Credit and financing for MSMEs: The Small Industries Development Bank of India (SIDBI) announced a 3.6% increase in net profit to Rs 2,398 crore for fiscal year 2020-21, from Rs 2,315 crore in FY20. The financial results for the year ended March 31, 2021 were declared at the 23rd annual general meeting on Friday. The bank also announced an 11.5% increase in its net interest income to Rs 3,678 crore in FY21, from Rs 3,299 crore in FY20, although Non-interest income declined slightly to Rs 944 crore from Rs 1,069 crore during the said period. SIDBI also reported a marginal year-over-year decline of 5.6% in advances to Rs 1,56,233 crore as of March 31, 2021, up from Rs 1,65,422 crore as of March 31, 2020.
Net profit growth rose to prominence amid the Covid-related challenges facing the MSME sector and the critical need for immediate credit sought by businesses as the lockdown imposed restrictions on production and movement of workforce. SIDBI had launched programs including SAFE, SAFEPLUS, AROG and TWARIT during the period to support MSMEs.
“To meet the emerging needs of the MSME sector, SIDBI continued its development commitments, in particular by feeding national missions through digital portals, by setting up project management units in 11 states to strengthen the ecosystem, by supporting 1,700 women entrepreneurs in 7 states, defining up to 100 Swavalamban Connect Kendras to stir the aspirations of young people / displaced populations, as well as the establishment of the Swavalamban Crisis Responsive Fund for MSMEs ”, said Sivasubramanian Ramann, President and CEO of SIDBI in a press release.
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The bank also reported a decrease in the gross non-performing assets (GNPA) ratio of 45 bps from 0.63 to 0.18 percent, from Rs 1,040.84 crore to Rs 282.31, and the ratio Net NPA (NNPA) decreased 28bp from 0.40. percent to 0.12 percent, as of March 31, 2021 – from Rs 658.64 crore to Rs 185.25 crore. The provision coverage ratio (PCR), which represents the percentage of a bank’s funds set aside for losses due to bad debts, improved from 14.89% to 93.24% as of March 31, 2021 , compared to March 2020.
SIDBI had recently allocated Rs 200 crore to its new Shwas and Arog programs for MSMEs manufacturing Covid related products for MSMEs, such as manufacture of oxygen cylinders, oxygenators, oxygen concentrators, oxygen liquid, credit for MSMEs in manufacturing products or providing services that are directly related to combating Covid, including pulse oximeters, licensed drugs, etc. The bank last month revamped its liquidity program for MSMEs affected by Covid – Liquidity support by urgent injection of funds via the Direct Funding Window (LIQUID) 1.0 to activate the term loans to its existing customers with the aim of fulfill new orders, purchase raw materials, machinery and equipment, discharge unpaid creditors, etc.