SIDBI, World Bank ink $543 million pacts for start-ups, MSMEs

The projects will mark a new beginning in the area of MSME financing and supplement the Govt's thrust on Make in India and Zero Defect Zero Effect Programme, says SIDBI

Lender to small industries, SIDBI today signed USD 543 million (about Rs 3,400 crore) pacts with World Bank for two projects to provide debt assistance to start-ups, MSMEs and promote energy efficiency investments in the country.

"The projects will mark a new beginning in the area of MSME financing and supplement the Government's thrust on Make in India and Zero Defect Zero Effect Programme," SIDBI said.

The first agreement on MSME growth, innovation and inclusive finance project is for line of credit of USD 500 million to Small Industries Development Bank of India. Of this, USD 150 million will be used for spurring early stage risk capital finance; USD 200 million for supporting service sector enterprises; and USD 150 million will be utilised for financing of manufacturing MSMEs.

The project also targets women entrepreneurs (20 per cent of the project) and units in underserved (low income) states such as Uttar Pradesh, Madhya Pradesh and West Bengal (25 per cent of assisted units from low income states).

The second agreement is for Partial Risk Sharing Facility for Energy Efficiency (PRSF) Project with a total outlay of USD 43 million. Under this pact, a guarantee fund with a corpus of USD 37 million will be managed by SIDBI. It also entails technical assistance of a USD 4 million to be implemented by SIDBI and USD 2 million to be implemented by Energy Efficiency Services Limited.

"The objective of the project is to support the GoI's efforts to transform the energy efficiency (EE) market in India by promoting increased level of EE investments, particularly through energy service performance contracting (ESPC) delivered through Energy Service Companies (ESCOs)," SIDBI said.

It will guarantee the loans given by Banks/financial institutions/NBFCs to ESCOs and ESCO-implemented projects to minimise their risk perception.

It is estimated that the project is expected to provide credit guarantee to more than 500 ESCO implemented EE projects which would mobilise financing of the tune of USD 127 million.