ADB and HSBC India establish $ 100 mn guarantee plan for microcredit

ADB and HSBC programme will help women running small businesses and microfinance institutions lending after the pandemic.

The Asian Development Bank (ADB) and HSBC India have signed an agreement to establish a $100 million partial guarantee program to support more than 0.4 million micro-borrowers, especially women running small businesses.

The agreement will provide financing of an equivalent of $30 million that will be initially disbursed to three micro finance institutions (MFIs) in India by April 2022. The partial guarantee arrangement will help MFIs to access funding for on-lending activities as they expand operations after the coronavirus pandemic.

ADB, a Manila-based multilateral funding agency, in a statement said HSBC will expand its lending to microfinance institutions (MFIs) and non-bank finance companies, with ADB partially guaranteeing the loans. This will expand HSBC’s risk appetite and deployed capital, helping to enhance private sector financing and improve financial inclusion in India. It is ADB’s first partnership with HSBC.

Anshukant Taneja, Microfinance Program Lead at ADB, said MFIs have emerged as lifelines for underserved clients such as low-income households and small businesses as they struggled to access finance during the pandemic.

Microfinance in India has had a massive impact on people’s lives as they struggled to cope with the global pandemic. It plays a critical role in enabling financial inclusion and ensuring last-mile delivery of microcredit, said Rajat Verma, Head-Commercial Banking, HSBC India.

ADB’s Microfinance Program was launched in 2010 and has provided more than $1.8 billion in loans and helped mobilize $881 million in co-financing. It has provided access to microloans for more than eight million borrowers, 98 per cent of them women.