The Asian Development Bank (ADB), a multilateral development bank, will provide a USD 50 million loan to the state-owned Small Industries Development Bank of India (SIDBI) for lending to micro, small and medium-sized enterprises (MSMEs) and a partial credit guarantee of up to USD 250 million for ADB’s Micro, Small and Medium Enterprise (MSME) Development Project, which will allow public sector commercial banks to obtain medium- to long-term funds to on-lend to existing MSME clients in India.The SIDBI loan has a fifteen-year term with a grace period of three years and an interest rate based on LIBOR. The partial credit guarantee will be made available to one or more unspecified Indian public sector banks for three years. Guaranteed instruments are expected to be US dollar-denominated loans or bonds with a tenor of five years, but there is also flexibility for a tenor of up to 10 years and for the instrument to be in yen or euros.
By Christopher Maggio, Research Assistant
About Asian Development Bank (ADB):
Established in 1966 and headquartered in Manila, the Philippines, the Asian Development Bank (ADB) is a regional development bank that consists of sixty-seven members, of which forty-eight are based in the region and nineteen are based outside the region. The ADB has three strategic agendas: to foster inclusive growth, to facilitate regional integration and to ensure evironmentally sustainable growth. To accomplish these objectives, the ADB uses loans, technical assistance programs, grants and direct assistance in the form of equity investments, guarantees and credit to private companies in member countries.
Organization’s Website:
http://www.adb.org/
About Small Industries Development Bank of India (SIDBI):
The Small Industries Development Bank of India (SIDBI) was established by the Indian Parliament in 1990. It provides credit to large- and medium-scale microfinance institutions (MFIs). SIDBI reports having facilitated total financial assistance equivalent to USD 397 million during the fiscal year ending March 2009. This amount has gone toward various ventures such as term loans, equity support, and capacity building grants to MFIs. SIDBI is listed on, but does not report data to, the MIX Market.
Organization’s Website:
http://www.sidbi.com/
Additional Resources:
ADB press release entitled ‘$300 Million Finance Program to Help India Grow Micro, Small, Medium Firms’: http://www.adb.org/Media/Articles/2010/13165-indian-sme-developments/
MicroCapital’s Microfinance Universe profile: ADB
MicroCapital’s Microfinance Universe profile: SIDBI
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