ADB, HSBC India launches $100 mn partial-guarantee programme for microcredit

The Asian Development Bank (ADB) and HSBC India have signed an agreement to establish a $100 million partial-guarantee programme to support more than 400,000 (0.4 million) micro-borrowers and mostly women-run microenterprises across India.  

HSBC India will expand its lending to microfinance institutions (MFIs) and non-bank finance companies, with ADB partially guaranteeing the loans. It is ADB's first partnership with HSBC India. 

Under the agreement, to give impetus to the partnership aggregated financing of an equivalent of $30 million will be disbursed to three MFIs in India by April 2022. The partial-guarantee arrangement will help MFIs access funding for on-lending activities as they expand operations after the pandemic. 

Also Read: India, ADB sign $300 mn loan facility to improve primary healthcare in 13 states

Commenting on the development, Anshukant Taneja, Program Lead for the Microfinance Program, at ADB, said, "MFIs have emerged as lifelines for underserved clients such as low-income households and small businesses as they struggled to access finance during the pandemic." 

"This programme will strengthen microfinance as a tool to build economic resilience, reduce gender disparities, and support economic recovery across India," he added. 

Rajat Verma, Head-Commercial Banking, HSBC India, said, "Microfinance in India has had a massive impact on people's lives as they struggled to cope with the global pandemic and has a further critical role to play as we slowly emerge from it. We are excited by the opportunity and the developmental impetus we can provide by working with ADB." 

ADB's microfinance programme was launched in 2010 and has provided loans worth over $1.8 billion and helped mobilise &881 million in co-financing. It has provided access to microloans for more than 8 million borrowers, 98% of them being women.