World Bank to provide $500 mn loan for SIDBI's MSME project

India today signed agreements with the World Bank for a $500 million loan for the Small Industries Development Bank of India (SIDBI) to create a fund that will support growth and innovation in micro, small and medium enterprises (MSME) as also finance projects.
Under the loan agreements, World Bank (IBRD) will give assistance of $500 million to SIDBI's MSME Growth Innovation and Inclusive Finance Project.

The project aims at improving access to finance of micro, small and medium enterprises (MSME) in manufacturing and service sectors from early to growth stage, including through innovative financial products. The project also aims at supporting growth and employment creation through unlocking opportunities for firm growth that the financing would provide.

SIDBI-funded MSMEs will be the primary beneficiaries.

MSMEs for the purpose of this project will be firms that are considered as units under the MSME Act.

The project specifically benefits SIDBI by enhancing its financial and institutional capacity in the areas of early stage, service and manufacturing sector financing, and also supports other Participating Financial Institutions (PFIs).

The project will have three components, which include `spurring early stage and risk capital finance', `supporting service sector financing models and `supporting finance to manufacturing MSMEs.'

The loan, which has a maturity period of 5 years, will be implemented by Small Industries Development Bank of India.

Tarun Bajaj, joint secretary, Department of Economic Affairs in the finance ministry and Onno Ruhl, country director for India of the World Bank, signed the loan guarantees while Kshatrapati Shivaji, CMD, SIDBI and Onno Ruhl, country director (India) of World Bank signed the loan agreements.