Your SlideShare is downloading. ×
0
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
AfDB-EMRC SME Forum Session 3 NK_Maini
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

AfDB-EMRC SME Forum Session 3 NK_Maini

2,239

Published on

Published in: Education
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
2,239
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
12
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. 1 AfDB‟s 2011 Annual Meetings AfDB – EMRC SME Forum : Bridging the Missing Middle Gap in Africa Session on ‘Innovative Solutions to Address the Financial needs of SMEs’ N K Maini Deputy Managing Director Small Industries Development Bank of India June 06,2011
  • 2. 2 Indian MSME Sector – An Overview Contribution to Economic Growth, Poverty Reduction, Employment Creation: No. of MSMEs – 30 mio, 95% MEs; 2nd largest source of employment - 70 mio; Contributes 45% of industrial output and 50% of exports; Outsourcing, linkages with large units/ MNCs increasing vertical integration. Paradigm shift from protection to enabling, economic - enterprise growth to sustainable -inclusive growth.
  • 3. 3 Role of SIDBI – „The‟ Development Bank Background  Under an Act of Parliament - April 1990;  Promotion, financing and development of MSMEs and co-ordinate the functions of institutions serving the sector;  Presence:  >600 MSME clusters through 103 branches;  indirect support to network of >84,000 branches of banks/ FIs/ MFIs;  Cumulative financial support of US$ 45 billion to 32 million MSMEs.
  • 4. 4 4 One Stop Solution for MSME sector SIDBI SVCL- Venture Capital SMERA- credit rating- green rating ISTSL-technology transfer-pCDM CGTMSE – credit guarantee- RSF Improve flow of Credit to MSMEs Entrepreneurship / Enterprise promotion Credit delivery models Business Development Services Missing Middle – Downscaling / upscaling Refinance Direct Credit - Risk Capital - Sustainable Finance Structured products 4ISARC – Asset reconstruction Micro Finance - Nurturing MFIs
  • 5. Indian MSME - Segments Loans upto US$ 1100/- MFIs No paper work, social collateral, Loans from US$ 1100/- to US$ 22,000 Missing Middle Lack of information, considered risky, small ticket size, high transaction cost. Loans above US$ 22,000 Formal FIs Availability of Info, reasonable ticket size and manageable transaction costs, well banked
  • 6. Financial Inclusion – Micro Finance by SIDBI  Thrust on unserved, underserved, rural and unorganised sectors serving National priorities and MDGs;  Through Micro Finance (loans upto US$ 1100);  Nurtured 150 plus MFIs for on-lending;  Pioneered the concept of rating of MFIs;  Mainstreaming - Commercial Banks now funding MFIs;  Cumulative Beneficiaries >30 mio persons.
  • 7. Propagating Responsible Micro Finance  Promoting transparency and reduction in Interest rates;  Created “Lenders‟ Forum” to promote co-operation among MFI lenders;  India Microfinance Platform;  Code of Conduct Assessment Tool;  Credit Bureau to avoid multiple lending;  Encouraging information sharing amongst MFIs.
  • 8. Beyond Micro Finance: „Missing Middle‟ Approach  In India, about 20% of credit demand of micro enterprises met by formal financial institutions;  Of the total bank loan, only 25% are for loans up to US$ 22,000 – a vast sector missing out on credit availability;  Thus, SIDBI thrust now on this “Missing Middle” segment – from US$ 1100 to US$ 22,000.
  • 9. Why Micro Enterprises ?  Meet development agenda. High incremental employment creation;  Creating larger SME clients for the future;  Foothold in a segment that can be targeted by banks/ MFIs in the future-mainstreaming. 9
  • 10. Approaches to MEL  Co-branding NBFCs BMOs (Industry Associations)  Banking Correspondent model  Buying out the portfolios  Direct MEL 10
  • 11. Test Launch – Direct MELs In FY2009, SIDBI started MELs:  Loans for working capital and/ or equipment  Credit Guarantee coverage – borne by SIDBI  Test launch through 7 MFBs  Avg. interest of 12% p.a.  Avg. loan of US$ 4000  500 MELs covered 11
  • 12. Direct MEL– Lessons Learnt  Absence of formal financial information;  Need to bring in simplified process and assessment techniques;  Large numbers need high standardisation;  Our rate very attractive – to client;  Need for intensive follow up/ monitoring (outsourcing ?);  Capacity building needs of intermediaries/ clients. 12
  • 13. Direct MEL – Future Outlook !  Draw from international practices in MELs e.g., downscaling;  Design a scalable model covering entire credit cycle;  A separate integrated software – user friendly, can be shared with other lenders;  Simplified process and tools to assess the loan against borrower‟s cash flows;  Expert credit rating model initially – statistical model once a pool of MELs is available. 13
  • 14. Missing Middle - Partners  ADB : LoC of US$ 50 mio & TA of US$ 3 mio to develop, access to finance and business development services by micro enterprises. TA is women centric for supporting micro-entrepreneurship for women empowerment in selected states and capacity building of the staff of MFIs, to sensitize them towards the specific needs and opportunities of the sector.  GIZ, Germany : To provide capacity building support towards cluster centric approach for MEL
  • 15. 15 Contact Details Navin Kumar Maini Deputy Managing Director Small Industries Development Bank of India, Head Office, SIDBI Tower, 15, Ashok Marg, Lucknow – 226001, India Tel.: +91-522-2288508 Fax: +91-522-2286925 Mob.: +91-99190 02367 E-mail : nkmaini@sidbi.in Website: www.sidbi.in WE EMPOWER MSMEs

×