MUMBAI, May 1: The decision to delink the Small Industries Dvelopment Bank of India (Sidbi) from the Industrial Development Bank of India (IDBI) will bring more focus to the financing of small-scale industries (SSIs). Though the budget was silent on how it will be effected, it is likely to be done by transferring the IDBI stake in the Sidbi to the Reserve Bank of India (RBI).This was one of the key recommendations of the SH Khan committee on harmonising the role and operations of DFIs and banks. The committee had recommended the transfer of the IDBI stake in the Sidbi to the RBI and mould the latter in the role of a nodal agency for SSIs, similar to the role of the National Bank of Agriculture and Rural Development (Nabard) for agricultural credit.
The budget has also endorsed the other recommendation made by the Khan committee regarding the transfer of the IDBI's stake in various state finance corporations. The commitee had recommended the "transfer of the IDBI stakes in various state lendinginstitutions to the Sidbi and give nodal/co-ordinating agency status to the latter for financing of small and medium industries."
On the future ownership, role and status of the Sidbi, the committee had said: "Since the credit requirements of small-scale industries are being taken care of by the Sidbi, it would be desirable to transfer the present shareholding of the IDBI in state lending institutions to the Sidbi. It should be vested with the overall responsibility for enacting policy and procedural guidelines with regard to the operations of SFCs," the report says.
It said that Sidbi should be accorded the status of a nodal agency for financing of SSIs along the lines of the Nabard in the field of agricultural development. As a corollary to this, the committee has recommended that the ownership of the Sidbi should also be transfered to the RBI. At present, the Sidbi is a wholly-owned subsidiary of the IDBI.
"The Sidbi's role in state-level institutions should be as stake-holder as well asresource-provider. For this purpose, the Sidbi should have access to assured sources of concessional funding from the RBI," the report said.
The budget, however, was silent on some of the other major suggestions on SSIs made by the Khan committee like public listing of stronger state financial corporations and merger of various state-level lending institutions.
Another recommendation, which did not find a place in the budget announcement, is to bring state lending institutions under the supervisory ambit of the RBI.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
