New Delhi, Aug 11: Small Industries Development Bank of India will soon ink a strategic tie-up agreement with a commercial bank for extending direct credit facilities to the small scale sector. "We are in negotiations with a commercial bank, including Punjab National Bank, for a strategic tie-up for extending direct credit to SSIS," SIDBI managing director V K Chopra said here today at a seminar 'finance and credit needs of SSIS', organised by All India Manufacturers' Organisation.
He said that the agreement would be signed very shortly. So far, sidbi had been extending credit mostly indirectly through state financing entities and commercial banks, he added.

Initially, it would start covering certain sectors and depending on the success, it would be extended to other segments and parts across the country.

Highlighting that the SSI sector had a pivotal role to play, considering the vast employment potential and share in the country's GDP, Chopra, who was earlier with Oriental Bank of Commerce, said Sidbi board had decided to extend direct credit to the segment.
He said that the board had also decided to cover credit upto Rs five lakh by the commercial banks toinsist on collateral.

"The new scheme (of providing coverage for credit lines upto Rs five lakh without collateral) will be effective from September 1," Chopra said.
Bureau Report