Sidbi has already held negotiations with these two overseas ventures and would decide on the final structure of the fund by year end, bank managing director Sailendra Narain said.

"We have a number of proposals from overseas venture capital funds and we are currently negotiationg with the CDC and the Walden group," Narain said.

He said a number of international venture companies from the United Kigdom and the US had also evinced interest in becoming partners in Sidbi's silicon fund.

Sidbi has proposed seting up of the silicon valley fund to enable Indian companies already having base in IT sector in the US to gain international edge in their respective area of operations.

"Even though a number of Indians or non-residentIndian shave set up base in silicon valley they have not got their due share in the international market and the fund would enable them diversify or grow through mergers and acquisitions," Narain said.

Narain said the silicon fund would be made available in the forms of equity funds and conditional loans to Indian companies in the US and parts of the European Union.

"The only condition in extending the fund would be that the benefits should accrue to Indian companies and to the country," he said.

Narain said companies could utilise the funds for opening new offices or subsidiaries, diversifying products and aquisitions and mergers.

An association of NRIs in the US, Tai group has also pledged its support to the proposed fund, he said.

The bank has in association with the department of electronics already set up a Rs 100 crore venture capital fund - Sidbi venture capital ltd - to finance domestic IT and Software companies.

"The fund has been incorporated last week and we hope to launch it shortly,"Narain said.

Sidbi, which has been taking major steps in seting up state level dedicated venture capital funds since 1991, has so far sanctioned Rs 119 crore and disbursed Rs 28 crore till March 31, 1999.

Narain said a total of Rs 97 crore was sanctioned for nine state funds dedicated exclusively for IT and software sectors.

While Karnatak, Gujarat, Tamil Nadu, Maharashtra and Punjab have already set up funds with Sidbi assitance, Andhra Pradesh, Kerala and Rajasthan were in advanced stage os setting up their funds, he said.

Narain said Sidbi has worked out a three-tier strategy of focusing at the state/regional level, national and international level to focus on promoting use of venture capital funds for the small scale and IT sectors.

While the regional strategy envisages setting up of regional venture capital funds with 50 per cent of the fund being contributed by the bank and the rest by state finance corporations and industrial development corporations, the national strategy involved settingof the Rs 100 crore fund, he said.

In its efforts to promote use of information technologyin the small scale industry (SSI), the bank will sanction upto Rs 3,000 each to a total of 500 units, he said.

"Apart from assistance being given to the individual units, Sidbi would also extend Rs 30,000 per association of SSIs," Narain said.

While 44 individual units have availed of Sidbi assistance, 38 associations have been cleared during the March-July period, he said.

Sidbi has also begun sanctioning special assistance to State Financial Corporations (SFCs) and non-governmental organisations (NGOs) to tackle Y2K problem and conduct IT related training programmes respectively.

The bank has so far sanctioned Rs 5-6 crore SFCs to initiate enough measures to achieve Y2K compliance.