No.No.No.

ParametersParametersParametersParameters BfSBfSBfSBfS[wherever[wherever[wherever[whereverapplicable]applicable]applicable]applicable]

AAAA BBBB CCCC1111 DERDERDERDER (For the company as a whole,

including proposed assistance)2:1

2222 Projected DSProjected DSProjected DSProjected DSCRCRCRCR 1.5:13333 Promoters contributionPromoters contributionPromoters contributionPromoters contribution

New Entity2 33%Existing Entity3 25%

4444 Asset Coverage RatioAsset Coverage RatioAsset Coverage RatioAsset Coverage Ratio [ACR][ACR][ACR][ACR]

(a) New Entity 1.4(b) Existing Entity [other than (c)

below]1.3

(c) Existing Entity with CGMTSE cover 1.2

The above BfS are not applicable for assistance to infrastructure

projects/ joint financing proposals [consortium/ multiple banking

arrangement/ under Memorandum of Understandings (MoUs) with

banks/Fis]. The norms for such proposals would be in line with the

norms of consortium / others banks in the multiple banking

arrangement. Similarly, the BfS would not be applicable in respectof test marketing proposals for new products, resource support

and structured products or other arrangements approved by the

Board/Committees of the Board.

Further, good business opportunities exist in modern MSME

clusters in terms of financing industrial infrastructure, financing

individual MSME units, other income generating activities like

earning LC charges, syndication fee, etc. As cluster financing is

done usually under consortium arrangement / multiple financing

arrangement with other banks, the terms of finance including

interest rate arrived on consensus basis could be considered and

in case of consortium not being there, competitive terms on par

with other lending banks in the cluster could be considered. A

2A New entity is an entity newly set up/proposed to be set up. This would also include entities

established in the past but with nil or insignificant commercial production.3An Existing entity is one which has already been established and is engaged in commercial

production (with or without SIDBI's financial assistance).


28/34

28

flexible approach could also be followed with regard to other

norms/issues like promoters contribution, DER, DSCR, security

margin/asset coverage, etc. Internal risk rating could in such

cases be taken only as a guiding factor. The terms and conditions

of sanction could be generally as stipulated by the consortium

leader, lead banks/others.


29/34

29

Annexure IIAnnexure IIAnnexure IIAnnexure IIAAAA.... TERM LOAN TO MICRO FINANCE INSTITUTIONS (MFIs)TERM LOAN TO MICRO FINANCE INSTITUTIONS (MFIs)TERM LOAN TO MICRO FINANCE INSTITUTIONS (MFIs)TERM LOAN TO MICRO FINANCE INSTITUTIONS (MFIs)

1111.... ObjectiveObjectiveObjectiveObjective

SIDBI extends term loans to

MFIs for on lending to the poor individuals or groups ofindividuals formed as JLGs, SHGs, etc.

entities for on lending to MFIs

2222.... Eligibility criteriaEligibility criteriaEligibility criteriaEligibility criteria

To be eligible for term loan assistance from SIDBI the MFI:

a. should be registered as Society, Trust, Company/Section-25Company, NBFC-MFI, Co-operative Society and MACS.

b. should be registered as any other legal entity may be consideredonly after BO obtains Legal Verticals clearance on its suitability.

c. should have been lending under MF for at least 36 months orshould have promoters/senior management having at least 10years of experience in micro credit/banking/NBFC lendingoperations.

d. has a minimum outreach of 5,000 loan accounts or 3,000customers

e. targets the poor, especially women and is secular .

f. has audited financial statements (in case of NGO withmicrofinance as a programme, the NGO should have separateaudited financial statements for the MF programme) and

g. has systems, processes and procedures in place required of afinancial intermediary like internal accounting, internal audit, riskmanagement, cash management, timely MIS, etc.

h. shall be in compliance with RBI and other statutory guidelines.

3333.... OthersOthersOthersOthers

a. Mainline NBFCs would be considered for assistance undermicrofinance by SFMC, HO on a case to case basis.

b. MFI may follow any generally practiced MF models like Grameenmodel, SHG model, JLG model, cooperatives, etc., and any other

appropriate model permissible under the lawc. The Banks loan to be on lent by MFIs for use by borrowers in:

Setting up/running non-farm income generating activities andmicro enterprises under MSMED Act and

for construction of new / renovation/ expansion of dwellingunits / dwelling unit-cum-work sheds, etc.


30/34

30

d. Loan to an MFI will be on annual/need basis with minimum loan of`0.50 crore to an MFI.

e. NBFC-MFI to submit a certificate from a C.A regarding compliancewith RBI norms for NBFC-MFIs and all other MFIs to submit a C.Acertificate regarding compliance with RBIs norms on eligibility ofbank loans to MFIs under priority sector.

f. Availability of a valid external rating.

g. Primary security shall comprise hypothecation of bookdebts/receivables.

h. Suitable collateral security like deposit of FDs, personalguarantee, pledge of shares, guarantee by multilateral donors andother forms of collateral security may be considered on a case tocase basis.

BBBB.... LOANS TOLOANS TOLOANS TOLOANS TO PARTICIPATING FINANCPARTICIPATING FINANCPARTICIPATING FINANCPARTICIPATING FINANCIAL INSTITUTIONSIAL INSTITUTIONSIAL INSTITUTIONSIAL INSTITUTIONS (PFIs) FOR(PFIs) FOR(PFIs) FOR(PFIs) FORONLENDING TO MICRO ENTERPRISES / MISSING MIDDLEONLENDING TO MICRO ENTERPRISES / MISSING MIDDLEONLENDING TO MICRO ENTERPRISES / MISSING MIDDLEONLENDING TO MICRO ENTERPRISES / MISSING MIDDLE

1111.... ApproachApproachApproachApproachThe Bank shall extend term loan to PFIs for on lending to microenterprises loans in the range of `50,000 10,00,000 perenterprise/borrower.

2222.... Eligibility CriteriaEligibility CriteriaEligibility CriteriaEligibility Criteria

NBFCs and MFIs (including NBFC- MFIs) have to fulfill the followingcriteria:

Track record of experience and performance in the field ofmicrofinance and MSE financing

Demonstrate adequate organizational capacities andgovernance structures

Meet minimum requirements regarding credit managementand risk appraisal systems

Compliance with all applicable prudential regulations andguidelines of RBI

Adequate anti-money laundering procedures are in place

Have arrangements or will shortly enter into arrangements witha credit bureau

Meet benchmark norms with respect to capital adequacy, networth, non-performing assets, risk rating etc. as laid out inSIDBIs Loan Policy, reviewed and revised from year to year

Meet minimum SIDBI requirements with respect to adoption ofan Environmental and Social Safeguards framework governingMSE lending.

Specific exemptions from some of these criteria can be made forstart-up NBFCs, depending on SIDBIs assessment and Loan Policyin consultation with international lending Agencies.


31/34

31

3333.... OthersOthersOthersOthers

a. Lending will be based on in-house appraisal along with creditrating by an independent rating agency as in vogue in SFMC.

b. NBFCs registered as Asset Finance Company or LoanCompanies should have minimum Investment grade rating ofBBB+ group rating by CRISIL or its equivalent grade rating byother rating Agencies whose ratings are accepted by SIDBI.

c. As regards MFIs (including NBFC-MFI), they should have aminimum capacity assessment rating of MfR5 of CRISIL orequivalent from a grading Agency acceptable to SIDBI.

d. Security shall comprise Hypothecation of assets, whereveravailable, created out of the loan and collateral security oncase to case basis.

e. Exposure norms and rate of interest shall be as per guidelinesfrom time to time.

CCCC.... Securitization/Acquisition by way of Direct assignment of cashSecuritization/Acquisition by way of Direct assignment of cashSecuritization/Acquisition by way of Direct assignment of cashSecuritization/Acquisition by way of Direct assignment of cashflowsflowsflowsflowsPurchase of Micro Enterprise / Missing Middle loans by way ofsecuritization and direct assignment of cash flows will beconsidered on a case to case basis in accordance with theextant RBI guidelines in this regard.


32/34

32

AnnexureAnnexureAnnexureAnnexure IIIIIIIIIIII

Higher investment grade ratingsHigher investment grade ratingsHigher investment grade ratingsHigher investment grade ratings Select SectorsSelect SectorsSelect SectorsSelect Sectors

Sr. No.Sr. No.Sr. No.Sr. No. Particulars of industryParticulars of industryParticulars of industryParticulars of industryMinimumMinimumMinimumMinimuminternalinternalinternalinternalratingratingratingrating

1 Chemical & chemical productsincluding drugs andpharmaceuticals

CR4

2 Commercial Real Estate CR4

3 Deserving units in the restrictedlist of industries such as chemicaldyes & dye intermediates,industrial oxygen, distilleries, etc.

CR3

4 Electronic equipment CR4

5 Food & food products includingfood processing sector

CR4

6 Hotels, hospitals / nursing homes,cold storages, industrial or warehouse spaces, etc

CR4

7 Industries covered under RedCategories by Pollution ControlBoard (PCB) of the concernedstate

CR4

8 Iron & steel industry CR3

9 Leather & leather products CR4

10 Power sector projects CR411 Textiles (including jute)/

readymade garments/ hosiery) /powerloom

CR4

12 Wind mill projects (stand alone4) CR3

4Minimum rating of windmill projects taken up by existing companies primarily for depreciation

benefit/ captive use/ sale to SEB would be CR5.


33/34

33

AnnexureAnnexureAnnexureAnnexure IIIIVVVV

Exposure CapsExposure CapsExposure CapsExposure Caps

5Includes exposure to activities in various sub-sectors under infrastructure6Excluding NBFCs

S. No.S. No.S. No.S. No. ActivityActivityActivityActivity //// IndustryIndustryIndustryIndustry ExposureExposureExposureExposure capcapcapcap

1111 Bills FinanceBills FinanceBills FinanceBills Finance

(a) MSME-RFS without collateral 15% of o/s portfolio ofSIDBI

2222 Infrastructure activities/projectsInfrastructure activities/projectsInfrastructure activities/projectsInfrastructure activities/projects

(a) Total portfolio5 10% of o/s portfolio ofSIDBI

(b) Power sector including generation,transmission and distribution.

7.5 % of o/s portfolio ofSIDBI

3333 NBFCs (overall exposure of the Bank)NBFCs (overall exposure of the Bank)NBFCs (overall exposure of the Bank)NBFCs (overall exposure of the Bank) 20 % of o/s portfolio ofSIDBI

3 (a) Gold Loan companies 5 % of o/s portfolio ofSIDBI

4444 Resource SupportResource SupportResource SupportResource Support6666 12.5 % of o/s portfolio ofSIDBI

5555 Services SectorServices SectorServices SectorServices Sector

(a) Exposure in service sector projects 15 % of o/s portfolio ofSIDBI

6666 Industry ExposureIndustry ExposureIndustry ExposureIndustry Exposure

(a) Cap on exposure to a particular industryother than those at (b) below

5 % of o/s portfolio ofSIDBI

(b)

(i) Transport Equipment (including Auto andauto components) 10 % of o/s portfolio of SIDBI

(ii) Textiles / ready made garments andhosiery

10 % of o/s portfolio of SIDBI

(iii) Food processing industry 10 % of o/s portfolio of SIDBI

(iv) Engineering industry 10 % of o/s portfolio of SIDBI

(v) Drugs and pharmaceuticals 10 % of o/s portfolio of SIDBI

(vi) Electronics and electrical products 10 % of o/s portfolio of SIDBI

(vii) Agro based industries 10 % of o/s portfolio of SIDBI

(viii) Commercial Real Estate 8.5 % of o/s portfolio of SIDBI

(xi) Iron & Steel 5 % of o/s portfolio of SIDBI

(xii) Petroleum & Petroleum Products 10 % of o/s portfolio of SIDBI

7777 Direct Assignment businessDirect Assignment businessDirect Assignment businessDirect Assignment business 5 % of o/s portfolio of SIDBI


34/34

**********

S. NS. NS. NS. No.o.o.o. Activity /Activity /Activity /Activity / IndustryIndustryIndustryIndustry ExposureExposureExposureExposure capcapcapcap

8888 Ceiling on Exposure in unsecured advancesCeiling on Exposure in unsecured advancesCeiling on Exposure in unsecured advancesCeiling on Exposure in unsecured advances[including MSME[including MSME[including MSME[including MSME----RFS without collateral atRFS without collateral atRFS without collateral atRFS without collateral at1(a) above]1(a) above]1(a) above]1(a) above]

30% ofo/s portfolio of SIDBI

9999 Individual bank/institution wise limitIndividual bank/institution wise limitIndividual bank/institution wise limitIndividual bank/institution wise limit

Refinance/Co-accepted Bills/BRS/LOCFC/Resource Support [perinstitution]

(a) State Bank / its Associate Banks/Nationalised Banks/ Financial Institutions(FIs]

Individual bank/FI-wise limitas approved by the Board.

(b) Private sector banks/ foreign banks

(c) SFCs [per institution] 15% of capital funds of SIDBI

(d) SIDCs including TFIDCs [per institution] 1% of capital funds of SIDBI

(e) SSIDCs [per institution] 0.5% of capital funds of SIDBI

(f) Scheduled Co-operative banks/ RegionalRural Banks [per institution]

7.5 % of capital funds ofSIDBI

10101010 Aggregate exposure toAggregate exposure toAggregate exposure toAggregate exposure to

(a) All SFCs (Aggregate) `5300 crore

(b) All SIDCs including TFIDCs (Aggregate) 5 % of capital funds of SIDBI

(c) All Nationalised Banks (aggregate) 300% of capital funds ofSIDBI

(d) All State Bank and its Associate Banks(aggregate)

200% of capital funds ofSIDBI

(e) All FIs (aggregate)7 100 % of capital funds of

SIDBI(f) Private Sector Banks (aggregate) 200 % of capital funds of

SIDBI

(g) Foreign Banks (aggregate) 100 % of capital funds ofSIDBI

loan policy sidbi

Documents