IGNOU MTM 8 2017 - List the institutions which provide financial assistance to Small Scal

Question

List the institutions which provide financial assistance to Small Scale Enterprises. Explain the various
types of loans that can be availed from these institutions.

24 Jan 2018

Answer :

Word Count : 1581

Some of the financial institutions supporting small scale industries in India are:-

1. State Finance Corporations (SFCs) 2. Commercial Banks 3. Small Industries Development Bank of India (SIDBI) 4. Industrial Finance Corporation of India (IFCI) 5. Industrial Credit and Investment Corporation of India (ICICI Bank)

6. Industrial Development Bank of India (IDBI) 7. Small Industries Development Fund (SIDF) 8. National Small Industries Corporation 9. National Bank for Agriculture and Rural Development (NABARD) 10. Central Government Stores Purchase Programme 11. SIDO and Marketing Assistance to Small Scale Industries

12. Technical Consultancy Organisations (TCOs) 13. Small Industry Development Corporations 14. Industrial Estates 15. Trade Development Authority 16. State Trading Corporation of India 17. Export Consortia and a Few Others.

Additionally, learn about:- 1. Repayment of Loans 2. Comprehensive Promotion Structure of MSME Sector 3. Problems of Financial Institutions in Lending to Small Scale Industries 4. Stock Exchange for Small and Medium Enterprises 5. Credit Rating and Micro, Small, and Medium Enterprises.

A network of State Financial Corporations, National Small Industries Corporation, State Small Industries Corporations, Commercial Banks, Cooperative Banks, and Regional Rural Banks provide financial assistance to small scale units. The Small Industries Development Bank of India (SIDBI) provides refinance to the industrial loans advanced by these institutions to the small scale sector.

Financial Institution 1. State Finance Corporations (SFCs):

These institutions extend term loans for the purchase of land, construction of factory premises and purchase of machinery and equipment for the setting up of new industries or for expansion and modernization of the existing ones. SFCs generally prescribe a margin of 25 per cent and allow an initial holiday of two years for the loan repayment (this period can be increased to five years in backward districts).

National Small Industries Corporation (NSIC) and State Small Industries Corporations (SSICs) provide machinery on hire-purchase basis to small scale and ancillary industries, the value of which would not exceed Rs. 60 lakhs and Rs. 75 lakhs, respectively inclusive of the value of machinery and equipment already installed.

The payment for the machinery and equipment is made directly to the suppliers. The hire-purchase value is generally recovered in 13 half-yearly installments and a rebate of 2 per cent is given if the installments are paid on or before the due date. While NSIC supplies both imported and indigenous machinery. However, SSICs supply only indigenous machinery.

Financial Institution 2. Commercial Banks:

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