OREANDA-NEWS. KfW Development Bank has signed a USD 340 million agreement with the Industrial Development Bank of India (IDBI) on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ). The Indian bank will channel USD 300 million of the funds through to microfinance institutions (MFI) and micro and small enterprises (MSEs) in urban and rural areas for refinancing purposes and to provide capital relief. A lack of access to needs-based financing remains the greatest barrier to growth for Indian micro and small companies. Their financing shortfall is estimated at more than EUR 40 billion. Here the development loan will provide considerable relief. USD 40 million of the total will be used to realise selected infrastructure projects such as environmentally-friendly water supply and wastewater disposal in municipalities, as well as energy distribution systems within the framework of private-public partnership models.

“With this credit line, KfW is providing the IDBI with an important and broadly effective contribution towards creating income and fighting poverty in India. Growth among small companies triggers local demand and consumption, secures employment and is a key factor in the creation of new jobs”, said Dr Norbert Kloppenburg, member of the Executive Board of the KfW Group.

The importance of the almost 30 million Indian micro, small and medium-sized companies of the formal sector is enormous. They generate 45% of industrial production, contribute 40% of the production intended for export and provide employment to over 69 million people.

With a portfolio of EUR 2.3 billion, around three-quarters of which is made up of its own funds, KfW is one of the world's leading microfinance financiers, especially for equity investments and activities in Latin America and Eastern Europe/Central Asia. KfW has already established itself as the leader among the financiers of microfinance institutions in sub-Saharan Africa.