FINANCING SOURCES FOR SMALL

SCALE INDUSTRIES

By:
Miss. Priyanka R. Wandhe
 “No SSI unit can take off without monetary support.”

1. Financing from Central Government:

Established Small Industries Development Bank of India (SIDBI).
Operations mainly classified into 3 heads:

Indirect Finance: Provides finance to commercial banks who

gives finance and enable them to provide short term loans, credit
to SSI, provides bill discounting facilities.

Direct finance: Provided for setting up new units, modernisation

& upgradation of existing units,for developing marketing
networking, for export promotion, for infrastructure development.

Promotional & Development Activities: SIDBI aims at-:

Technology upgradation, market promotion, quality management,
HR Development, guarantee free credit for long term & working
capital financing.
2. Financing from State government:
State Financial corporation (SFC): Provides long
term credit to SSI. Function to achieve Socio-economic
goals set by State Govt. Amount financed by SFC to SSI
is 73% of total sanctions to SSI.

State Small Industries Development corporation

(SSIDC): Provides assistance to small cottage and tiny
industries to procure & distribute scarce raw materials,
hire purchase facilities to purchase machinery.

State Industrial Development Corporation

(SIDIC):
Undertaking wholly owned by State Govt. Acts as a
catalyst for state wise industrial development.
Mainly engaged in infrastructure development.
3. Financing from Banks:
From Commercial Banks: Gives priority to finance
short, medium & long term needs of SSI. They
provide finance in the following ways:- cash credit,
bill discounting & purchasing, term loans, demand
loans.

Regional Rural Banks (RRB): To develop rural

economy by financing agricultural & rural
activities. Provides major loans to rural artisians,
village & cottage industries.

Co-operative Banks: Finances the SSI in urban

areas and gives credit to priority sector.
4. Financing from statutory Boards:
Set up to ensure co-ordination between SSI
sector, various financial institutions & Govt.
It renders advice to the Govt. on various
policy matters & other issue of SSI.
5. Financing by statutory Corporations:

National Small Industries Corporation (NSIC):

Provides assitance in export, training in industrial
trade, marketing support, supply of indeginous &
imported machines on hire purchase or leasing
basis.

North Eastern Development Finance

Corporation Limited (NEFDI): Provides research
facilities. It helps for international funding.
 Khadi and Village Commission (KVIC):

Finance schemes are:-

a). Interest subsidy scheme of bank finance:

(Interest subsidy eligibility certificate) can raise loans
from bank to the extent of amount mentioned in the
certificate, can be used for short & long term
finance.

b). Margin Money scheme: Commercial banks & State

KVI provides margin money to the enterpreneurs of
mainly village industry.
6. Additional State Govt. Agencies:
State Commissioner or Director of Industries &
District Industries Centres (DIC):

Implements the Govt. policies for development of

SSI.

Set up to implement centrally sponsored scheme.

Recently, set up single window clearance system for

the benefit of SSI enterpreneurs.
7. Other Agencies:
Non Govt. organisation (NGO): Registered under
Society’s Registrations Act & they are non profit
organisations.
Involved in various activities like:-
Training of management assistants, setting up of
testing centres, etc.

Housing Urban Development Corporation Ltd.

(HUDCO): Helps in the infrastructure development
for SSI.
THANK YOU