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World Bank to provide USD 750 million emergency loan for MSMEs

Money will help the government’s efforts to channel liquidity to MSMEs

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International Finance Corporation, Small Finance Bank, Non-Banking Financial Companies, The World Bank, Coronavirus pandemic

The World Bank will give USD 750 million as loan to India for strengthening small businesses that form the backbone of the country’s economy and were devastated in the Coronavirus pandemic.

The emergency lending will ensure liquidity for some 1.5 million micro, small and medium enterprises (MSMEs) and protect millions of jobs.

The money will help the government’s efforts to channel liquidity to MSMEs through a range of instruments, including credit guarantees, and de-risk lending from banks and the Non-Banking Financial Companies (NBFCs).

It will improve the funding capacity of funding channels such as NBFCs and Small Finance Bank (SFBs) and help them respond to the urgent and varied needs of MSMEs.

This will cover support for the government’s refinance facility for NBFCs. The International Finance Corporation is separately providing direct support to SFBs through loans and equity.

The loan supports the government’s policy framework and it’s not funding a specific expenditure. It would work with the government for specific sectors in the next stage.

The Bank has lent USD 5.13 billion to India in FY20 which ended on 30 June 2020. The disbursals to India have been about USD four billion in FY20

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