Bangalore: Small Industries Development Bank of India (SIDBI) will launch a Rs 500 crore venture capital fund with participation from some commercial banks targeted at small and medium enterprises (SME) this month end, SIDBI Chairman and Managing Director, V K Chopra said today (Sep 15, 2004).

Chopra told reporters in Bangalore on the sidelines of a banking conference that the fund to be operational by this month-end has got commitment of Rs 200 crore and several banks have given in-principle approval to partner SIDBI in the fund.

"The intention of the venture capital fund will be to fund projects for the SMEs," he said.

Chopra said both SIDBI and Punjab National Bank (PNB) have committed Rs 100 crore each in the fund, while Bank of India has agreed to invest a similar amount.

He said an existing venture fund had funded Rs 484 crore into SMEs for expansion of their different projects.

Chopra said SIDBI has roped in six public sector banks to set up a dedicated independent credit rating agency for SME sector.

He said PNB, Bank of India, Canara Bank, Union Bank, Bank of Baroda, Oriental Bank of Commerce will join SIDBI and a reputed credit rating agency for the new initiative.

Chopra said a risk-sharing fund to invest over Rs 25 lakh for SMEs would also be launched soon.