MANILA, PHILIPPINES (31 March 2022) — The Asian Development Bank (ADB) and HSBC India (HSBC) signed an agreement to establish a $100 million partial guarantee program to support more than 400,000 micro-borrowers and mostly women-run microenterprises across India.
HSBC will expand its lending to microfinance institutions (MFIs) and nonbank finance companies, with ADB partially guaranteeing the loans. This will expand HSBC’s risk appetite and deployed capital, helping to enhance private sector financing and improve financial inclusion in India. It is ADB’s first partnership with HSBC. Under the agreement, to give impetus to this partnership, aggregated financing of an equivalent of $30 million is being initially disbursed to three MFIs in India by April 2022.
“MFIs have emerged as lifelines for underserved clients such as low-income households and small businesses as they struggled to access finance during the pandemic,” said ADB Microfinance Program Lead Anshukant Taneja. “This program will strengthen microfinance as a tool to build economic resilience, reduce gender disparities, and support economic recovery across India.”
The partial guarantee arrangement will help MFIs to access funding for on-lending activities as they expand operations after the pandemic.
“Microfinance in India has had a massive impact on people’s lives as they struggled to cope with the global pandemic and has a further critical role to play as we slowly emerge from it,” said HSBC India Head-Commercial Banking Rajat Verma. “We are excited by the opportunity and the developmental impetus we can provide by working with ADB. We believe microfinance plays a critical role in enabling financial inclusion and ensuring last-mile delivery of microcredit.”
Launched in 2010, ADB’s Microfinance Program has provided more than $1.8 billion in loans and helped mobilize $881 million in cofinancing. It has provided access to microloans for more than 8 million borrowers, 98% of them women. Microfinance has improved livelihoods, reduced poverty, promoted gender equity, and spurred the growth of microenterprises and employment.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.