The Hindu : Business : SIDBI signs pact with JICA for 30 billion yen

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Saturday, Nov 22, 2008
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SIDBI signs pact with JICA for 30 billion yen

Shanthi Kannan

The loan will be used for energy saving projects

Funds will be made available in 3-4 tranches
300-odd forging units identified in Ludhiana

CHENNAI: Small Industries Development Bank of India (SIDBI) has signed a loan agreement with Japan International Cooperative Agency (JICA) for 30 billion yen (Rs.1, 500 crore). The loan agreement was signed in Tokyo on Friday.

This is part of the Rs. 4,555 crore soft loan package that the Government of Japan agreed to extend to India when the Prime Minister Manmohan Singh recently visited Japan.

The other projects include Chennai Metro project, Hyderabad outer ring road project (phase 2) and Capacity development for forest management and personnel training project.

The loan will be used by SIDBI for financing the micro small and medium enterprises (MSMEs) for energy saving and environmental-friendly projects.

The funding will also benefit these enterprises to accumulate carbon credit points.

The JICA loan money will be made available to SIDBI in three to four tranches, depending upon the utilisation of credit for the aforesaid purpose. The first tranch is expected to come by January 2009. The funds will be provided to the MSMEs for capacity building and equipment purchase.

The tenure of the loan will be 15 years, with five-to-seven year grace period. The rate of interest will be 30 basis points, payable half-yearly. The loan amount will be used by SIDBI in four main programmes. It will utilise the loan amount for providing credit directly to the enterprises. It has also identified nine NBFCs (non-banking finance companies) for offering resources support. It has also identified 30 commercial banks, which do on-line lending to micro and small medium enterprises and also provide them technical support.

World Bank

Rakesh Rewari, Deputy Managing Director, SIDBI, told this correspondent that the JICA loan credit could be used as a fund for energy efficiency equipment, which would generate carbon points. It has already set up a special purpose vehicle in Ludhiana. SIDBI had also signed with the World Bank for one billion dollar for funding these projects.

Mr. Rewari said the SPV — christened Indian SME Technology Services Ltd. — had identified 300-odd forging units in Ludhiana, which would facilitate Rs.50 crore worth of carbon credit points. In the first phase, the SPV would cover 40 to 50 units and would get tradable certified emission reductions (CER) worth Rs. 50 lakhs.

He said the SPV had entered into collaboration with the German bank KfW to help the enterprises in trading carbon credits.

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