Environmental and social risk management

MSME Growth Innovation and Inclusive Finance Project – Project Brief

The Project Development Objective (PDO) is to improve access to finance of MSMEs in manufacturing and service sectors from early to growth stage firms, including through innovative financial products. The MSME Growth Innovation & Inclusive Finance Project (MSME-IIF) supports financing of service and manufacturing sector firms including early stage firms and parallel technical assistance (TA) to support such financing.The project has three components: (i) Spurring early stage finance (ii) Supporting service sector financing models, (iii) Supporting finance to manufacturing MSMEs.

Small Industries Development Bank of India (SIDBI) is the borrower and the implementing agency for the project. The financing to MSMEs under the Project will be provided by SIDBI directly as well as through other Participating Financial Institutions (PFIs). For its direct financing, SIDBI will use loan appraisal criteria and procedures agreed with the Bank and detailed in the Operations Manual (OM). In the refinancing model, SIDBI is the wholesaler and the PFIs are intermediaries. The PFIs will extend sub-loans to eligible MSMEs and shall approach SIDBI for refinancing these loans.

The project outcome includes enhancing the competitiveness of the sector by making available credit for start-ups and emerging sectors; improving the existing environment for start up and early growth company financing; improving the productivity on account of exploitation of synergies in the cluster; improving the market access and increased competitive advantage; enhancing capacity of stakeholders thereby increasing vibrancy and fostering MSME growth competitiveness as well as employment.