National-Level Financial Institutions: SIDBI and NSIC

Two important national-level institutions provide financial and business support directly aimed at the small-scale sector: SIDBI (finance) and NSIC (marketing, credit, and materials).

1. SIDBI — Small Industries Development Bank of India

SIDBI was set up in 1990 and began operations in 1990, with its head office at Lucknow. It is the apex (topmost) financial institution for the promotion, financing, and development of the micro, small, and medium enterprise (MSME) sector in India. In simple words, SIDBI is the chief bank for small industries.

Main functions of SIDBI:

1. Refinance. It provides refinance to banks and State Financial Corporations that lend to small units — that is, it lends to the lenders, so that more credit flows to small industry.
2. Direct finance. It also gives loans directly to well-run small and medium units for expansion, modernisation, and technology upgradation.
3. Bill discounting and factoring to ease the cash flow of small units.
4. Support for micro-finance and small entrepreneurs, including help to first-generation and women entrepreneurs.
5. Development and promotional activities such as skill upgradation, marketing help, and encouraging cleaner and modern technology in the MSME sector.

2. NSIC — National Small Industries Corporation

NSIC was established in 1955 as a Government of India enterprise to aid, promote, and foster the growth of small-scale industries in the country. Unlike SIDBI, which is mainly a financing body, NSIC provides a bundle of practical business services to small units.

Main functions of NSIC:

1. Marketing support. It helps small units market their products, organises their participation in exhibitions and buyer-seller meets, and — importantly — operates the Single Point Registration Scheme through which small units can register to supply their goods to government departments and public-sector undertakings, often with purchase preference and exemption from earnest-money deposits.
2. Credit support. It arranges finance for small units — for example, help in obtaining bank credit and facilitating equipment finance.
3. Raw-material assistance. It procures and supplies scarce and imported raw materials to small units on convenient terms. …