• Business

    Government Funding and Schemes

    An entrepreneur requires a continuous flow of funds not only for
    setting up of his/ her business, but also for successful operation as well as
    regular up gradation/ modernization of the industrial unit. To meet this
    requirement, the Government (both at the Central and State level) has been
    undertaking several steps like setting up of banks and financial
    institutions; formulating various policies and schemes, etc. All such
    measures are specifically focused towards the promotion and development of
    small and medium enterprises.

    The public
    sector banks are the major source of financial assistance to the industrial
    sector. They extend credit support to the firms in the form of loans,
    advances, discounting bills, project financing, term loans, export finance,
    etc. Some of the major examples of such banks are:-

    1.       State Bank of India (SBI) provides a wide range of financial products and services
    that can cater to any business or market requirement. It deploys multiple
    channels to deliver integrated solutions for all financial challenges faced
    by the corporate universe. Its various funding schemes are:-
    Working capital finance, extended to all
    segments of industries and services sector.
    Corporate term loans to
    support capital expenditures for setting up new ventures as also for
    expansion, renovation, etc.
    Deferred payment guarantees to support purchase
    of capital equipments.
    The bank also provides financial assistance to agriculturists
    through a network of rural and semi-urban branches. These specialized
    branches have been set up in different parts of the country exclusively for
    the development of agriculture through credit deployment. Their schemes cover
    a wide range of agricultural activities likecrop loanfinance to horticulturefarm mechanization schemesland development schemesminor irrigation projectsagricultural term loans, etc.
    2.       Bank of Baroda offers various products and services that meet the
    specific requirements of business enterprises, particularly the small scale
    units. Various schemes relating to the provision of loans and advances by the
    bank include:-
    3.       Andhra Bank has also devised a host of loan schemes to meet the
    financial requirements of an enterprise. These particularly cater to the
    corporate and agricultural sector. Some of its important funding options
    Small scale industries need credit support on a continuous basis for running
    the enterprise as well as for its diversification and modernisation.
    Recognising the need for a focused financial assistance to such industries,
    the Government of India, together with the State Governments, has formulated
    several policy packages including schemes and funds for their growth and
    development. Most of these programmes of the Central Government are implemented
    through two principal organisations:-
    1.       Small Industries Development Organisation (SIDO) is an apex body for promotion and development of small
    scale industries in the country. Its major activities include:-
    Advising the Government on formulation of policies and
    programmes for the small-scale industries.
    Conducting periodical census/survey of the small scale industry
    and generating data/reports on various important parameters/indicators of
    growth and development of the sector.
    Maintaining close liaison with other Central Ministries,
    Planning Commission, State Governments, Financial Institutions and other
    organisations concerned with the development of small-scale industries.
    Facilitating linkage of small-scale industries as ancillaries to
    large and medium scale industries.
    Developing human resource base through training and skill
    For achieving its objectives, SIDO has devised a comprehensive
    range of schemes for providing credit facilities, technology support services
    and marketing assistance, etc. Some of the major schemes are:-
    2.       National Small Industries Corporation Ltd (NSIC), has been
    established with the objective of promoting, aiding and fostering the growth
    of small scale industries in the country. It has been assisting small
    enterprises through a set of specially tailored schemes which facilitate
    marketing support, credit support, technology support and other support
    • Marketing support schemes :- sound marketing is critical
      for the growth and survival of small enterprises. NSIC acts as a
      facilitator to promote small industries products and has devised a
      number of schemes to support small enterprises in their marketing.
    • Credit support schemes:-
      NSIC facilitates credit requirements of small enterprises in several
      areas. These include:-
    • Equipment financing:- through schemes like
      ‘Hire Purchase’ and ‘Term Loan’ for the procurement of equipments.
    • Financing for procurement
      of raw material
      :- by facilitating bulk purchase of basic raw materials at
      competitive rates, import of scares raw materials,etc. NSIC also takes
      care of all the procedures, documentation and issue of letter of credit
      in case of imports.
    • Financing for marketing
      :- such as internal marketing, exports and bill discounting,
    • Financing through
      syndication with banks
      :- by entering into strategic alliances with
      commercial banks so as to facilitate fund requirement of the small
      enterprises. It involves an arrangement of forwarding the loan
      applications of the interested small enterprises to the banks.
    • Performance and credit
      rating scheme for small industries
      :- so as to enable the
      small enterprises to ascertain the strengths and weaknesses of their
      existing operations and take corrective measures accordingly. NSIC is
      operating the scheme through agencies like ICRA, ONICRA, Duns &
      Bradstreet(D&B), CRISIL, FITCH, CARE and SMERA.
    • Technology support schemes:- NSIC
      offers small units various support services through its ‘Technical
      Services Centres’ and ‘Extension Centres’. The services provided include
      advise on application of new techniques; material testing facilities
      through accredited laboratories; energy and environment services at
      selected centres; classroom and practical training for skill
      upgradation, etc.

    At the State
    level, various State Financial Corporations (SFCs) have been set up by the
    respective State Governments for providing financial assistance to the
    industrial units. For this purpose, these institutions have brought out
    several funds and schemes, from time to time. There are 18 State Financial
    Corporations (SFCs) in the country. For example:-

    1.       Kerala Financial Corporation (KFC), incorporated under the State Financial Corporations Act
    of 1951, is a trend setter in the field of industrial finance. It has been
    playing a major role in  the development and industrialisation of Kerala
    by extending financial assistance well-suited for the requirements of the
    entrepreneurs.   Its main objective is to extend term loan
    assistance for establishing new industrial units or to extend credit
    assistance for meeting expansion/diversification/modernisation costs of the
    existing units, in small scale or medium sectors. Some of its major schemes include:-
    2.       Madhya Pradesh Financial Corporation is the premier institution in the State of Madhya Pradesh engaged
    in providing financial assistance to small and medium industries. This
    assistance has been extended in the form of a wide range of fund and non fund
    based services/ schemes. The fund based schemes are available for setting up
    of business ventures within the State, whereas, non fund based schemes are
    available throughout the country.

    The fund based schemes include:-

    • Term Loan
    • Equipment Finance
    • Asset Credit
    • Short Term Loan
    • Working Capital
    • Loan Replenishment
    • Finance for Market
    • Composite Loan
    • Credit Linked Capital
      Subsidy for SSI

    The non-fund based schemes include:-

    • Public Issue Appraisal
    • Credit Syndication
    • Corporate Advisory Services
    Source : Thanks to http://business.gov.in.


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