India: Micro, Small, and Medium Enterprise Development Project - Project Loan

Sovereign Project | 43158-013

Summary

The Project Loan of $50 million, with a guarantee from the Government of India, aims to help Small Industries Development Bank of India (SIDBI) in reaching out to the "missing middle" - i.e. small borrowers or micro-enterprises who have grown too large for traditional microfinance support, but remain unable to access more conventional bank financing. At least 30% of the Project loan will be used by SIDBI for direct financing of deserving micro-enterprises. For its direct lending operations, SIDBI will ensure that at least 30% of the subborrowers are qualified women MSME entrepreneurs. Upto 70% of the Project Loan will be used by SIDBI for indirect financing of microenterprises through eligible participating financial institutions (PFIs) which could either be scheduled banks, non-bank financial companies, or microfinance institutions.

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Project Name Micro, Small, and Medium Enterprise Development Project - Project Loan
Project Number 43158-013
Country India
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2617-IND: Micro, Small, and Medium Enterprise Development Project - Project Loan
Ordinary capital resources US$ 50.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector Finance - Small and medium enterprise finance and leasing
Gender Equity and Mainstreaming Gender equity
Description The Project Loan of $50 million, with a guarantee from the Government of India, aims to help Small Industries Development Bank of India (SIDBI) in reaching out to the "missing middle" - i.e. small borrowers or micro-enterprises who have grown too large for traditional microfinance support, but remain unable to access more conventional bank financing. At least 30% of the Project loan will be used by SIDBI for direct financing of deserving micro-enterprises. For its direct lending operations, SIDBI will ensure that at least 30% of the subborrowers are qualified women MSME entrepreneurs. Upto 70% of the Project Loan will be used by SIDBI for indirect financing of microenterprises through eligible participating financial institutions (PFIs) which could either be scheduled banks, non-bank financial companies, or microfinance institutions. Twelve states (Andhra Pradesh, Assam, Bihar, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal) are eligible to receive direct or indirect assistance through this Loan.
Project Rationale and Linkage to Country/Regional Strategy

The small and medium enterprises (SME) sector in India plays a vital role in the growth of the country. At the time of project processing, the SME sector in India accounted for around 95% of industrial units, 45% of gross industrial production, 40% of exports, and provided direct employment to 42 million persons in around 12.8 million registered SME units.

This intervention is part of ADB's response to requests for financing from the Government, SIDBI, and Indian public sector commercial banks to support efforts to remove constraints to MSME access to finance, and to foster SME development.

Support for the MSME sector has been a critical element in all of India's five year plans. The proposed project is therefore strongly aligned with India's development priorities. It is also in line with the poverty reduction strategy of ADB which states that ADB should promote "sound and efficient banking systems and capital markets" since these are seen as "being indispensable for macroeconomic stability, mobilizing savings, and ensuring availability of long-term financing, an essential requirement for pro-poor growth."

Impact Help MSMEs in India realize their full potential, thereby assisting MSMEs in India to be fully developed, especially those led by female microentrepreneurs
Project Outcome
Description of Outcome Improved MSME access to commercial financing and market opportunities, thereby fostering MSME growth, competitiveness, and employment creation
Progress Toward Outcome US$25.4 million has been disbursed for the financing of 3,409 MSMEs through direct financing and indirect financing (through 4 PFIs).
Implementation Progress
Description of Project Outputs

Enhance credit delivery through SIDBI and PFIs in the MSME sector

Increase of SME productive and managerial capacity and related new jobs created for new markets

Participating banks will increase their MSME portfolios through the use of ADB's PCG

Status of Implementation Progress (Outputs, Activities, and Issues)

US$ 25.4 million has been disbursed.

Total number of subprojects benefited is 3,409. Women subborrowers constitute 11% of the total subborrowers.

PCG is not applicable to the ADB Loan to SIDBI.

Geographical Location Rajasthan,India
Safeguard Categories
Environment FI
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

SIDBI has developed and adopted an Environmental and Social Safeguards Framework (ESSF).

SIDBI is also providing support to its PFIs, for putting in place systems for environmental compliance. The PFIs will also be encouraged to put in place ESSF.

Involuntary Resettlement No involuntary resettlement will be triggered.
Indigenous Peoples No impacts on indigenous people/scheduled tribes are anticipated.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Any consultants will be recruited in line with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time).
Procurement All procurement to be financed under an ADB loan will be carried out in accordance with ADB's Procurement Guidelines (2007, as amended from time to time).
Responsible ADB Officer Shalini Singh
Responsible ADB Department South Asia Department
Responsible ADB Division India Resident Mission
Executing Agencies
Small Industries Development Bank of IndiaMSME Development Centre, Resources Mgt.
Dept,4th Flr,Plot No. C-11,'G' Block
Bandra Kurla Complex Bandra (East)Mumbai
Timetable
Concept Clearance 08 Jun 2009
Fact Finding 24 Aug 2009 to 04 Sep 2009
MRM 12 Oct 2009
Approval 26 Feb 2010
Last Review Mission -
PDS Creation Date 08 Jul 2009
Last PDS Update 27 Mar 2015

Loan 2617-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Feb 2010 19 Mar 2010 17 May 2010 30 Jun 2015 - 30 Jun 2015
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 50.00 Cumulative Contract Awards
ADB 50.00 26 Feb 2010 35.71 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 26 Feb 2010 35.71 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - - - Satisfactory

Evaluation Documents

See also: Independent Evaluation

No documents found.


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