Sidbi plans rating for SSI clusters

The Small Industries Development Bank of India Sidbi along with six commercial banks is setting up a credit rating agency that will provid...

The Small Industries Development Bank of India Sidbi along with six commercial banks is setting up a credit rating agency that will provide rating for small scale industry SSI clusters. The aim is to facilitate cluster-related credit modules for the sector.

A cluster is a sectoral or geographical concentration of enterprises identified by a product or product range and the place where it is located. Sidbi had proposed to six commercial banks, all of which have agreed for equity participation in the agency. The six commercial banks are Punjab National Bank, Oriental Bank of Commerce, Canara Bank, Bank of Baroda, Union Bank of India and Bank of India.

With credit rating, bankers will be more encouraged to lend. The government has adopted the cluster model for development of SSIs with a view to address infrastructure constraints being faced by the sector. The model also enables SSIs to spruce up their marketing infrastructure. SSIs are currently getting financial assistance under the various cluster-based programmes being implemented by ministries of industry and textiles. This apart, export-related clusters are being formed under a scheme run by the commerce department. The Industrial Infrastructure Upgradation Scheme, launched by the government in Budget 2003 also covers SSI cluster projects.

Sidbi has also received a commitment of Rs 325 crore for its venture capital fund for SMEs. While Punjab National Bank has approved Rs 100 crore for the fund, Oriental Bank of Commerce is contributing Rs 50 crore. Union Bank of India and Bank of India have approved Rs 25 and Rs 50 crore, respectively. Central Bank, Bank of Baroda and Canara Bank are also approaching their respective boards to seek approval for joining. The same is being considered by State Bank of India. The venture capital fund VCF will focus on funding small and medium enterprises in biotechnology, pharma and knowledge-based industries among others.