USAID, DFC, KOTAK to support financing Women entrepreneurs & MSME in India
The United States Agency for International Development (USAID) and the United States International Development Finance Corporation (DFC) announced today that they are jointly sponsoring a $50 million loan portfolio guaranty to Kotak Mahindra Bank (KMBL) to support increased access to finance for women borrowers and micro, small, and medium-sized enterprises (MSMEs) throughout India. Faced with the pandemic, our cooperation will assist MSMEs hit by COVID-19 in obtaining loans to restore and scale their operations.
Kotak Mahindra Bank would make loans for on-lending to Non-Banking Financial Companies (NBFCs) in the MSME and Microfinance (MFI) space under this programme. This will enable end borrowers obtain much-needed financing and will foster sustainable and inclusive economic growth. This initiative is critical for women's economic empowerment because at least 50% of loans will be made to women-led or women-managed MSMEs, or to MSMEs that employ a particular percentage of women or that create a good or service that benefits women disproportionately. It is expected to benefit around 30,000 individual women borrowers and 7,500 small and medium-sized businesses.
The programme will be backed by Chennai-based non-bank financial company Vivriti Capital, which will provide a US $1 million first loss guarantee and substantial analytical and sourcing support via premier debt platform CredAvenue. The DFC will offer KMBL with a pari passu guarantee of up to 50% of the remaining uninsured line (i.e. US $24.5 million), which will be financially funded by USAID.
D Kannan, Group President – Commercial Banking, Kotak Mahindra Bank, stated, "Kotak Mahindra Bank is committed to promoting financial inclusion and making credit available from formal sources to micro, small and medium-sized enterprises (MSMEs) and women entrepreneurs from lower socioeconomic segments. These two groups have been harmed by the ongoing epidemic, and this programme will provide loans and assist women entrepreneurs and micro, small, and medium-sized enterprises in growing their operations and creating jobs.”
Veena Reddy, Director of USAID's India Mission, stated, "At USAID, we think that gender equality and women's empowerment are not only a component of development, but are vital to it. Women in India have been disproportionately affected by the COVID-19 pandemic, with economic challenges affecting their families and communities directly. USAID is pleased to support this innovative project, which will assist women-owned firms and entrepreneurs in gaining access to critical financial resources and achieving their full potential.”
“Empowering women-owned MSMEs is vital for supporting inclusive growth in India and also contributes to the country's post-pandemic recovery,” Algene Sajery, Vice President of External Affairs and Head of DFC's Global Gender Equity Initiatives, stated. “DFC is happy to sponsor this programme, which brings together major participants in the Indian financial sector to assist expand our loan guaranty's reach and development impact.”
“We are honoured to support this effort to establish a special finance line for women entrepreneurs and borrowers. CredAvenue's ability to engage the entire ecosystem in such a large-scale initiative gives our partners an unmatched advantage.” According to Anita Ferreira, Chief Capital Markets Officer at CredAvenue, a Vivriti Capital subsidiary.