Mission SIDBI Foundation for Micro Credit (SFMC) was launched by the Bank in January 1999 for channelising funds to the poor in line with the success of pilot phase of Micro Credit Scheme. SFMC's mission is to create a national network of strong, viable and sustainable Micro Finance Institutions (MFIs) from the informal and formal financial sector to provide micro finance services to the poor, especially women. Approach SFMC is the apex wholesaler for micro finance in India providing a complete range of financial and non-financial services such as loan funds, grant support, equity and institution building support to the retailing Micro Finance Institutions (MFIs) including two-tier MFIs so as to facilitate their development into financially sustainable entities, besides developing a network of service providers for the sector. SFMC is also playing significant role in advocating appropriate policies and regulations and to act as a platform for exchange of information across the sector. The launch of SFMC by SIDBI has been with a clear focus and strategy to make it as the main purveyor of micro finance in the country. Operations of SFMC in the coming years, are not only expected to contribute significantly towards development of a more formal, extensive and effective micro finance sector serving the poor in India, but also ensure sustainability at all levels viz. at the apex level (SFMC), at the MFI level and at the client level to ensure continuance of such arrangement. Most importantly, SFMC has strived to create a mechanism in which there should be no barriers to growth. Under the dispensation, there is focus on innovation and action research. - Uniqueness   Rating of MFIs Most micro finance programmes are being operated by NGOs and are not subjected to regulation and supervision as they are registered as Societies or Trusts. Non-regulation of these institutions has worked to their detriment and these institutions are not able to have smooth access to funds from the financial sector which is vary of lending to such entities. This constraint, coupled with the fact that SFMC was launched with a view to upscale the flow of micro credit with enabling policy modifications relating to simplification of the procedures in availment of assistance and substantial relaxation in the security/ collateral requirement posed a difficult challenge. Therefore, to meet the requirements of the revised dispensation which called for selection of suitable micro finance intermediaries which could be trusted with bulk assistance without collateral constraints, Capacity Assessment Rating [CAR] was introduced by SFMC as a supplementary tool to assess the risk perception. On SFMC's initiative, the rating of MFIs have been started by four agencies. Till March 31, 2009, 497 ratings have been commissioned to MCRIL/ CRISIL/ CARE/ Access Development Services (ADS). SFMC has also organized trainings on CAMEL methodology of ACCION to build the internal capacity of SFMC officers. Customized Support to MFIs MFIs are provided annual need based assistance. One of the unique features of the scheme is the comprehensive Capacity Building Support being provided to the MFIs/ NGOs to expand their operations as well as to increase their efficiency. Customized financial support comprising of loans, capacity building grant as well as equity/ quasi equity is being provided to the client institutions. Minimal Security Requirement Credit worthiness is based on the rating of the borrowing institutions rather than availability of security/ collateral requirements. Term Deposit Receipts (TDRs) issued by Scheduled Commercial Banks/ SIDBI for an amount equivalent to 10% /5% /2.5% (depending upon geographical area of operation and duration of partnership with SIDBI). Methodology Neutral SIDBI's support is not for any specific methodology. MFIs may on lend directly to SHGs/ individuals or route their assistance through their partner NGOs & MFIs. They may also adopt any other lending channel so as to effectively reach financial assistance to the poor clients. Capacity Building Support for the sector SFMC's capacity building efforts are directed not only towards MFIs but also towards smaller/ grassroot institutions engaged in micro finance operations, training, consultancy, rating and impact assessment etc., and other service providers in the form of training, seminars, workshops, orientation and exposure visits. Innovation & Action Research SIDBI has taken a number of initiatives in launching / facilitating introduction / market-making of new concepts in the sector. The launch of an electronic portal for information dissemination and knowledge sharing within the sector and development of MIS software for MFIs are some such initiatives. Other major initiatives include developing a common charter of accounts for the sector, creating gender and environment awareness, promoting innovations and action research on emerging concepts etc. The environment appraisal of SFMC activities was carried out by the Society for Participatory Research in Asia (PRA), New Delhi and covered areas like identification of environmental risks associated with some of the most relevant activities funded through the SFMC microfinance route, developing a format for identifying these risks in micro-project identification and drawing up some simple guidelines on risk mitigation. The appraisal covered 15 partner MFIs of the Bank located in and around Chennai, Hyderabad, Bhubaneswar and Kolkata. Opening of specialised Microfinance branches Seven dedicated microfinance branches have been opened by the Bank at Lucknow, Chennai, Hyderabad, Bangalore, Kolkata, Bhubaneswar and Guwahati to deliver micro finance services through intermediaries in a timely and customer-friendly manner. While Hyderabad, Chennai, Bangalore are major hubs of microfinance activity in the country, the other centres viz. Lucknow, Kolkata, Bhubaneswar and Guwahati have been targeted with the primary objective of giving an impetus to microfinance programmes in the underserved areas.