Promotion of Microfinance and Small Enterprises (SIDBI)

completed

The project aims to reduce the large financing gaps for the microfinance and small business sector in the Indian financial system and thus contribute to increasing income and securing and creating jobs for poorer sections of the population (overarching development policy objective). The project consists of two components. Component 1 provides refinancing for microfinance institutions in order to expand the range of microcredits up to INR 50,000 (approx. EUR 625) in the underserved Indian states based on the principles of responsible finance. The target group is the poorer sections of the population in rural and urban areas outside the south, especially women. Component 2 refinances non-banking finance companies (NBFCs) and banks nationwide that provide small businesses (so-called micro enterprises) with loans of more than INR 50,000. Due to their informal status, unavailable collateral and missing financial data, the small entrepreneurs have only very limited access to needs-based financing. The aim of the FC module is to achieve sustainable use of the expanded financing offer by the target groups. This is intended to better exploit the productive potential of the Indian lower class, from income-generating activities of poorer households to more employment-intensive activities of self-employed small entrepreneurs. The project consists of a low-interest loan of EUR 50 million to the Small Industries Development Bank of India (SIDBI). In addition, the capacities of selected microfinance institutions are being strengthened as part of technical support measures.