Mumbai, January 2, 2006:Small Industries Development Bank of India (SIDBI) today entered into a Memorandum of Understanding (MoU) with Industrial Development Bank of India Ltd.(IDBI Ltd.) for co-financing of projects relating to Small and Medium Enterprises[SME], service sector, infrastructure projects and Micro Credit in industrial clusters in the country.

Shri V.P. Shetty, Chairman and Managing Director, IDBI Ltd., said, “Risk sharing between IDBI Ltd. and SIDBI for project funding and working capital facility would create a new synergy in expanding the horizon for funding SMEs in the country. IDBI Ltd. and SIDBI would explore a joint front office approach in each other's location while promoting SME sector development. The present MoU is indeed a step forward towards a deep strategic alliance between IDBI Ltd. and SIDBI for SME business and related business opportunities”.

Under this tie-up, SIDBI and IDBI Ltd. have come together to launch a unique anywhere banking facility for SMEs. SIDBI's current account with IDBI Ltd. would enable it to have its assisted SMEs to avail of anywhere banking facility with IDBI Ltd. bank branches located in the vicinity of such SMEs.

SIDBI and IDBI Ltd. shall create a joint mechanism for appraisal of projects including merchant banking. It would avail of the banking facility of IDBI Ltd. for delivery of term loans and operation of working capital facility.

A unique technology product based on FINACLE Core Banking Solution would enable the assisted SMEs of SIDBI to bank and participate in the various types of products and facilities of IDBI Ltd., like EFT, CMS, Debit cards and RTGS.

The technology features of MICR cheque and Core Banking Solution of FINACLE would be tapped to promote the tripartite accounting between SIDBI and IDBI Ltd. in respect of their joint customers within the regulatory parameters.

Apart from credit to SMEs, the alliance will also focus on joint initiatives in the areas of micro credit, cluster development and other development initiatives.

About SIDBI

SIDBI is committed to developing a strong, vibrant and responsive small scale sector. This commitment is to be achieved through a variety of means. Principal amongst them is finance. Alongside finance, SIDBI provides appropriate support in the form of promotional and developmental services. SIDBI has been built up as a financially sound, vibrant, forward looking and technically oriented institution and, it intends to sustain this orientation in future.

SIDBI has 50 Branches, 5 Zones and 1 Regional Office across the country. SIDBI’s charter include Financing, Promotion , Development and Co-ordination for orderly growth of Small and Medium Enterpises. The Charter has provided SIDBI considerable flexibility in adopting appropriate operational strategies to meet these objectives. The activities of SIDBI, as they have evolved over the period of time, now meet almost all the requirements of SMEs which fall into a wide spectrum constituting modern and technologically superior units at one end and traditional units at the other.

SIDBI has operationalised SME Fund of Rs.10,000 crore under which direct assistance is being provided at an interest rate of two percent below SIDBI’s PLR.

SIDBI has operationalised a national level venture capital fund called SME Growth Fund of Rs.500 crore which is utilized for investing in equities of growth sectors like life sciences, light engineering, retailing, food processing, IT and infrastructure related services.

SIDBI, in association with CIBIL, select public sector banks and an existing rating agency, has set up a specialized rating Agency “SMERA” for the SME sector. SIDBI operates special schemes like Credit Linked Capital Subsidy Scheme, Credit Guarantee Scheme, etc.

SIDBI has helped a number of MFIs in developing a wide range of products as also support other service providers. SIDBI showed an excellent performance in Micro Credit operations by achieving a growth of 168 percent in sanctions and 119 percent in disbursements over the previous year.

SIDBI retained its position in the top 30 Development Banks of the World in the latest ranking of The Banker, London. As per the May 2001 issue of The Banker, London, SIDBI ranked 25th both in terms of Capital and Assets.

As of March 31, 2005, the outstanding portfolio of SIDBI stood at Rs.10,862 crore. SIDBI operations during Q2 2005-06 resulted in a net profit of Rs 56 crore. During the half-year ended September 30, 2005,SIDBI earned a net profit of Rs 102 crore.

About IDBI Ltd.

IDBI Ltd is now virtually a universal bank post the merger of IDBI Bank with its parent (IDBI Ltd).The bank is fast spreading its wings across the country. The new generation public sector bank now has 157 Branches, 8 Extension Counters and 363 ATMS spread over 95 cities. The bank rides on a state-of-the-art information technology (IT) platform to structure and deliver personalized banking services and customized financial solutions to its clients.