financial and non financial assistance for entrepreneurs

1. Chapter 5
Institutional Assistance to Small
Scale Enterprises

3. Institutions offering financial
assistance
 State Financial Corporations –SFC
 SIDBI
 COMMERCIAL BANKS
 Karnataka State Industrial Investment
and Development Corporation
(KSIIDC)
 Karnataka State Financial
Corporation – KSFC
 Industrial Finance Corporation of India
(IFCI)

4. Institutions offering non-financial
assistance
 District Industries Centre (DIC)
 Small Industries Services Institute
(SISI)
 Entrepreneurship Development
Institute (EDI)
 Small Industries Development
Organization (SIDO)

5. Institutions offering non-financial
assistance
 Association of Women Entrepreneurs
of karnataka (AWAKE)
 Technical Consultancy Organizations
(TCO)
 Technical Consultancy Services
Organization of Karnataka (TECSOK)
 Khadi and Village Industries
Commission (KVIC)

6. State Financial Corporations (
SFCs)
 To overcome the financial hurdles of
SSIs in the country, Government of
India has established SFC in each
state .
 According to the provisions of the
State Financial Corporations Act,
1951.

7. Specific functions of SFCs:
 There are at present 18 SFCs and almost
every state has a financial corporation of its
own.
 Giving loans to small and medium scale
industries.
 Financial support is also provided for
Purchase of machinery
modernization
Women Entrepreneur

8. Specific functions of SFCs:
 Grant loans to industrial concerns (repayable
within a period not exceeding 20 years)
 Loans are extended to
manufacturing concern
food processing
hotel industry
repair and services
hospitals
tourism services

9. Financial Assistance through Small Industries
Development Bank Of India ( SIDBI)
SIDBI was established on April 2nd,1990.
It is the principal financial Institution for
the promotions, Financing and
Development of industries

10. Objectives of SIDBI:
 Setting up of new projects
 Expansion ,diversification, modernization
 Technology upgradation, quality improvement
,rehabilitation of sick units
 Strengthening of marketing capabilities of SSI units
 Development of Infrastructure
 Export Promotion.

11. SIDBI provides
 Foreign currency to import equipment
 Re-finance
 Micro-finance initiatives:
banking service is provided to
unemployed or low income people or who
have no access to financial service.

12. Financial Assistance through Commercial
Banks:
A commercial bank is the one which accepts
deposits and gives loans. The credit policy:
 Priority sector lending –SSI,
agriculture,export etc(40%
of lending to these sector)
 Institutional arrangement:
SIDBI-Apex refinance bank
SFC-term loans
Scheduled Bank(private
bank,public bank &
foreign bank) –Term
loan

13. Credit policy

14. Initiatives are
 Credit for tiny sector
 Opening SSI bank branches
 Technology development fund
 Working capital
 No security for loan upto 5 lakhs
 Credit guarantee scheme up to 25
lakhs
 Credit linked capital subsidy scheme
for technology upgradation

15. State Bank of India (SBI) has
many schemes for SSI
 They are :
General purpose term loans (3 years)
Liberalized credit for SSI(no security
upto 5 lakhs)
Composite term loan (upto
25lakhs.combination of term loan and working
capital)
composite term loan = term loan + working
capital

16.  SBI offer financial assistance to
technically qualified, trained and
experienced entrepreneur .
 Equity fund scheme - interest free loan
for a period of 5 to 7 years
 Stree Shakti Package - women
entrepreneurs

17.  Composite loan scheme -
equipment+construction+working capital
needs
 Margin money scheme –to start industries
in rural areas (partnership firms & Private Limited
companies are not eligible)
 Mahila Udyam Nidhi Scheme-women
 Export finance schemes

18. Financial Assistance from Karnataka State
Financial Corporation( KSFC):
KSFC extending financial assistance to
entrepreneurs, service sectors like hotels,
industrial estates, hospitals , nursing homes
etc.
KSFC finances up to Rs. 200 lakhs for
partnership, sole proprietor firms
 Rs. 500 lakhs for companies and co-
operative societies.

19.  KSFC also provide facilities like
hire purchase assistance
merchant banking facilities
underwriting of shares
bill discounting etc…

20. Few schemes of KSFC to SSI
sector:
 Loan schemes for commercial complexes
 Loan scheme for Development of Industrial
Estates
 Loan scheme for Hospitals, Nursing homes
and Medical Stores
 Loan scheme for transport industry
 Loan scheme for Maintenance and
construction of roads.

21. Karnataka State Small Industries
Development Corporation ( KSSIDC):
 (KSSIDC) is an agency promoted by the
government of Karnataka
 for promotion and development of small
scale industries in the state.
KSSIDC has established 98 industrial estates
in all the districts.
It has provided ready built sheds and small
plots for allotment to entrepreneurs.

22. KSSIDC has also opened raw material
depots in all the districts of the state.
An industrially prosperous Karnataka is the
vision of KSSIDC.
KSSIDC has regional offices at Bangalore,
Mysore, Gulbarga
 Branch offices at Hubli, Belgaum,
Shimoga, Tumkur, Mangalore.

23. Karnataka State Industrial Investment and Development
Corporation( KSIIDC)
 promoting industrial growth
 The institution accepts loan applications
within the state of Karnataka only.
 Provide medium and long-term loans.

24.  Equipment finance scheme
assistance is available to
existing industrial concern with sound
financial position.
Repayment -2-5 years
Moratorium-1 year

25. The corporation started with the following as
its main services:
 Establishment and management of industrial
estates.
 Procurement and distribution of raw
materials.
 Assistance towards marketing.
 Supply of machinery under hire purchase
system
 Providing guidance to SSI Entrepreneurs.
 Providing Technical Library Facilities.

26. Industrial Finance Corporation Of India
( IFCI):
 IFCI is one of the first public financial
institution set up in 1948
 Credit to medium and large-sized
industries
 Industrial and economic development

27. Principal activities
 Provide finance for green-field
industrial projects (infrastructure project) and
brown-field projects (expansion,
diversification & modernization)
 Expansion, diversification and
modernization
 Term loan, working capital, bills
discounting

28. Purpose of Financial Assistance:
IFCI extends its assistance only for
productive purposes such as:-
Purchase Of new machinery
Construction of factory building
Purchase of land
Setting up new industrial project
Expansion, diversification, modernisation
and renovation of existing units.

29. Non-Financial Assistance

30. DIC
To accelerate industrial development, GOI
has established DIC in every district.
The functions and activities of DICs are
monitored by the Directorate of Industries
Schemes of state govt implemented by DIC

31. Objectives
 Accelerate industrialization
 Spread of industries in rural areas
 Decentralize industrialization to minimize
economic imbalances
 Implement various schemes to
encourage entrepreneurs
 Act as single window to obtain
permission

32. Role of DIC
 Prepares profile of the industry located
in district
 Prepares list of products and services
can be produced in the district
 Assists entrepreneurs
 Organize EDP

33.  Marketing support
 Exporting products and importing
machinery & raw material
 Advice entrepreneurs on investment
opportunities

34. Small Industries Services Institute ( SISI):
 SISI is established by GOI to help the SSI.
There are 28 SISI

35. Major activities of SISI
 Assistance to prospective entrepreneur
 Assistance to existing units
 Economic Information

36.  Conduct survey to identify emerging
business opportunities.
 Prepares project profiles on various issues
 EDP
 Export promotion services

37. Conduct workshops, seminar, training
programmes on quality aspects in
business
Production index - to know the
performance of various industries.
Ancillary development

38. Technical assistance
Provide support to DIC
 Regularly conducts market surveys

39. Entrepreneurship Development Institute
( EDI):
 EDI an autonomous and not –for- profit
institution.
 Set up in 1983.
 sponsored by apex financial institutions
namely IDBI, IFCI,ICICI and SBI .

40.  EDI has set up Centre for Research in
Entrepreneurship Education and
Development ( CREED).

41. The objectives of EDI are:
 opportunities for self-employment
 Training
 Participating in institution building efforts

42.  Inculcating the spirit of Entrepreneurship
in youth
 Promoting micro enterprises at rural level
 Improving managerial capabilities of
small scale industries.

43. Small Industries Development organization:
 SIDO is functioning under Department of
SSI , Government Of India.

44. The main functions of SIDO are
Framing of policies pertaining to SSI sector
Coordination with different agencies
Monitoring policy implementation
Industrial Development
Extension services (modernization)

45. Association of Women Entrepreneurs of
Karnataka (AWAKE):
 Established in 1983
 Any women who is an entrepreneur can
join AWAKE for a nominal fee.
 Organize seminars on various topics

46. Purpose of AWAKE:
AWAKE strives to promote
entrepreneurship among women as a means
to achieve self- reliance and socio economic
independence
AWAKE provides support and guidance to
aspiring women from rural, urban, national
and international arenas
AWAKE’s services are extended to women
self-help group (SHGs), NGOs and other
developmental agencies.

47. The target group of AWAKE:
 All women from urban, rural, national and
international areas aspiring to be socially
and economically self-reliant and
empowered.
 All women entrepreneurs seeking
guidance to grow

48. Technical Consultancy
Organisations ( TCO)
 Technical Consultancy Organization was
established by many financial institutions
like ICICI, IFCI, ,IDBI,SFC etc. in
collaboration with state level financial
institutions and commercial Banks.

49. Functions of TCO:
Advice SMEs about technical aspects of
business
Prepare project profiles and feasibility reports
Technical collaboration and transfer of
technology
Undertake financial potential survey
Offer merchant banking facilities
Undertake market research
Provide consultancy services to the new
entrepreneurs
Conduct entrepreneurship development
programmes

50. Technical Consultancy Services
Organization of KARNATAKA ( TECSOK):
 Its office is situated in Nrupatunga Road ,
Bangalore

51. TECSOK offers range of services to the entrepreneurs:
 Identification of Project ideas and
selection of investment opportunities
 Selection of suitable locations for setting
up industrial units
 Conducting market surveys, industrial
potential surveys
 Turnkey Assistance
 Assistance in obtaining necessary licenses
and clearances

52.  Energy audit and conservation
 Modernization studies
 Coordinating and conducting
Management development programmes
 Identification and development of
ancillary industries

53. Khadi and Village Industries Commission
(KVIC) :
 Established in 1957, KVIC is an
autonomous body set up for promoting
khadi and village industries.

54. Objectives
 To preserve traditional art
 To equip artisans to take up challenges of
modern market.
 To promote khadi, village and cottage
industry.
 To market these products
 To introduce products in international markets

55. Schemes provided by KVIC:
 Working capital provision
 Equity capital
 Loan provision for purchase of raw materials
 Marketing avenues and selling centres for the
products of artisans and craftsmen
 Financial assistance for purchase of land,
building, workshop,machinery and equipment.
 Subsidies for the registered societies of artisans
and craftsmen

56. Microfinance and SHG:
 Microfinance ,also called microcredit, is a type
of banking service that is provided to
unemployed or low –income individuals or
groups which otherwise would have no other
access to financial services.
 Microfinance organization support a large
number of activities that range from providing
the basics- like bank checking and savings
accounts – to startup capital for small business
entrepreneurs, and educational programs that
teach the principles of investing.

57. Different types of Microfinance Institutions
in India:
 Joint Liability Groups (JLG): Informal
group consisting of 4-10 individuals who
try to avail loans against mutual guarantee
from banks for the purpose of agricultural
and allied activities.
 Self-Help Group( SHG): It is a type of
formal or informal group consisting of
small entrepreneurs with similar kind of
socio-economic backgrounds.

58.  The Grameen Bank Model: It was
introduced by Prof. Muhammad Yunus In
Bangladesh during 1970s. The goal of this
system has been the overall development of
the rural economy which generally consists
of Financially backward classes.
 Rural Cooperatives: It used the mechanism
to pool the resources of people with
relatively small means and provide financial
services.

59. Self-Help Groups:
 It is a type of formal or informal group
consisting of small entrepreneurs with
similar kind of socio-economic backgrounds.
 Such individuals temporarily come together
and generate a common fund to meet the
emergency needs of their business.
 These groups are generally non-profit
organization.
 Interest rates are also generally low and
fixed especially for women.