MSMEs to get Liquidity support scheme from SIDBI

Small Industries Development Bank of India (SIDBI) has announced the launch of the Liquidity support scheme for micro, small and medium enterprises (MSMEs) that have been hugely impacted by COVID-19 pandemic.

SIDBI stated that it has received Rs. 15,000 crore from Reserve Bank of India (RBI) in order to provide financial help to MSMEs. RBI provided the help through a Special Liquidity Facility (SLF).

SIDBI will provide the liquidity lines to non-banking finance companies (NBFC’s), microfinance institutions (MFI’s), and banks who will refinance the MSME’s.

Objective:

In its measures to support COVID-19 hit businesses, Reserve Bank of India (RBI) stated that the funding was provided to SIDBI. The announced schemes will cover all eligible entities with an investment-grade rating, irrespective of an organization’s size to ensure wide coverage.

Qualifications of NBFC’s and MFI’s to receive the funding:

To receive funding, non-banking finance companies (NBFC) must be registered with RBI as an investment and credit company. It must have been in business for at least 3 years. The company must have minimum asses size of Rs. 50 crore and minimum net owned funds of 20 crores with an external rating of BBB-.

In case of microfinance institutions (MFI’s), it must be registered as a trust cooperative society, society, company or NBFC with a minimum credit rating of BBB-.

For banks, they must be profit-making and have their minimum net worth of Rs. 100 crores. They must also have non-performing assets below 10% and a minimum capital adequacy ratio of 9%.

About SIDBI:

Small Industrial Development Bank of India (SIDBI) is a financial institution which was formed on April 2, 1990. Its aim is to provide short term lending to industries and to refinance facilities along with serving as the major financial institution to micro, small, and medium enterprises (MSMEs).

SIDBI is headquartered in Lucknow, India, and was established under an Act of Parliament. It operates under the Department of Financial Services, Government of India.