Banking Regulator, The Reserve Bank of India has allocated Rs 10,000 crore to SIDBI for setting up a venture capital (VC) fund to attract private capital for start-ups. The proposal to establish a VC fund was unveiled by Finance Minister Arun Jaitley while presenting the interim Budget last year.
The MoS (Independent Charge) for Skill Development & Entrepreneurship Rajiv Pratap said the allocation of Rs 10,000 crore as venture capital will act as a catalyst to bring in more private capital by providing equity, quasi equity, soft loan, and other risk capital for start-up companies.
The move was aimed at creation of a conducive eco-system for the venture capital in the MSME sector.
Tidbits
- SIDBI stands for Small Industries Development Bank of India. It is a non-independent financial institution aimed to aid the growth and development of micro, small and medium-scale enterprises (MSME) in India.
- SIDBI was set up on April 2, 1990 through an act of parliament. Its headquarters is in Lucknow.
- MUDRA Bank – Micro Units Development & Refinance Agency Ltd – a recently launched bank to provide loans to small entrepreneurs is a wholly owned subsidiary of SIDBI.
- MUDRA Bank was launched by Prime Minister Narendra Modi on 8 April 2015.
- The MUDRA bank classifies its clients into three categories and the maximum allowed loan sums will based on the category:
- Shishu: Allowed loans up to ₹50,000.
- Kishore: Allowed loans up to ₹5,00,000
- Tarun: Allowed loans up to ₹10,00,000
