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The Small Industries Development Bank of India (SIDBI) was established in:
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Answer: Option C — 1990
Detailed Solution
The Small Industries Development Bank of India (SIDBI) was established on 2 April 1990 under an Act of Parliament, the SIDBI Act, 1989. It was initially set up as a wholly owned subsidiary of the Industrial Development Bank of India (IDBI). Its ownership was later transferred to public sector banks, insurance companies and other financial institutions. Its headquarters is in Lucknow, Uttar Pradesh.
SIDBI is the principal financial institution for the promotion, financing and development of the Micro, Small and Medium Enterprises (MSME) sector, and for coordinating the work of other institutions in this field. MSMEs are very important for India's economy; they account for a large share of manufacturing output, exports and employment.
Main functions of SIDBI:
- Refinancing banks and financial institutions for their loans to MSMEs.
- Direct lending to MSMEs, including working capital and term loans.
- Supporting microfinance institutions (MFIs) and small borrowers.
- Managing funds and schemes, such as the Fund of Funds for Startups (FFS), the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE, set up jointly with the government in 2000), and the MUDRA scheme.
SIDBI set up MUDRA (Micro Units Development and Refinance Agency) as its subsidiary in 2015, under the Pradhan Mantri MUDRA Yojana, to refinance small loans up to ₹10 lakh (raised to ₹20 lakh for some borrowers in 2024) for micro enterprises. It also runs the Udyami Mitra portal and the Stand-Up India portal.
SIDBI is one of the five All India Financial Institutions (AIFIs) regulated by the RBI, along with NABARD, EXIM Bank, the National Housing Bank and NaBFID.
Why not the other options?
- ✗1982 is the year NABARD and EXIM Bank were set up.
- ✗1964 is the year IDBI (and the Unit Trust of India) was set up.
- ✗1988 is the year SEBI was set up as a non-statutory body.
Quick tip
Remember: SIDBI = 2 April 1990, Lucknow, subsidiary of IDBI initially, for MSMEs; MUDRA (2015) is its subsidiary. NABARD = 1982 (Mumbai).
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Financial Markets & Institutions — Preparation
This question tests your understanding of Financial Markets & Institutions, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.
This topic covers India's financial institutions and markets: regulators such as SEBI, IRDAI and PFRDA, development banks such as NABARD, SIDBI and EXIM Bank, the money market and capital market, stock exchanges and indices, insurance, and microfinance and self-help groups. Questions usually ask what each regulator oversees, where institutions are headquartered, and what market terms mean (bull and bear markets, IPO, Sensex and Nifty). For example, NABARD supports agriculture and rural development, SIDBI supports small industries, and SEBI regulates the securities market. Practise the financial markets and institutions questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.