The Small Industries Development Bank of India (SIDBI) today said that it will extend 100 crore line of credit to the state-run lender Indian Overseas Bank for the MSME sector for 7 years.
What is line of credit? A line of credit is any credit source extended to a government, business or individual by a bank or other financial institution. Interest is paid only on money actually withdrawn, although the borrower may be required to pay an unused line fee, often an annualized percentage fee on the money not withdrawn.
What is SIDBI? Small Industries Development Bank of India is an independent financial institution aimed to aid the growth and development of micro, small and medium-scale enterprises in India. Set up on April 2, 1990 through an act of Parliament, it was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India.
What is IOB? Indian Overseas Bank is a major bank based in Chennai with 2303 domestic branches and six branches overseas. Indian Overseas Bank has an ISO certified inhouse Information Technology department. IOB offers internet Banking and is one of the banks that the Govt. of India has approved for online payment of taxes.
Why is the money given? The money will be provided to deserving MSMEs for bridging the gap in project funding, working capital margin and for meeting intangible expenses through an array of instruments like subordinate debt, redeemable preference shares and equity