Small Business Development Bank of India (SIDBI) is planning to launch venture capital (VC) funds that amounts to 850 crore in this fiscal for extending support to small and medium enterprises. The funds are going to be great support for the buoyant domestic market of SMEs. Last year the SME market has seen 11% growth. VC funds are going to support the growth story.

‘The India Opportunity Fund’ that is the largest of the venture funds is worth 500 crore and is made available to SMEs having a good track record. The second one is worth 50 crore and it is floated in order to invest in small units that are planning to enter capital market through SME exchanges.

S Muhnot, managing director of SIDBI, says that the venture capital funds are going to become market-maker for the proposed SME exchange. The ‘Nominated Investors Liquidity Fund’ yet to be launched will further serve as an impetus to making a thriving market.

SIDBI and National Stock Exchange have teamed to build a new trading platform specifically meant for SMEs. Green light has been signaled by Sebi to both BSE and NSE to set up a separate SME exchange. This is going to serve as the right dais for raising equity from market and to fund growth.

The third venture capital fund of SIDBI is worth 300 crore though the fund is still to be discussed. SIDBI is going to approach domestic banks to build the three funds. Development finance institution is planning to see 20 % growth in outstanding loans that amounts to 60,000 crore from March 2012 as compared to 50,000 crore at the end of 2010-11. It also plans to give out 1,000 crore to micro-lenders in this current year.