Finance Minister Arun Jaitley launches Rs 12,000-cr SIDBI funds to fire start-ups

Union Finance Minister Arun Jaitley on Tuesday launched two funds by Small Industries Development Bank of India (SIDBI), a fund of funds with total corpus of Rs 12,000 crore which is also expected to fire up startups.

The funds are Rs 2,000-crore India Aspiration Fund (IAF) and SIDBI Make In India Loan For Enterprises (SMILE) scheme with an investment size of Rs 10,000 crore. "India is witnessing a start-up revolution and to harness the potential of India's innovators and entrepreneurs a vibrant financial ecosystem is essential. The IAF is intended to play a vital role in this financial ecosystem," Jaitley said.

The fund is expected to catalyse tens of thousands of crores of equity investment in start-ups and MSMEs. Life Insurance Corporation (LIC) has also agreed to be a partner and co-investor in the fund, he added. The 'Make In India' initiative backed by a conducive financial ecosystem will make the country a manufacturing hub very soon, the minister added.

"Funding amounting to Rs 20,000 crore has been sanctioned by the MUDRA Bank and we are targeting to take it to Rs 1 trillion," Jaitley said. The idea behind the launch of SMILE scheme is to 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, a SIBDI release said.

SMILE, which has built-in higher concessional terms for enterprises promoted by people from scheduled caste or scheduled tribes category and persons with disabilities and women, is expected to benefit around 13,000 enterprises with employment of nearly 2 lakh persons.

SIDBI will provide 15 per cent of the total corpus, which will be mobilised by the start-ups through resources under IAF or fund of funds. "We have already made a commitment of financing Rs 752 crore to start-ups and will be further mobilising Rs 8,620 crore under IAF and we are expecting to provide Rs 2,000 crore under the new scheme," SIDBI chairman Kshatrapati Shivaji said.