Credit and Finance for MSMEs: The government Self-Reliant India (SRI) fund, which provides equity funding to small businesses, has invested Rs 1,600 crore in funding to 88 micro, small and medium enterprises (MSMEs) in the country, said BB Swain, Secretary, Ministry of MSMEs at the MSME Growth Conclave organised by Gujarat University. SRI fund is a SEBI-registered category-II Alternative Investment Fund (AIF) announced in May 2020 that operates through a mother-fund and daughter-fund structure and aims to invest Rs 50,000 crore into MSMEs. Funding to the first set of 88 MSMEs was made through the 25 empanelled private equity firms, according to Swain.
“MSMEs are not really known for seeking equity but the scheme has started promoting it (equity capital). Our (government) target was if we give one rupee, the private sector would give four rupees for equity sharing. So, we targeted a ratio of 1:4 while it is running at 1:7. This shows there is enough money for MSMEs that are talented and doing well. They are definitely getting enough funding,” said Swain.
SRI fund is implemented by NSIC Venture Capital Fund Limited (NVCFL), a wholly-owned subsidiary of the government’s MSME growth agency National Small Industries Corporation (NSIC). The government is the sole anchor investor in the SRI fund with the initial support of Rs 10,000 as the mother fund. The rest 80 per cent of the Rs 50,000 crore fund will be raised by daughter funds from banks, financial institutions, HNIs, and others.
Around 5,000 MSMEs are expected to benefit from the SRI fund, MSME Minister Narayan Rane had informed the Lok Sabha in February this year. “Assuming an average investment of Rs 10 crore per MSMEs, approximately 5000 MSME are likely to be benefited,” Rane had said. Among the empanelled daughter funds were Aavishkaar India Fund VI, Alkemi Venture Fund II – Scheme I, Gaja, Capital India Fund 2020, Ivycap Ventures Trust Fund III, Stakeboat Capital Fund II, and more.