USAID, DFC to sponsor $50mn loan guarantee
Kotak Bank bid to help Covid-hit women, MSMEs
Hyderabad TO help the Covid19 hit women borrowers and MSMEs, The United States Agency for International Development (USAID) and the US International Development Finance Corporation (DFC) have announced that they are jointly sponsoring a $50 million loan portfolio guarantee to Kotak Mahindra Bank Limited (KMBL) to support for their finance access.
Under this program, Kotak Mahindra Bank will provide loans for on-lending to Non-Banking Financial Companies (NBFCs) operating in the MSME and Microfinance (MFI) space. At least 50 per cent of the loans are earmarked to be lent to women-led or women-managed MSMEs. More than 30,000 individual women borrowers and 7,500 MSME firms to benefit.
D Kannan, Group president – Commercial Banking, Kotak Mahindra Bank said, "Kotak Mahindra Bank is committed to the cause of fostering financial inclusion and making credit available from formal sources to MSMEs and women entrepreneurs belonging to lower socio-economic segments. These two segments have been impacted by the ongoing pandemic, and this program will provide credit and help women entrepreneurs and MSMEs to not only scale up their businesses, but also generate employment."
The program will be supported by Chennai-based NBFC, Vivriti Capital, which will provide $1 million first loss guarantee, as well as extensive analytical and sourcing support through leading debt platform CredAvenue. The DFC will provide KMBL with a pari passu guaranty, which is financially sponsored by USAID, of up to 50 per cent of the remaining uncovered line (i.e. $24.5 million).
Veena Reddy, USAID/India Mission Director said, "At USAID, we believe gender equality and women's empowerment are not just a part of development but are the core of development. Women in India have been disproportionately impacted by the Covid-19 pandemic, facing economic hardships that directly impact the livelihoods of their families and communities. USAID is happy to support this new initiative that will help facilitate access to the much-needed financial resources to women-owned businesses and entrepreneurs and help them reach their full potential."