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An entrepreneur requires a continuous flow of funds not
only for setting up of his/ her business, but also for successful operation
as well as regular upgradation/ modernisation of the industrial unit.
To meet this requirement, the Government (both at the Central and State
level) has been undertaking several steps like setting up of banks and
financial institutions; formulating various policies and schemes, etc.
All such measures are specifically focussed towards the promotion and
development of small and medium enterprises.
The public sector banks are the major source of financial
assistance to the industrial sector. They extend credit support to the
firms in the form of loans, advances, discounting bills, project financing,
term loans, export finance, etc. Some of the major examples of such banks
are:-
- State Bank of India (SBI) provides
a wide range of financial products and services that can cater to any
business or market requirement. It deploys multiple channels to deliver
integrated solutions for all financial challenges faced by the corporate
universe. Its various funding schemes are:-
The bank also provides financial assistance to agriculturists
through a network of rural and semi-urban branches. These specialized
branches have been set up in different parts of the country exclusively
for the development of agriculture through credit deployment. Their schemes
cover a wide range of agricultural activities like crop
loan, finance
to horticulture, farm
mechanization schemes, land
development schemes, minor
irrigation projects, agricultural
term loans, etc.
- Bank of Baroda offers various products
and services that meet the specific requirements of business enterprises,
particularly the small scale units. Various schemes relating to the provision
of loans and advances by the bank include:-
- Andhra Bank has also devised
a host of loan schemes to meet the financial requirements of an enterprise.
These particularly cater to the corporate and agricultural sector. Some
of its important funding options include:-
Small scale industries need credit
support on a continuous basis for running the enterprise as well as
for its diversification and modernisation. Recognising the need for a
focused financial assistance to such industries, the Government of India,
together with the State Governments, has formulated several policy packages
including schemes and funds for their growth and development. Most of
these programmes of the Central Government are implemented through two
principal organisations:-
- Small Industries Development Organisation (SIDO)
is an apex body for promotion and development of small scale industries
in the country. Its major activities include:-
- Advising the Government on formulation of policies and
programmes for the small-scale industries.
- Conducting periodical census/survey of the small scale
industry and generating data/reports on various important parameters/indicators
of growth and development of the sector.
- Maintaining close liaison with other Central Ministries,
Planning Commission, State Governments, Financial Institutions and other
organisations concerned with the development of small-scale industries.
- Facilitating linkage of small-scale industries as ancillaries
to large and medium scale industries.
- Developing human resource base through training and
skill upgradation.
For achieving its objectives, SIDO has devised a comprehensive
range of schemes for providing credit facilities, technology support services
and marketing assistance, etc. Some of the major schemes
are:-
- National
Small Industries Corporation Ltd (NSIC), has been established
with the objective of promoting, aiding and fostering the growth of small
scale industries in the country. It has been assisting small enterprises
through a set of specially tailored schemes which facilitate marketing
support, credit support, technology support and other support services.
- Marketing
support schemes :- sound marketing is critical for the growth and
survival of small enterprises. NSIC acts as a facilitator to promote
small industries products and has devised a number of schemes to support
small enterprises in their marketing.
- Credit support schemes:- NSIC facilitates credit requirements of small
enterprises in several areas. These include:-
- Equipment financing:- through schemes like 'Hire
Purchase' and 'Term Loan' for the procurement of equipments.
- Financing for procurement of raw material:- by facilitating
bulk purchase of basic raw materials at competitive rates, import
of scares raw materials,etc. NSIC also takes care of all the procedures,
documentation and issue of letter of credit in case of imports.
- Financing for marketing activities:- such as internal
marketing, exports and bill discounting, etc.
- Financing through syndication with banks:- by entering
into strategic alliances with commercial banks so as to facilitate
fund requirement of the small enterprises. It involves an arrangement
of forwarding the loan applications of the interested small enterprises
to the banks.
- Performance and credit rating scheme for small industries:-
so as to enable the small enterprises to ascertain the strengths
and weaknesses of their existing operations and take corrective
measures accordingly. NSIC is operating the scheme through agencies
like ICRA, ONICRA, Duns & Bradstreet(D&B), CRISIL, FITCH, CARE
and SMERA.
- Technology
support schemes:- NSIC offers small units various support services
through its 'Technical Services Centres' and 'Extension Centres'. The
services provided include advise on application of new techniques; material
testing facilities through accredited laboratories; energy and environment
services at selected centres; classroom and practical training for skill
upgradation, etc.
At the State level, various State Financial Corporations
(SFCs) have been set up by the respective State Governments for providing
financial assistance to the industrial units. For this purpose, these
institutions have brought out several funds and schemes, from time to
time. There are 18 State Financial Corporations (SFCs) in the country.
For example:-
- Kerala Financial Corporation (KFC),
incorporated under the State Financial Corporations Act of 1951, is a
trend setter in the field of industrial finance. It has been playing a
major role in the development and industrialisation of Kerala by
extending financial assistance well-suited for the requirements of the
entrepreneurs. Its main objective is to extend term loan assistance
for establishing new industrial units or to extend credit assistance for
meeting expansion/diversification/modernisation costs of the existing
units, in small scale or medium sectors. Some of its major schemes
include:-
- Madhya Pradesh Financial Corporation
is the premier institution in the State of Madhya Pradesh engaged in providing
financial assistance to small and medium industries. This assistance has
been extended in the form of a wide range of fund and non fund based services/
schemes. The fund based schemes are available for setting up of business
ventures within the State, whereas, non fund based schemes are available
throughout the country.
The fund
based schemes include:-
- Term Loan
- Equipment Finance
- Asset Credit
- Short Term Loan
- Working Capital
- Loan Replenishment
- Finance for Market Activities
- Composite Loan
- Credit Linked Capital Subsidy for SSI
The non-fund
based schemes include:-
- Public Issue Appraisal
- Credit Syndication
- Corporate Advisory Services
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