MPPSC 2023 Prelims Q85: When was the Small Industries Development Bank of India

Q: What is the answer to MPPSC 2023 Prelims Q85?

A. Correct — A, April 1990. SIDBI was set up in April 1990 under the SIDBI Act, 1989, as the principal financial institution for the promotion, financing and development of the Micro, Small and Medium Enterprises (MSME) sector. It was originally incorporated as a wholly-owned subsidiary of IDBI, and was later delinked from it.

MPPSC 2023 Prelims Paper-I · Question 85 of 100

Verified against the official question paper. Answer as per the official MPPSC answer key.

When was the Small Industries Development Bank of India (SIDBI) established?

(a)April 1990
(b)January 1950
(c)August 1995
(d)May 2005

Answer

Why

Correct — A, April 1990. SIDBI was set up in April 1990 under the SIDBI Act, 1989, as the principal financial institution for the promotion, financing and development of the Micro, Small and Medium Enterprises (MSME) sector. It was originally incorporated as a wholly-owned subsidiary of IDBI, and was later delinked from it.

Why the others are wrong

(b)January 1950 — Wrong — far too early; India had no MSME-focused apex bank at that time.
(c)August 1995 — Wrong — not SIDBI's founding date; SIDBI was already five years old by then.
(d)May 2005 — Wrong — not SIDBI's founding date; SIDBI had been operating for 15 years by then.

Concept

SIDBI (Small Industries Development Bank of India) is the apex financial institution for promoting, financing and developing India's Micro, Small and Medium Enterprises (MSME) sector. It was established in April 1990 under the SIDBI Act, 1989, initially as a wholly-owned subsidiary of IDBI.

Exams pair SIDBI (1990, MSME-focused) with NABARD (1982, agriculture-focused) and IDBI (1964, general industrial development) — the trap is mixing up which apex bank serves which sector, and mixing up their founding years.

Key facts

SIDBI was established in April 1990 under the SIDBI Act, 1989
It is the principal financial institution for the promotion, financing and development of the MSME sector
Originally set up as a wholly-owned subsidiary of IDBI
SIDBI's headquarters is in Lucknow, Uttar Pradesh

Study next

MSME classification — investment & turnover criteria (post-2020 revision)Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)Stand Up India Scheme — refinanced through SIDBIIDBI (1964) vs SIDBI (1990) vs NABARD (1982) — which apex bank covers which sectorDelinking of SIDBI from IDBI

Common traps

Confusing SIDBI's founding year (1990) with NABARD's (1982) or IDBI's (1964)
Assuming SIDBI, like NABARD, is agriculture-focused rather than MSME-focused

MPPSC/UPSC ask exact establishment years/Acts of apex financial institutions, or which one refinances a named scheme (e.g., Stand Up India via SIDBI).

Related PYQs

No directly related past PYQ was found.

Practice

practice — not a real PYQ
SIDBI was originally established as a wholly-owned subsidiary of which institution?
- (a)Reserve Bank of India
- (b)NABARD
- (c)IDBI
- (d)State Bank of India
Answer(c) IDBI — SIDBI was later delinked from it.
practice — not a real PYQ
The 'Stand Up India Scheme', aimed at promoting entrepreneurship among SC/ST and women entrepreneurs, provides refinance through which institution?
- (a)NABARD
- (b)SIDBI
- (c)EXIM Bank
- (d)National Housing Bank
Answer(b) SIDBI.