SIDBI looking to diversify by going into trade finance


Small Industries Development Bank of India (SIDBI) is primarily focused on the development of Micro, Small & Medium Enterprises (MSMEs). It offers various loan schemes to help MSMEs in growing, developing, marketing, and commercialising their products and services. SIDBI was established in the year, 1990 by the Indian government under the SIDBI Act, 1989.

Small Industries Development Bank of India - SIDBI


Trade financing

Now, the bank is planning to foray into trade finance and sanctioning loans online as a diversification. The Chairman and Managing Director (MD) of the bank, Mohammad Mustafa has said that it is considering many options with regards to direct lending portfolio. SIDBI will offer term loans to manufacturing units as well as traders. The funding gap in trade cycle faced by the buyers and sellers of goods and services can be overcome with trade finance. As the MSME sector is an integrated space, the financial institution is planning to enter trade financing, provided the legal opinions are in place.

Online sanctioning of loans

The bank has Udyami Mitra, an online portal to provide easy access to loans to MSMEs. Udyami Matri provides end-to-end solutions to facilitate credit delivery and an array of credit-plus services via application tracking, support, and multiple interface with service providers, applicants, and banks. Now, the financial institution is developing a new concept using which MSMEs will be given online loan sanctions with a lower turnaround time. As per the new concept, the loan will be approved in 30 minutes and after all the routine banking procedures, the loan amount will be disbursed in 7 to 8 days. SIDBI is working with 5 to 6 banks in order to make the online sanctioning of loans a reality as soon as possible.


With regards to direct financing, SIDBI may face limitations. Therefore, it is taking steps to begin co-lending with non-banking financial companies (NBFCs) and banks. Currently, it has partnered only with small banks.


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