India's largest Private Sector Bank (PSB) YES Bank on Friday announced its tie-up with Overseas Private Investment Corporation (OPIC), the US Government's Development Finance Institution, and Wells Fargo on an agreement to increase lending to small and medium enterprises (SMEs) in India.
Specifically, $50 million of the financing will be used to expand support to women-owned businesses, while another $50 million will be used for financing SME businesses in low-income states.
Dev Jagadesan, OPIC's Acting President and Chief Executive Officer (CEO), signed the financing agreement alongside Arun Agrawal, Group President - International Banking, YES Bank, showcasing both the organisations' dedication towards ensuring access to funding for women-owned businesses and SMEs in India.
YES Bank has also partnered with International Finance Corporation and Women Entrepreneurs Opportunity Facility by drawing a $50 million loan in March 2016 for mobilizing capital for women entrepreneurs.
"This agreement with OPIC further strengthens YES Bank's ability to fund and support the unique needs of SMEs and the entrepreneurial ecosystem; thereby boosting the developmental agenda in low-income states of India. It underscores the potential of YES Bank's business and financial model. This facility will support financing to women entrepreneurs in India for driving future economic growth and job creation," said MD and CEO YES Bank, Rana Kapoor.
"OPIC, YES Bank, and Wells Fargo have a strong history of partnering to support lending to small businesses and I look forward to continuing this partnership to foster economic growth in India by alleviating the financial challenges SMEs commonly face," said OPIC's Acting President and CEO, Dev Jagadesan.
SMEs contribute about 45 percent of industrial output and employ 42 million people in India. An estimated three million women-owned businesses in India employ over eight million people. However, only about a quarter of them are able to get the finance they need to grow and create jobs.
However, the World Bank estimates that viable and addressable demand for SME lending in India debt surpasses supply by $48 billion, a shortfall that holds back the transformative effect a thriving entrepreneur class can have on a developing economy.
This gap is particularly pronounced in India's low-income states and women-owned businesses, where approximately two-thirds of the SME debt gap resides.
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