With the view to bring financial inclusion in the MSME sector, Union Finance Minister Arun Jaitley has launched two funds by Small Industries Development Bank of India (SIDBI), a fund of funds with total corpus of Rs 12,000 crore.
The funds are Rs 2,000-crore India Aspiration Fund (IAF) and SIDBI Make in India Loan for Enterprises (SMILE) scheme with an investment size of Rs 10,000 crore.
“India is witnessing a start-up revolution and to harness the potential of India’s innovators and entrepreneurs a vibrant financial ecosystem is essential. The IAF is intended to play a vital role in this financial ecosystem,” Jaitley said while launching the funds.
“The fund is expected to catalyse tens of thousands of crores of equity investment in start-ups and MSMEs. The insurance behemoth Life Insurance Corporation (LIC) has also agreed to be a partner and co-investor in the fund,” he added.
“Various important initiatives taken by the government was sanguine that Make In India initiative with a conducive financial ecosystem will make India a manufacturing hub very soon,” the minister said.
“Fund amounting to Rs 20,000 crore has been sanctioned by the MUDRA Bank and we are targeting to take it to Rs 1 trillion,” Jaitley said.
“The India Aspiration Fund is intended to catalyse tens of thousands of crores of equity investment into start-ups and MSMEs (micro and small enterprises), creating employment for lakhs of persons, mostly educated youth, over the next four to five years,” SIDBI said in a statement on Tuesday.
The second fund is a debt fund called SIDBI Make in India Loan for Enterprises (SMILE), which was announced in the Union budget in February. The fund will provide soft term loans and loans in the nature of quasi-equity to MSMEs to meet debt-to-equity norms and pursue growth opportunities in existing MSMEs.
The idea behind the launch of SMILE scheme is to provide soft loans in the nature of quasi-equity and term loans on relatively soft terms to MSMEs to meet the required debt-equity ratio norm as also for pursuing opportunities of growth by existing MSMEs, a SIBDI release said.
The focus will be on identified 25 sectors under ‘Make The focus will be on identified 25 sectors under ‘Make in India’ programme with emphasis on financing smaller enterprises with the MSME sector.