PHD Chamber had emphasized that SIDBI should undertake more direct lending to Micro, Small and Medium  (MSMEs) instead of going for large investments in bonds and other instruments as is being done at present.

According to the Chamber as on 31st March 07, total resources amounting to Rs.21229.37 crore were available to SIDBI. Out of this, only Rs. 4121.48 crore was deployed in ‘Loans & Advances to Industrial Concerns’. This works out to 19.41% of the total resources. The major portion of the remaining resources (Rs. 14,589.52 crore i.e. 68.73%) were kept  deployed in ‘Loans & Advances to Banks & FIs’, Investment in Securities, Shares, Bonds, Cash & Bank Balances etc.

PHD Chamber analysis shows that during 2006-07, SIDBI disbursed Rs. 10,225.37 crore, out of which ‘Project Financing’ (under Direct Financing) was only Rs.1717.13 crore (i.e. 16.79% of the total disbursement) and ‘Micro Finance’ was Rs.379.02 crore (i.e. 3.70%). Significantly, more than 50% if the total disbursement made by SIDBI in 2006-07 (Rs.5189.12 crore), was towards ‘Refinance’ to the banks and FIs. The average return on investment, made by SIDBI in Government securities, bonds, shares, debentures etc, during the year 2006-07 was only 3.90%, which is much less than that SIDBI could earn by utilizing the funds in Direct Financing of MSME units.

According to Dr L K Malhotra, President, PHD Chamber, “SIDBI should provide the details of assistance rendered under its various schemes. The information should be scheme-wise, contain the benefits accruing under each scheme and specify the number of people benefited by these schemes on a yearly basis for the last three years. The objective is to know more about the deployment of SIDBI resources for various well designed schemes and their impact on SMEs. These could also be popularized amongst MSMEs”.