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The Small Industries Development Bank of India Act, 1989


13. Business of Small Industries Bank

1.     The Small Industries Bank shall function as the principal financial institution for the promotion, financing and development of industrial concerns in the small-scale sector and shall also co-ordinate the functions off institutions engaged in promoting, financing and developing the industrial concerns in the small-scale sector and may carry on and transact any of the following business, namely:-

              i.        Granting loans and advances to any State Financial Corporation, State Industrial Development Corporation, State Small Industries Corporation, scheduled bank, State Co-operative Bank or such other financial institutions, as the Central Government may, on the recommendation of the Development bank, specify, by way of refinance on such terms and conditions as it may deem fit to impose, of any loans or advances granted to industrial concerns in the small-scale sector by such corporation, bank or institution, which are repayable within a period not exceeding twenty-five years;

             ii.        Accepting discounting or rediscounting bills of exchange and promissory notes made, drawn accepted or endorsed by industrial concerns in the small-scale sector or by any person selling products manufactured by an industrial concern in the small-scale sector;

            iii.        Subscribing to or purchasing stocks, shares bonds or debentures of, any State Financial Corporation, State Industrial Development Corporation, State Small Industries Corporation, National Small Industries Corporation or such other financial institutions, as the Central Government may, on the recommendation of the Development bank, specify;

            iv.        Granting lines of credit or loans and advances to any State Financial Corporation, State Industrial Development Corporation, State Small Industries Corporation, National Small Industries Corporation or such other financial institutions, as the Central Government may, on the recommendation of the Development Bank, specify;

             v.        Granting loans and advances to any industrial concern in the small-scale sector or subscribing to, or purchasing, or under-writing the issue of stocks, shares, bonds or debentures of, any such concern:

Provided that nothing contained in this clause shall be deemed to preclude the Small Industries Bank from granting loans or advances to, or subscribing to the debentures of, an industrial concern in the small-scale sector, the amounts outstanding thereon may be convertible at the option of the Small Industries Bank into stocks or shares of that concern within the period the loan, advance or debenture is repayable.

Explanation. In this clause, the expression "the amounts outstanding thereon" used in relation to any loan or advance, shall men the principal, interest and other charges payable on such loan or advances as at the time when the amounts are sought to be converted into stocks or shares;

            vi.        Granting loans and advances-

a.     To any person exporting; or

b.    To any person outside India, in connection with the export; or

c.     For the execution of turn-key projects outside India by any industrial concern in the small-scale sector;

           vii.        Granting loans and advances to a scheduled bank or any other bank or such financial institutions as the Central Government may, on the recommendation of the Development Bank, specify, by way of refinance of loans and advances granted by it for purposes of export;

          viii.        Accepting, collecting, discounting, rediscounting, purchasing, selling or negotiating in or outside India, bills of exchange or promissory notes arising out of transactions, relating to export or import and granting of loans and advances in or outside India against such bills or promissory notes;

            ix.        Granting, opening, issuing, confirming or endorsing letters of credit and negotiating or collecting bills or other documents drawn thereunder;

             x.        Granting lines of credit to the Government of any foreign State or any financial institution or person outside India for the purpose of export or import;

            xi.        Financing export from or import into India of machinery, equipment or other assets including vehicles, ships and aircraft's on lease, sub-lease or hire purchase basis by or for any industrial concern in small-scale sector;

           xii.        Buying or selling of or entering into such other dealings in, foreign exchange, as may be necessary for the discharge of the functions of the Small Industries Bank;

          xiii.        Opening of any account in any bank in or outside India or making of any agency arrangements with, or acting as an agent or correspondent of, any bank or other institution in or outside India;

         xiv.        Transferring for consideration any instrument relating to loans and advances granted by it o any industrial concern in the small-scale sector;

          xv.        Granting loans and advances to any person for purposes of investment in any industrial concern in the small-scale sector;

         xvi.        Guaranteeing loans raised from, or credit arrangements made with, any bank, financial institution or other lending agency in any country outside India in foreign currency, with the approval of the Central Government, by industrial concern in the small-scale sector;

        xvii.        Guaranteeing deferred payments due from any industrial concern in the small-scale sector;

       xviii.        Guaranteeing-

a.     Loans raised by industrial concerns in the small-scale sector which are floated in the public market, or

b.    Loans raised by any industrial concern in the small-scale sector from any scheduled bank or State Co-operative Bank or State Financial Corporation or State Industrial Corporation or such other financial institutions as the Central Government may, on the recommendation of the Development Bank specify;

         xix.        Guaranteeing the obligations of any scheduled bank or State Co-operative Bank or State Financial Corporation or State Industrial Development Corporation or State Small Industries Corporation or such other finical institution as the Central Government may, on the recommendation of the Development Bank, specify, arising out of, or in connection with, underwriting the issue of stocks, shares, bonds or debentures of any industrial concern in the small-scale sector;

          xx.        Providing factoring services to any industrial concern in the small-scale sector;

         xxi.        Providing technical and financial consultancy, merchant banking and extension services;

        xxii.        Undertaking activities for promotion of industry in the small-scale sector including entrepreneurial development programs, raw material purchase, marketing support and promotion of, or financial support to, agencies engaged in such activities;

       xxiii.        Acquiring, with the approval of the Central Government on the recommendation of the Development Bank, the undertaking including the business, assets and liabilities of any institution the principal object of which is the promotion or development of industry in the small-scale sector in India, or the grant of financial assistance for such promotion or development;

       xxiv.        Leasing, sub-leasing or giving on hire or hire-purchase any movable or immovable assets to any industrial concern in the small-scale sector;

        xxv.        Undertaking research and surveys for evaluating or dealing with marketing or investments and undertaking and carrying on techno-economic studies in connection with the development of industry in the small-scale sector;

       xxvi.        Providing technical, legal, marketing and administrative assistance to any industrial concern in the small-scale sector or any person for promotion, management or expansion of any industrial concern in the small-scale sector;

      xxvii.        Planning, promoting and developing industries and in the small-scale sector;

     xxviii.        Promoting, forming or conducting or associating in the promotion, formation or conduct of companies, subsidiaries societies, trusts or such other association of person as it may deem fit;

       xxix.        Acting as agent of-

a.     The Central Government or of the Reserve Bank or of the Development Bank, or

b.    Such other Government or person as the Development Bank may authorise;

        xxx.        Doing any other kind of business which the Central Government may, on the recommendation of the Development Bank, authorise;

       xxxi.        Generally doing such other acts and things as may be incidental to, or consequential upon, the exercise of its powers or the discharge of its duties under this Act or any other law for the time being in force including sale or transfer of any of its assets.

2.     The Small Industries Bank may receive in consideration of any of the services mentioned in sub-section (1) such commission, brokerage, interest, remuneration or fees as may be agreed upon.

3.     The Small Industries Bank shall not grant any loan or advance or other financial accommodation on the security of its own bonds or debentures.



The Small Industries Development Bank of India Act, 1989 Back




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