October 04, 2023: Smt. Nirmala Sitharaman, Hon’ble Minister of Finance and Corporate Affairs, Government of India, inaugurated a new branch of Small Industries Development Bank of India located at Avinashi Road, Coimbatore, which is close to industrial estates like Kurichi, Mopperipalayam, Kallapalayam, and industrially developed areas like Arasur and Sulur, to cater to the MSME’s growing financial requirements. Smt.Vanati Srinivasan, MLA, Coimbatore South, Shri Vivek Joshi, IAS, Secretary, Department of Financial Services, Ministry of Finance, Government of India, Shri Sivasubramanian Ramann, IA&AS CMD, SIDBI and Shri Sudatta Mandal, Deputy Managing Director, SIDBI, graced the occasion.
In her opening remarks, Hon’ble Finance Minister mentioned that MSMEs are a vital part of the Indian economy and have made significant contributions to the country’s socio-economic growth. MSMEs make a crucial contribution to India’s GDP, are the second-largest employment provider, and have significant contribution on the overall exports of the country. Considering this, she reiterated that the need for providing ‘timely and adequate credit’ to MSMEs by banks/FIs.
She mentioned that the issues like delayed payment, collateral, etc. needs to be addressed in a more holistic manner so that the MSMEs being the backbone of the country are benefitted.
She mentioned that SIDBI has been set up as the Principal Financial Institution for Promotion, Financing and Development of MSMEs in the country. SIDBI has been playing a catalytic role in creating vibrancy in the MSME ecosystem and has carved a very crucial role for itself in India’s industrial economy.
She mentioned that SIDBI was pre-dominantly doing indirect finance as mandated and, it reached out to the MSMEs through Banks, NBFCs, MFI etc. and have now felt that the financial needs of MSMEs are dynamic and need to be met in a timely and cost effective manner. With this background, SIDBI started the direct finance which is around 10% of total credit to MSMEs. However, the 10% of the credit has its relevance and needs to be increased to 20% and further. She further informed that, today, SIDBI is fully digitized and cater to the varied needs of the MSME with its innovative products.
SIDBI is now expanding and opening branches in industrial clusters and has more than 90 branches and expected to cross over 100 shortly. Hon’ble Finance Minister further mentioned that there are more than 400 plus clusters in India and expressed hope that SIDBI which already has cluster presence would widen its reach in the days to come.
SIDBI has been at the forefront of providing innovative solutions to the issues faced by/requirements of MSMEs. It has created a green and digital credit delivery system for extending credit promptly to MSMEs at competitive terms and has also set up TReDS exchange platform in joint venture with NSE for addressing the issue of late receivables.
The digital journey like account aggregator has also played a major role in augmenting the credit flow to MSME. The budget proposed an amendment to the Income Tax Act. It ensures that the buyers can claim deduction in income tax only on payments made to a MSME supplier. In short, a company can’t claim the expense under the act until the payment has actually been made to the seller.