New Delhi, Sept 13 (KNN) The Small Industries Development Bank of India (SIDBI) is planning to grow its share in the Banking system’s total lending to micro, small, and medium enterprises (MSMEs) from 14 per cent to 25 per cent in three years, reported Businessline.

To support this, it expects to raise equity capital, including Rs 5,000 crore in two tranches, said S Ramann, Chairman and Managing Director, SIDBI. This capital-raising programme will include a rights issue next year.

“We are a refinance bank as well as a direct lending bank. Our total loan portfolio stood at Rs 4-lakh crore as of March-end 2023. We will probably end up at Rs 5-lakh crore by the end of the current fiscal,” he said.

“Two years ago, SIDBI accounted for 7 per cent of total MSME lending. Today, that figure is already 14 per cent. This figure might cross 15 per cent in a year,” Ramann said.

SIDBI’s loan book has a 92 per cent indirect financing component and an 8 per cent direct financing component. The SIDBI Chief observed that this ratio will change to 85:15 in a couple of years, reported Businessline.

Ramann underscored that digital banking helps bridge the chasm where the underserved MSEs (which require Rs 1 lakh to Rs 5 lakh loans and are probably without GST, PAN, and may not be filing returns) don’t get direct financing.

“Though the interest rates are high in the up to Rs 1 lakh loan segment, MSEs do get credit from MFIs (microfinance institutions). These intermediaries borrow from others. So their cost of credit is high.

“Our aim is to lend at half the rate that MFIs lend. So, if MFIs are lending at 25-28 per cent, ballpark, we will probably lend at about half this rate. We are positioning ourselves as a lender to the micro, nano, and tiny segments,” Ramann said.

SIDBI also wants to create a green fund-of-funds (FoF) to support the sustainability framework (involving solar rooftops, EVs, the circular economy, food and health, etc.), which is critical for India.  (KNN Bureau)