Small Industries Development Bank of India (SIDBI) on Thursday approved funds to the tune of Rs 524 crore for the upgradation and development of micro, small and medium enterprises (MSME) in Tamil Nadu.

SIDBI chairman Sivasubramanian Ramann handed over the 'in-principle approval letter' to Chief Minister M K Stalin on Tuesday and said Tamil Nadu was the first state to receive the cluster development fund, a state government release said.

The funds would be utilized to execute projects including setting up of precision engineering cluster in Kancheepuram, e-vehicle component cluster in Coimbatore, a medical equipment industrial park in Oragadam near Chennai among others.

Meanwhile, in a company statement, Ramann said the thrust shall be laid on clusters in sectors, sub-sectors which can directly benefit the MSMEs in the State (under the initiative). "SIDBI shall complement these with its customized direct lending products being channelised in the supported clusters, setting an example for other institutions to adopt and replicate", he added.

The SIDBI Cluster Development Fund has been set up with support from the Reserve Bank of India and it is envisaged in setting up, upgrading and renovation of MSME infrastructure in areas other than agriculture, the statement said.