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 coordinate the functions of 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:—
2
[(i) granting loans and advances to any State Financial Corporation, State Industrial
Development Corporation, State Small Industries Corporation, scheduled bank, State Cooperative
Bank or such other financial institutions, approved by the Board in this behalf, 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 or, of any loans or
advances granted by the State Financial Corporation or State Industrial Development Corporation to
any other industrial concern, 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 3
[such other financial institutions as may be approved by the Board in
this behalf];
(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 3
[such other financial institutions as may be approved by the Board in this behalf];
1. Subs. by Act 7 of 2000, s. 7, for section 12 (w.e.f. 27-3-2000).
2. Subs. by s. 8, ibid., for clause (i) (w.e.f. 27-3-2000).
3. Subs. by s. 8, ibid., for “such other financial institutions, as the Central Government may, on the recommendation of the
Development Bank, specify” (w.e.f. 27-3-2000).
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(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 of 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 mean the principal, interest and other charges payable on such loan or
advance 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 smallscale sector;
(vii) granting loans and advances to a scheduled bank or any other bank or such financial
institutions 1
[approved by the Board in this behalf], 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 aircrafts 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 to
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;
1. Subs. by Act 7 of 2000, s. 8, for “as the Central Government may, on the recommendation of the Development Bank, specify”
(w.e.f. 27-3-2000).
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(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 1
[as approved by the Board in this behalf];
(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 financial institutions 1
[as approved by the Board in this behalf], 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
entrepreneural development programmes, raw material purchase, marketing support and promotion
of, or financial support to, agencies engaged in such activities;
(xxiii) acquiring, with the approval of 2
[the Central Government], 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 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 persons 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 3
[the Board] may authorise;
(xxx) doing any other kind of business which the Central Government may, on the
recommendation of 3
[the Board], 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.
1. Subs. by Act 7 of 2000, s. 8, for “as the Central Government may, on the recommendation of the Development Bank, specify”
(w.e.f. 27-3-2000).
2. Subs. by s. 8, ibid., for “the Central Government on the recommendation of the Development Bank” (w.e.f. 27-3-2000).
3. Subs. by s. 8, ibid., for “the Development Bank” (w.e.f. 27-3-2000).
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(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.
14. Loans by Central Government.—The Central Government may, after the due appropriation
made by Parliament by law in this behalf, advance to the Small Industries Bank—
(a) an interest free loan of such amount and repayable in such instalments and in such other
manner as may be determined by the Central Government; and
(b) such further sums of money by way of loan on such terms and conditions as may be agreed
upon:
Provided that the Central Government may, on a request being made to it by the Small Industries
Bank, increase the number of instalments or alter the amount of any instalment or vary the date on which
any instalment is payable under clause (a).
15. Borrowings and acceptance of deposits by the Small Industries Bank.—(1) The Small
Industries Bank may, for the purpose of carrying out its functions under this Act,—
(a) issue and sell bonds and debentures with or without the guarantee of the Central Government;
(b) borrow money from the Reserve Bank—
(i) repayable on demand or on the expiry of the fixed periods not exceeding ninety days from
the date on which the money is so borrowed against the security of stocks, funds and securities
(other than immovable property) in which a trustee is authorised to invest trust money by any law
for the time being in force in India;
(ii) against bills of exchange or promissory notes arising out of bona fide commercial or trade
transactions, bearing two or more good signatures and maturing within five years from the date of
the borrowing;
(iii) out of the National Industrial Credit (Long Term Operations) Fund established under
section 46C of the Reserve Bank of India Act, 1934 (2 of 1934), for any of the purposes specified
in that section;
(c) borrow money from the Development Bank or such other authority, organisation or institution
as may be generally or specially 1
[approved by the Board];
(d) accept deposits repayable after the expiry of such period and on such terms as may be
generally or specially 1
[approved by the Board].
(2) The Central Government may, on a request being made to it by the Small Industries Bank,
guarantee the bonds and debentures issued by that Bank as to the repayment of principal and the payment
of interest at such rate as may be fixed by that Government.
2
[16. Investment.—The Small Industries Bank may invest (whether by way of deposits in banks or
otherwise) the amounts available in the Small Industries Development Assistance Fund or the Small
Industries General Fund or any other fund or account which are not for the time being required for the
transaction of business in such manner as may be approved by the Board.]
17. Power to transfer rights.—The rights and interests of the Small Industries Bank (including any
other rights incidental thereto) in relation to any loan or advance granted, or any amount recoverable, by it
may be transferred by the Small Industries Bank, either in whole or in part, by the execution or issue of
any instrument or by the transfer of any instrument by endorsement, or in any other manner in which the
rights and interests in relation to such loan or advance may be lawfully transferred, and the Small
Industries Bank may, notwithstanding such transfer, act as the trustee for the transferee.
18. Power to acquire rights.—The Small Industries Bank shall have the right to acquire, by transfer
on assignment the rights and interests of any public financial institution as defined in section 4A of the
1. Subs. by Act 7 of 2000, s. 9, for “approved by the Development Bank” (w.e.f. 27-3-2000).
2. Subs. by s. 10, ibid., for section 16 (w.e.f. 27-3-2000).
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Companies Act, 1956 (1 of 1956) (including any other rights incidental thereto) in relation to any loan or
advance granted, or any amount recoverable by such institution, either in whole or in part, by the
execution or issue of any instrument or by the transfer of any instrument or in any other manner.
19. Loans in foreign currency.—(1) Notwithstanding anything contained in the Foreign Exchange
Regulation Act, 1973 (46 of 1973), or in any other enactment for the time being in force relating to
foreign exchange, the Small Industries Bank may, for the purposes of granting loans and advances under
this Act, borrow, with the previous consent of the Central Government 1
***, foreign currency from any
bank or financial institution in any foreign country or otherwise.
(2) The Central Government may, where necessary, guarantee any loan taken by the Small Industries
Bank under sub-section (1) or any part thereof as to the repayment of principal and the payment of
interest and other incidental charges.
(3) All loans and advances granted by the Small Industries Bank out of foreign currency borrowed
under sub-section (1) shall be expressed in terms of foreign currency as equivalent of Indian currency
calculated in accordance with the rate of exchange prevailing at the time of grant thereof, and the amount
due thereunder shall be repayable in equivalent Indian currency, calculated in accordance with the rate of
exchange prevailing at the time of repayment of such loan or advance.
(4) Unless otherwise provided by the Central Government, any loss or profit in connection with any
borrowing of foreign currency under sub-section (1) for the purpose of granting loans and advances under
this Act, or with its repayment to the concerned foreign lending agency, on account of any fluctuations in
the exchange accruing—
(a) during the period within which the loan or advance is repayable by the industrial concern in
the small-scale sector or the period of actual repayment thereof by the concern, whichever is longer,
shall be reimbursed by, or paid to, as the case may be, the recipient of such loans and advances;
(b) after the expiry of the period specified in clause (a),—
(i) shall be borne by the Small Industries Bank in respect of normal market fluctuations in the
rate of foreign exchange;
(ii) shall be reimbursed by, or paid to, as the case may be, the Central Government in respect
of fluctuations other than the normal market fluctuations in foreign exchange.
Explanation.—If any question arises as to whether any fluctuation as aforesaid is a normal market
fluctuation or not, the same shall be decided by the Central Government whose decision thereon shall be
final.
20. Grants, donations, etc., to the Small Industries Bank.—The Small Industries Bank may
receive gifts, grants, donations, benefactions or other monies from Government or any other source.