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Messages
Address by Chairman and Managing Director, SIDBI at the Seventh Annual General Meeting held at 3.00 pm on June 18, 2005 at Hotel Gemini Continental, Lucknow
Performance of SME Sector	During the year, important policy initiatives were taken by the Government of India as well as your Bank that have strong bearing on the growth prospects of SMEs and business operations of SIDBI.
Credit to SSI Sector	The outstanding bank credit to SSIs by the public, private sector and foreign banks has increased from Rs.63,654 crore as at end March 2004 to Rs.71,613 crore as at end March 2005. This outstanding balance forms less than 10 percent share of the net bank credit as at end March 2004 from a level of 17.5 percent in 1998. A strong need has been expressed at all levels to reverse this declining trend. The RBI Working Group under the chairmanship of Dr.A.S. Ganguly recommended various measures including promoting corporate SME linkages, focus on cluster development and defining the concept of small and medium enterprises.
Credit concentration through focus on clusters	As per the UNIDO study, there are 388 clusters in India with predominance of SSIs. Government of India provides technical and financial support services to assist clusters for specialising in certain product lines. As a follow up of the discussions in the RBI Standing Advisory Committee meetings, the RBI had earlier circulated a list of 60 clusters and advised banks for focused credit dispensation. SIDBI's cluster approach has been primarily aimed at technology upgradation, entrepreneurship development and environment management, etc. With the experience gained in implementation of this programme and to align with cluster dynamics, we are now reorienting our strategies to combine business with the development. SIDBI proposes to give focus on deployment of credit through clusters while extending developmental support. Branches of SIDBI can play a support role to improve flow of credit to tiny and small units in clusters. In fact, a few clusters are intended to be developed as "knowledge hubs" wherein the Bank would place dedicated officers specialised in a particular line of activity and act as resource persons. Under the World Bank Project also, we propose to develop around 25-30 clusters as "model clusters".
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