Small and medium-sized enterprises (SMEs) refinancer, Small Industries Development Bank of India (SIDBI), plans to float a Rs 10,000 crore rights issue next fiscal to expand its equity capital as it expects to grow assets to Rs 5 lakh crore by March 2024 from about Rs 4 lakh crore in March 2023, according to media reports.
The central government is the largest stakeholder of SIDBI. It owns 20.8 per cent, the State Bank of India holds 15.65 per cent and Life Insurance Corporation holds 13.33 per cent. The rest of the equity is held by other public financial institutions and banks. The shareholders will subscribe to the proposed rights issue.
Two years ago, direct financing accounted for only 7 per cent of its book, which jumped to 14 per cent this year.
In FY23, SIDBI’s capital adequacy ratio (CAR) came down to 19.29 per cent from 24.28 per cent in FY22, according to the annual report. It further explained the fall in the effective capital utilisation to increase the portfolio of the bank. This again fell to 15.63 per cent as of the June 2023 quarter.
The company further said that the asset base grew 63 per cent from Rs 2,47,379 crore in FY22 to Rs 4,02,383 crore in FY23, while the income rose a full 102 per cent the year to Rs 18,485 crore, from which it booked a net income of Rs 3,344 crore, which was 71 per cent more than the year-ago number.
According to a rating agency, SIDBI’s borrowing has increased, but it is still within the allowed limit. The SME loan book of commercial banks is around Rs 25 lakh crore, while the total credit market is over Rs 145 lakh crore.
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