emerging opportunities in msme financing september 2, 2015 ... · central theme of the programme,...

Empowering Micro, Small & Medium Enterprises

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Emerging Opportunities in MSME Financing

September 2, 2015 Mumbai

Presentation by Dr. Kshatrapati Shivaji, I.A.S.

Chairman and Managing Director, Small Industries Development Bank of India


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The Theme

• Central Theme of the Programme,

“Financial Inclusion : New Opportunities for the Financial Sector”

• My topic : “Emerging Opportunities in the MSME Financing

• Is there a connect between the two ?

• Yes, the connection runs deep. Either reap

Demographic Dividend or end up with

Demographic Disaster


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Financial Exclusion

• Who are the financially excluded ?

• Own Account Enterprises,

• Self employed small businesses

• New age Start-ups

• Idea based enterprises

√Own account enterprises itself – number

around 6 crore. √Negative impact, social consequences of

exclusion – disastrous. √Positive impact of inclusion –

increased national income.


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The Players in the Inclusion Space

The Players facilitating financial inclusion;

(i) Banks

(ii) NBFCs

(iii) RRBs

(iv) MFIs

(v) Others forms – Trusts, Societies,

NGOs, UCBs, Cooperatives, Other

entities.

√ What about Money lenders ?


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Financial Inclusion

The processes for financial inclusion :

√ Opening of bank account – first step

√ Saving activity by the account holder

√ Financial Literacy

√ Loans extended, overdraft, guarantee

√ Other related services – insurance,

remittance, cheque book, plastic card etc.


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Initiatives in Financial Inclusion - GoI

√ GoI - Mission Mode

√ Universalisation of bank accounts

√ PMJDY – nearly 18 crore bank accounts

√ Various Social Security Schemes

- PM Suraksha Yojana, Atal

Pension Yojana, PM Jeewan Jyoti

Beema Yojana.


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Initiatives in Financial Inclusion - RBI

√ Bank Correspondents / Bank Mitra

√ Payment Banks Licence

√ On way to Small Finance Bank

√ White ATMs / ATMs

√ More Differentiated Banks expected

√ Receptive to New Ideas


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Where Does SIDBI Stand

√ SIDBI serves the MSME sector

√ MSME sector is a vibrant and resilient sector

√ Substantial contribution to the national economy

√ Balanced regional development

√ Nursery of Innovation


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The Activities of SIDBI

• Positioned itself as a unique institution

• Complements and supplements the efforts of other

players in the MSME eco-system

• Bridges the financial and non-financial gaps

• Introduced a wide array of financial products for the

entire MSME spectrum

• Equity, quasi equity, mezzanine capital, risk capital,

venture capital, venture debt, micro finance, setting

up incubation centres, receivables finance, sustainable

finance, assistance for intangibles and asset light

activities.


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SIDBI - Apex institution for MSME in India

Credit

Indirect Finance

Direct Finance

Micro finance

Beyond credit

Enterprise promotion/ skill development

Management Development

Cluster Development

Marketing Support

Policy advocacy

Credit Advisory

Institutional solutions

SVCL- Venture Capital

SMERA- SME Rating

CGTMSE – Collateral Free

Lending

ISTSL-Technology Transfer

ISARC – Asset Reconstruction

MUDRA


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Initiatives in Financial Inclusion – SIDBI

Provided impetus to the MFI led micro finance lending

Benefitted around 33 million disadvantaged individuals, mostly

women

Propagated and institutionalised Responsible Finance Practices in

the MFI sector

Market making role which attracted institutional capital, social

capital and bank lending to the sector

Started Capacity Assessment Rating of MFIs which has since

become industry standard for bank lending

Code of Conduct Assessment (CoCA) has become a valuable tool

for assessing compliance with tenets of responsible lending

Incubated MFIs such as Bandhan, Equitas, SKS and others


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Initiatives in Financial Inclusion – SIDBI

Institutionalised Credit Guarantee Scheme.

Credit Guarantee Trust Fund for Micro and Small

Enterprises (CGTMSE)

Collateral free advances to the extent of approximately

Rupees ONE LAKH Crore benefitting 20 lakh micro and

small units

The above intervention has sustained employment for around 50 lakh on conservative basis

CGTMSE – model, in demand from many countries.


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Initiatives in Financial Inclusion –

MUDRA

Funding the Unfunded.

Micro Units Development & Refinance Agency (MUDRA)

Prosperity the Inclusive Way

Non-corporate Small Business Sector, one of the largest

disaggregated business (around 6 crore) eco-system

Only 4% associated with Institutional Finance

MUDRA–refinance/credit guarantee to eligible institutions

PMMY – Target Rs 1,22,000 crore for FY 2016.

MUDRA has 130 partner institutions. Ten indicative

schemes, covering various entrepreneurial activities.


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Stand Up India

India will Stand Up when the Start ups will prosper.

GoI initiatives of Zero Defect Zero Effect, Make In

India, Skill India culminates in the form of Startup

India.

Small has the potential to make it big.

Potential can be harnessed only with timely, adequate,

right type of financial instrument in a transparent

manner.


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Stand Up India

Assisting each Start up is an act of financial inclusion.

Commercialising an idea, with financial assistance,

which has the potential to disrupt status quo for

betterment of lives is an act of financial inclusion as it

matters most to individuals at BoP, ex. Mobile Banking.

SIDBI has been at the forefront of Start up movement

in India, even prior to the word gaining its popularity

as it is today.


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SIDBI in the Start Up Space

SIDBI has supported nearly 75 different venture funds with

aggregate committments of Rs 1800 crore.

Some assisted enterprises are marquee names likes

Wildcraft, Bill Desk, Smaash Entertainment etc.

SIDBI has recently launched India Aspiration Fund with a

corpus of Rs 2,000 crore.


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What is On the Horizon

√Low cost micro payment system is the imperative. √Supporting Start up Culture and Improving Ease of

Doing Business √Technology and related innovation will be the game

changers √Credit Bureau and Data Analytics – Customer profiling,

Default Analysis √Indian economy very dynamic. Banking system has to

be flexible and competitive to keep the dynamics in a sustained manner.

√Improved and friendly regulatory environment.


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Thank you!

www.sidbi.in

emerging opportunities in msme financing september 2, 2015 ... · central theme of the programme,...

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