MSME Growth Innovation and Inclusive Finance Project

closed

Closed

The objective of the MSME Growth Innovation and Inclusive Finance Project in India is to improve access to finance of MSMEs in manufacturing and service sectors from early to growth stage, including through innovative financial products. The higher level objective is to support growth and employment creation through unlocking opportunities for firm growth that the financing would provide. This project is made up of three components. Component 1 (Spurring Early Stage and Risk Capital Financing) will support pioneering early stage debt financing (including angel and early stage venture debt) and also support risk capital financing to MSMEs. India’s dynamic early stage ecosystem will be supported by debt from SIDBI (and other PFIs that may be interested) to startups and early stage MSMEs. Component 2 (Supporting Service Sector Financing Models) will support products offered by PFIs and SIDBI which are better tailored for the services sector. These include SIDBI’s recently introduced products, which are a small part of SIDBI’s balance sheet at present but represent products that have the potential to grow. Among them is the introduction and scale up of innovative models of financing with customized appraisal parameters that rely on business viability and cash flow assessment (rather than typical models that rely on collateral as a primary criterion for eligibility). Component 3 (Supporting Finance to Manufacturing MSMEs) will support various manufacturing sector financing products, including the introduction of new financial products and/or financing mechanisms for the manufacturing sector. The project will also support sustainable improvements in manufacturing MSMEs, through promotion of better management practices that will support their competitiveness in India but also globally. Several activities can be envisaged, such as: (i) Loan Extension Services (LES) to MSMEs: for those MSMEs that are interested (particularly relevant for more energy consuming firms), the parallel TA will support a quick opportunity assessment (for example energy efficiency (EE), audit) for overall improvement of the MSME unit; and (ii) Models of cluster financing.

FY17 - Financial Sector

World Bank

Project

Manufacturing (Industrial), Forest Products and Packaging, Government