SIDBI and AU SFB to jointly lend to small businesses

AU Small Finance Bank and Small Industries Development Bank of India (SIDBI) entered into an agreement to jointly lend to small businesses.

Both will earmark a corpus of Rs 100 crore for lending under the ‘AU SIDBI Joint Financing Programme’ for FY18.

The program will target micro, small and medium sized enterprises in the manufacturing and service sectors.

It will fund term loan proposals worth 25 Lakh to 2 crore. The appraisal of the proposal shall be done jointly by AU Bank and SIDBI.

They will adopt a common approach towards project identification, appraisal, monitoring, follow-up and client servicing, AU Small Finance Bank said.

Under the advice of SIDBI, AU Bank will play the anchor in this programme as all the processes including disbursement, monitoring and recovery will be handled by them, it said.

The corpus for the subsequent FYs would be decided after mutual consultation and seeing the progress made during FY18, AU SFB said.

The 3 year-long agreement will focus on timely and adequate credit availability to Medium Scale Enterprise (MSEs) units and efforts will be made for augmenting credit flow to MSE, it said.

“Our cordial relationship with SIDBI started in 2010, when they provided credit facility of Rs. 10 Cr for the promotion and development of MSME sector units in rural and semi urban areas, which has now reached Rs.1000 crores and will strengthen further in the times to come,” said Sanjay Agrawal, MD & CEO, AU Small finance Bank.

SIDBI said it went with AU Bank, given its distribution network in rural and semi urban markets and “successful track record in MSME credit”.

Prior to becoming a bank, as Au Financier NBFC, the company has gained over 20 years’ experience in lending to lower sections of the population.

The non-banking company was converted into a bank under the RBI’s small finance bank scheme and has 303 bank branches and 119 Asset branches across 10 states and 1 Union Territory.