Finance Minister Arun Jaitley has launched two funds by Small Industries Development Bank of India (SIDBI) with total corpus of Rs 12,000 crore for the purpose of funding start-ups in India and to aid small enterprises. The funds include Rs 2,000 crore India Aspiration Fund (IAF) and SIDBI Make in India Loan for Enterprises (SMILE) scheme with an investment of Rs 10,000 crore. Arun Jaitley said that the country is witnessing a start-up revolution and to harness the potential of India’s innovators and entrepreneurs, a vibrant financial ecosystem was essential, where the IAF is intended to play a vital role in this financial ecosystem.
The India Aspiration Fund, a fund-of-funds managed by SIDBI is expected to catalyze tens of thousands of crores of equity investment into start-ups and MSMEs (micro and small enterprises), creating employment for lakhs of people, mostly educated youth, over next four to five years. IAF will have an initial corpus of Rs 2,000 crore and further more money can be infused as per requirement. Further, Life Insurance Corportaion of India (LIC) will be a partner and co-investor in the fund.
The Rs 10,000 crore SIDBI Make in India Loan for Enterprises (SMILE) scheme which was announced in the Budget in February will provide soft loans in the nature of quasi-equity and term loans on relatively soft terms to MSMEs to meet the required debt-equity ratio norm as also for pursuing opportunities of growth by existing MSMEs. The scheme has built-in higher concessional terms for the enterprises promoted by Scheduled castes(SC)/Scheduled tribes(ST), persons with Disabilites (PwD), women and is expected to benefit around 13,000 enterprises with employment of nearly 2 lakh persons.
SIDBI will be providing 15% of the total corpus which will be mobilized by the start-ups through various resources under IAF or fund of funds. Further, SIDBI is going to finance Rs 752 crore to the start-ups which will be further mobilising Rs 8,620 crore under IAF and are expecting to provide Rs 2,000 crore under the scheme which was likely to mobilize fund in future to the tune of Rs 20,000 crore as sanctioned by the MUDRA Bank.
SIDBI chairman and managing director Kshatrapati Shivaji said that they provide loan under the scheme under 2:1 debt-equity ratio. In the near future SIDBI will be providing funds under the scheme to sectors like IT, biotechnology and digital technology.