INSTITUTIONS SUPPORTING ENTREPRENEURS

Module IV

SMALL INDUSTRIES FINANCING IN DEVELOPING COUNTRIES

Small

scale industries are usually run by an entrepreneur alone or a small group of entrepreneurs and hence availability of finance is a matter of concern for them. These entrepreneur face the problems of insufficient ownership capital to start up and run a business enterprise.

 In

a developing country like India, SSI plays a vital role and hence holds a prominent place in the five year plans. In conformity with the plans, SSIs have been given the privilege of priority sectors of the economy & have received active encouragement from government, banks and financial institutions.

FINANCIAL INSTITUTIONS IN INDIA

Financial

Institutions in India are divided in two categories. The first type refers to the regulatory institutions and the second type refers to the intermediaries.

The regulators are assigned with the job of governing all the divisions of the Indian financial system. These regulatory institutions are responsible for maintaining the transparency and the national interest in the operations of the institutions under their supervision. The regulatory bodies of the financial institutions in India are as follows: Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI) Central Board of Direct Taxes (CBDT) Central Board of Excise & Customs
1.

2. The Regulatory bodies, there are the Intermediaries that include the banking and non-banking financial institutions. Some of the specialized financial institutions in India are as follows: Unit Trust of India (UTI) Securities Trading Corporation of India Ltd. (STCI) Industrial Development Bank of India (IDBI) Industrial Reconstruction Bank of India (IRBI), now (Industrial Investment Bank of India) Export - Import Bank of India (EXIM Bank) Small Industries Development Bank of India (SIDBI)

 National

Bank for Agriculture and Rural Development (NABARD) Life Insurance Corporation of India (LIC) General Insurance Corporation of India (GIC) Shipping Credit and Investment Company of India Ltd. (SCICI) Housing and Urban Development Corporation Ltd. (HUDCO) National Housing Bank (NHB)

CENTRAL AND STATE LEVEL INSTITUTIONS

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)

RBI categorized IDBI as an "other public sector bank". It was established in 1964 by an Act of Parliament to provide credit and other facilities for the development of the fledgling Indian industry Objectives The main objectives of IDBI is to serve as the apex institution for term finance for industry in India. Its objectives include (1) Co-ordination, regulation and supervision of the working of other financial institutions such as IFCI , ICICI, UTI, LIC, Commercial Banks and SFCs. (2) Supplementing the resources of other financial institutions and thereby widening the scope of their assistance. (3) Planning, promotion and development of key industries and diversifications of industrial growth. (4) Devising and enforcing a system of industrial growth that conforms to national priorities.

Functions The IDBI has been established to perform the following functions(1) To grant loans and advances to IFCI, SFCs or any other financial institution by way of refinancing of loans granted by such institutions which are repayable within 25 year. (2) To grant loans and advances to scheduled banks or state co-operative banks by way of refinancing of loans granted by such institutions which are repayable in 15 years.

(3)

(4)

(5)

To grant loans and advances to IFCI, SFCs, other institutions, scheduled banks, state co-operative banks by way of refinancing of loans granted by such institution to industrial concerns for exports. To discount or rediscount bills of industrial concerns. To underwrite or to subscribe to shares or debentures of industrial concerns.

(6)

(7)

(8) (9)

(10)

To subscribe to or purchase stock, shares, bonds and debentures of other financial institutions. To grant line of credit or loans and advances to other financial institutions such as IFCI, SFCs, etc. To grant loans to any industrial concern. To guarantee deferred payment due from any industrial concern. To guarantee loans raised by industrial concerns in the market or from institutions.

INDIAN INSTITUTE OF ENTREPRENEURSHIP IIE

With an aim to undertake training, research and consultancy activities in the small industry sector focusing on entrepreneurship development, the Indian institute of entrepreneurship (IIE) was established in the year 1993 at Guwahati by the erstwhile ministry of Industry (now ministry of small scale industry) government of India as an autonomous national institute.

The objectives of IIE are: 1. To organise and conduct training for entrepreneurship development. 2. To evolve strategies and methodologies for different target groups and locations and conduct field tests. 3. To identify training needs and offer training programmes to government and non government organisations engaged in promoting and supporting entrepreneurship. 4. To identify, design and conduct training programmes for existing entrepreneurs. 5. To prepare and publish literature related to entrepreneurship and industrial development. 6. To conduct research for generating knowledge to accelerate the process of entrepreneurship development.

NT

ME

DISTRICT INDUSTRIES CENTERS (DICS)

Main Activity To develop and promote Cottage and Small Scale Industries in the district. The Small Scale Industries (SSI) means the Industries with investment upto Rs 1 (one) crore in plant & machinery

FINANCIAL ASSISTANCE SCHEMES (DEPARTMENTAL) 1) Prime Minister Rozgar Yojona (PMRY) It is a self-employment scheme for educated unemployed youth with eligibility... a) Class VIII passed b) Age 18 to 35 years (relaxable upto 45 years for SC / ST / Women / Physically handicapped / Ex-Servicemen) c) Project upto Rs 2.00 lakh for Industries/Service and Rs 1.00 lakh for Business d) Annual family income Rs 40,000/- (Max) 2) Normal Bank Finance Scheme If is one of the major schemes for setting up SSI unit. The Projects/Schemes for the purpose should have sufficient equity participation. 3) Loan Under BSAI Act This assistance is mainly for Handicrafts Sector. Limit of loan upto Rs 10,000/-. The rate of interest is 8% with a rebate of 2.5% on regular re-payment.

FACILITIES AND OTHER SERVICES 1. S.S.I. Registration a) Provisional/Temporary Registration : Before starting the SSI Unit, this registration is issued b) Permanent/Final Registration : After commencement of production of SSI Unit, this registration is issued 2. Preference for power connection Priority is given for WBSEB electric power connection to registered SSI Unit 3. Project/Scheme Vetting Project Scheme of SSI unit is vetted for technical feasibility 4. Marketing Assistance to Handicraft Products Given through participation in WB Handicrafts Expo' 5. Special Assistance rendered For setting up Haldia Petrochemicals Downstream Units.

6. National Project of Bio-Gas Development (NPBD) Construction of Bio-gas plant (family size 1-cum to 10-cum). Main usage are... a) Domestic cooking and lighting b) Production of organic manure (enriched with NPK) for better yield in agricultural, horticultural & piscicultural sectors c) Helps to maintain ecological balance. Provision of Govt. subsidy to all categories of beneficiaries 7. Pollution Clearance for SSI Units Pollution Clearance Certificate (consent for starting all categories, viz. Green, Orange, Red of SSI units) is issued on behalf of WBPCB west Bengal pollution control board and also the consent to operate for Green category only 8. Training Programme Some training programmes on different trades as mentioned below are organised from time to time for prospective entrepreneurs and handicraft artisans