MICROCAPITAL BRIEF: HDFC Bank to Lend $100m to Micro-, Small, Medium-sized Enterprises (MSMEs) in India - Half Led by Women - with Support from DFC, Mastercard, USAID

HDFC Bank, an affiliate of India’s Housing Development Finance Corporation, recently agreed to lend USD 100 million to micro-, small and medium-sized enterprises (MSMEs) in India to support their usage of digital payments, including to adjust to the COVID-19 pandemic. Half of the credit facility is earmarked for women entrepreneurs.

The government-backed US International Development Finance Corporation (DFC) and the US government’s Agency for International Development (AID) will mitigate an unspecified portion of the credit risk for HDFC Bank. US-based payment technology firm Mastercard support end-borrowers with training via the Mastercard Center for Inclusive Growth (MCIG), the Confederation of Indian Industry (CII) and the Confederation of All Indian Traders (CAIT).

HDFC Bank, which was founded in 1994, has 5,600 branches and 16,000 automated teller machines in 2,900 cities and towns. For the quarter ending in September 2021, the institution reports net profit of INR 88 billion (USD 1.2 billion) on a balance sheet of INR 18 trillion (USD 240 billion).

Headquartered in the US state of New York, Mastercard connects consumers, financial institutions, merchants and governments in approximately 210 countries and territories. As of October 2020, the firm reported net quarterly income of USD 1.5 billion on total assets of USD 32 billion. Mastercard founded the Mastercard Center for Inclusive Growth in 2013 with a contribution of USD 500 million to support the growth of micro- and small enterprises via access to technology.

DFC was launched in 2020 to “help businesses expand into emerging markets, foster growth and improve lives in the developing world while reinforcing US foreign policy and national security interests.” The organization issues equity placements, insurance, technical assistance and research in areas such as “energy, healthcare, critical infrastructure and technology.” Upon its founding, DFC took over the work of the Overseas Private Investment Corporation (OPIC) as well as USAID’s Development Credit Authority. During 2020, DFC brought in net income of USD 232 million, closing the year with assets of USD 12 billion.

Founded in 1961, USAID provides international economic and humanitarian assistance. It is active in areas such as economic growth, agriculture, trade, health, democracy, conflict prevention and humanitarian assistance. During its 2020 fiscal year, USAID operated in approximately 100 countries at a net cost of USD 13.7 billion.

By Zachary DeLuca, Research Associate

Sources and Additional Resources

Mastercard press release
https://www.mastercard.com/news/ap/en-in/newsroom/press-releases/en-in/2021/october/hdfc-bank-mastercard-usaid-and-dfc-launch-100-million-credit-facility-for-micro-small-and-medium-enterprises-msmes-in-india/

HDFC Bank homepage
https://www.hdfcbank.com/

HDFC Bank annual report 2021
https://www.hdfcbank.com/content/bbp/repositories/723fb80a-2dde-42a3-9793-7ae1be57c87f/?path=/Footer/About%20Us/Investor%20Relation/annual%20reports/pdf/HDFC-Bank-Integrated-Annual-Report-2020-21.pdf

DFC homepage
https://www.dfc.gov/

MCIG homepage
https://www.mastercardcenter.org/

CAIT homepage
https://www.cait.in/

CII homepage
https://www.cii.in/

USAID homepage
https://www.usaid.gov/

Previous MicroCapital Article on HDFC
https://www.microcapital.org/microcapital-brief-ifc-approves-250m-loan-to-hdfc-for-housing-finance-for-low-middle-income-borrowers-in-india-25-earmarked-for-green-buildings/

Previous MicroCapital article on Mastercard
https://www.microcapital.org/microcapital-brief-common-cents-lab-idb-mastercard-mercadolibre-harnessing-behavioral-economics-technology-in-effort-to-bolster-financial-stability-of-entrepreneurs-smes-in-latin-america/