CMA Intermediate · Financial Management and Business Data Analytics · Financial Institutions
Sharma Textiles, a micro and small enterprise, wants to expand its capacity and also needs working capital support through the banking system with refinance from the apex institution for small industries. Which institution fits this role?
SIDBI is correct because it is the principal financial institution for promoting, financing and developing micro, small and medium enterprises, offering direct loans and refinance through banks. NABARD targets agriculture and rural areas, EXIM Bank targets foreign trade finance, and IFCI is not limited to agricultural cooperatives.
- AEXIM Bank, because it refinances all manufacturers irrespective of size
- BNABARD, because it is the apex bank for all industrial units
- CSIDBI, because it is the principal financial institution for promoting and financing the MSME sectorCorrect
- DIFCI, because it is restricted to financing agricultural cooperatives
Explanation
SIDBI is the principal institution for promotion, financing and development of the MSME sector, including refinance to banks and direct lending. NABARD focuses on agriculture and rural sectors, EXIM Bank on trade, and IFCI is not an agricultural cooperative financier.
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