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SIDBI and IOB ink MoU to provide capital to MSMEs
SIDBI, a state-owned institution for financing and development of industries in the micro, small & medium enterprise (MSME) and Chennai-based Indian Overseas Bank (IOB) on Friday inked a memorandum of understanding (MoU) to provide growth capital to promoters of smaller size companies.
SIDBI, a state-owned institution for financing and development of industries in the micro, small & medium enterprise (MSME) and Chennai-based Indian Overseas Bank (IOB) on Friday inked a memorandum of understanding (MoU) to provide growth capital to promoters of smaller companies.
"Under the MoU, SIDBI will initially provide a line of credit of Rs. 100 crore to IOB for a period of 7 years from the risk capital fund (RCF) being managed by SIDBI. The line of credit shall be utilized to provide growth capital to deserving MSMEs for funding their growth requirements towards any bona fide business purpose including bridging the gap in project funding (i.e gap between bank term loan and available promoters contribution), working capital margin, intangible expenses (marketing / brand building, R&D, and quality control expenditure)," says a release issued by the institution.
SIDBI had specially created RCF to provide funding assistance to MSME units. The move with IOB in particular is expected to channelize growth capital / equity to a larger number of MSMEs.
The various forms of funding include instruments like subordinate debt, optionally convertible debt/ debentures, redeemable preference shares and equity.
