Ubharte Sitaare Alternative Investment Fund
Context:
Recently, the Ministry of Finance has launched Ubharte Sitaare Alternative Investment Fund to facilitate debt and equity funding to export-oriented MSMEs (Micro Small and medium Enterprises)
About Ubharte Sitaare Alternative Investment Fund:
- This fund is a mix of structured support– financial as well as advisory services by investing in equity or equity like instruments; debt– both funded & non-funded and technical assistance such as advisory services, grants & soft loans; to the Indian companies.
- The fund is expected to identify Indian enterprises with potential advantages, but which are currently underperforming or unable to tap their latent potential to grow.
- Under the scheme, an identified company is supported even if it is currently underperforming or may be unable to tap its latent potential to grow.
- The scheme diagnoses such challenges and provides support through a mix of structured support covering equity, debt and technical assistance.
- It will also have a Greenshoe Option of Rs 250 crore.
- A greenshoe option is an over-allotment option, which is a term that is commonly used to describe a special arrangement in a share offering for example an IPO (Initial Public Offering) that will enable the investment bank to support the share price after the offering without putting their own capital at risk.
- The fund has been set up jointly by Exim Bank and SIDBI (Small Industries Development Bank of India) which will invest in the fund by way of equity and equity-like products in export-oriented units, in both manufacturing and services sectors.
Objectives:
- To enhance India’s competitiveness in select sectors through finance and extensive handholding support.
- Identify and nurture companies having differentiated technology, products or processes, and enhance their export business; assist units with export potential, which are unable to scale up their operations for want of finance.
- Identify and mitigate challenges faced by successful companies which hinder their exports.
- Assist existing exporters in widening their basket of products and target new markets through a strategic and structured export market development initiative.
Other Initiatives to Promote MSME Sector
- Scheme of Fund for Regeneration of Traditional Industries (SFURTI): It aims to properly organize the artisans and the traditional industries into clusters and thus provide financial assistance to make them competitive in today’s market scenario.
- A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE): The scheme promotes innovation & rural entrepreneurship through rural Livelihood Business Incubator (LBI), Technology Business Incubator (TBI) and Fund of Funds for start-up creation in the agro-based industry.
- Interest Subvention Scheme for Incremental Credit to MSMEs: It was introduced by the Reserve Bank of India wherein relief is provided upto 2% of interest to all the legal MSMEs on their outstanding fresh/incremental term loan/working capital during the period of its validity.
- Credit Guarantee Scheme for Micro and Small Enterprises: Launched to facilitate easy flow of credit, guarantee cover is provided for collateral free credit extended to MSMEs.
Alternative Investment Funds
Alternative Investment Funds (AIF for short) are those funds created or established in India as a privately pooled investment vehicle in order to collect funds from specific investors as per a previously defined investment policy.
AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities.
The Union Cabinet too had approved the creation of an Alternative Investment Fund of Rs. 25,000 core to revive affordable housing projects.
Source: The Hindu
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