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Maruti Suzuki gets Japanese liquidity push to ease COVID-19 pain

Shingo Miyamoto, Economic Minister, Embassy of Japan said the support is part of Japan's efforts to help Indian economy overcome the COVID-19 shock

twitter-logoJoe C Mathew | October 29, 2020 | Updated 19:15 IST
Maruti Suzuki gets Japanese liquidity push to ease COVID-19 pain
On October 27, Japan Bank for International Cooperation (JBIC) signed a loan agreement amounting to $600 million (JBIC portion) with SBI

The Japan Bank for International Cooperation (JBIC) has joined hands with State Bank of India (SBI) to set aside $1 billion to help India's biggest automobile maker Maruti Suzuki by providing loans to the company's suppliers, dealers and customers through the SBI network. The amount is expected to help component suppliers, dealers and others part of the supply chain of Maruti Suzuki to meet their short and medium term financial requirements.    

Shingo Miyamoto, Economic Minister, Embassy of Japan said the support is part of Japan's efforts to help Indian economy overcome the COVID-19 shock. "It's an untied loan to be provided to the SBI to provide funding to Japanese automotive industry in India. It can boost the economy because automobile industry has a wide supply chain and companies can provide necessary economic activities if they are to be financed," he said.  

On October 27, JBIC signed a loan agreement amounting to $600 million (JBIC portion) with SBI. The rest, (amounting to $1 billion) is co-financed with Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd., Mizuho Bank, Ltd., the Shizuoka Bank, Ltd., and the Bank of Yokohama, Ltd.  JBIC will also provide a guarantee for the portion co-financed by the private financial institutions.

A JBIC representative said the loan can be availed by other Japanese auto makers too such as Toyota and Honda, although it will mostly target Maruti Suzuki. He also pointed out that the funds made available through SBI will also result in increased client base for India's biggest public sector bank. In addition to suppliers and dealers of Japanese automobile manufacturers, individuals will also benefit from provision of auto loans for the purchase of Japanese automobiles.

"The Government of India is striving to stimulate domestic manufacturing with its 'Make in India' initiative, and the automobile industry is the core of such manufacturing. Also, in response to the COVID-19 pandemic, the government of India announced economic measures for local, small and medium-sized enterprises, and this financing will assist these measures as well," a JBIC statement said.

The bank has also signed a loan agreement with leading power generation PSU NTPC Ltd for JPY50 billion (of which JBIC's portion is JPY30 billion) to provide NTPC with the necessary funds for solar power generation projects and instalation of environmental equipment in India as a part of green operations. The loan is extended under JBIC's Growth Investment Facility and is co-financed with Sumitomo Mitsui Banking Corporation, the Bank of Yokohama, Ltd., the San-In Godo Bank, Ltd., the Joyo Bank, Ltd., and The Nanto Bank, Ltd., with JBIC providing guarantee for the co-financed portion. 

Also Read: 'Rs 1 crore fine or 5-year jail': Punishment for Delhi air pollution

Also Read: Maruti Suzuki Q2 results: Profit flat at Rs 1,372 crore, sales up 10%

Also Read: IndiGo Q2 results: Loss widens to Rs 1,195 crore, revenue plunges 65%

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