The Asian Development Bank (ADB) has completed the disbursement of a $150 million debt financing to Cholamandalam Investment and Finance Company Limited (Chola), in equivalent rupees, to help micro, small, and medium-sized enterprises (MSMEs) in India have better access to finance and expand financial inclusion in the country.
“ADB’s financing to Chola will help ensure that MSMEs, which are crucial to the Indian economy, have access to the necessary long-term capital that they need to continue contributing to the country’s growth and development,” said ADB Principal Investment Specialist for Private Sector Operations Department Mr. Anshukant Taneja. “ADB’s financing, which has been provided in the backdrop of a slowdown in credit growth in the Indian banking system, has a countercyclical effect and is expected to boost investments and employment.”
MSMEs have huge potential to contribute to India’s development. While 48.8 million MSMEs were reportedly operating across the country in 2014 and contributing about 11.5% to India’s gross domestic product growth annually, about 94% of them are unregistered and unregulated. The realization of this potential is further hindered by the fact that access to credit is limited, with 78.2% of MSMEs being self-financing and only about 2% having access to credit from formal financial institutions.
“Chola has been working with ADB for setting up this credit line,” said Chola Executive Director Mr. Arun Alagappan. “The present transaction is a beginning of a long and mutually rewarding relationship and hence is a step that will help us strengthen our core operations.”
Based in Chennai, Chola is a pan-Indian nonbank financial company, with more than 880 branches—90% of these being in secondary and tertiary cities, where the physical presence of the commercial banks is often low.
Original source: ADB
Published on 18 September 2018
