The Asian Development Bank and SK Finance Limited have joined in a landmark $100 million senior secured loan agreement to help expand financial access for women-owned micro, small, and medium-sized enterprises (MSMEs) and spur electric vehicle adoption in India.
This new funding facility will be disbursed in two tranches which, therefore, will increase SK Finance's potential to take on the growing credit demands made by its client base. Of the two tranches, 20 percent shall be devoted to financing electrical vehicles while 80 percent dedicated to MSMEs, largely women-owned businesses.
Suzanne Gaboury, Director General for Private Sector Operations in ADB said that it is one of the programs under ADB that pursues broader strategic objectives. She said, "This project expands access to finance for underserved groups, particularly women entrepreneurs, and is playing an important role in helping India shift towards electric mobility. It reduces carbon emissions and enhances air quality, so very important for a sustainable future.
MSMEs comprise more than 110 million in India and are the most prominent contributors to the economy as well as exports for India. Still, the enterprises face huge challenges in accessing finances. The women-led businesses face a huge credit gap. The estimated annual gap for financing MSMEs in India stands over $1 trillion.
In turn, the alliance furthers the climate agenda of India through the electrification of automobiles - an imperative step towards mitigation of emissions from transport, the sector accounts for 12% of the energy-related carbon emissions in the country. It will further bolster the reduction of pollution levels, and increase the momentum in economic growth and global competitiveness.
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