Chennai: Small Industries Development Bank of India (SIDBI) has signed a memorandum of understanding with Washington-based Small Enterprises Assistance Fund to set up a $40-million venture capital (VC) fund exclusively for small enterprises.
In its first phase, the fund will have a corpus of $25 million, of which SIDBI would contribute $5 million. The rest will be funded by multinational financial institutions. The fund is expected to become operational in three months.
SIDBI chairman P B Nimbalkar says the fund will open up financial avenues that were so far closed to small enterprises.
Further, SIDBI has offered to support Tamil Nadu Small and Tiny Industries in case it wishes to set up a mutual credit guarantee fund. Nimbalkar says three industry associations, Andhra Pradesh's Aleap, Karnataka's Kassia and Tamil Nadu's Tea, are already in the process of setting up a mutual credit guarantee fund.