Access to finance is a critical input for the promotion of the entire sector. For this, long term financing, supporting capital formation and technological upgradation are a critical requirement for a MSE to maintain its growth trajectory.

Looking beyond traditional approaches the MSMEFDP helps facilitate MSME growth for survival and sustainability by providing Credit Facility.

• The credit facility primarily addresses the financing needs of the MSMEs, as defined by the Government of India under the MSMED Act, 2006, and enables them to access longer-term funds for their sustainable growth.
• The facility is being implemented by SIDBI and has been utilized for extending credit to existing and new MSMEs. Participating FIs are eligible to benefit under this scheme
• The Project has been designed in such a way as to encourage MSMEs to adopt best international practices by following environmental and social standards. For instance, industries falling under the negative list of the World Bank are excluded from the purview of the Project. Cases supported under the Project are filtered through a comprehensive E&S framework which is an adoption of global best practices. Documenting commercial practices of MSMEs has also been an attempt aligned to International Best Practice.
  

The Project has implemented and effectively utilized two Lines of Credit (LoC), one from World Bank for USD 120 million and other from KfW for Euro 43.5 million. Additional line of credit of USD 400 million from World Bank is being utilized. The highlights are given below:

• A Line of Credit of USD 120 million, earmarked to facilitate increased flow of loans, was contracted and successfully utilized.
• This line has benefitted 927 MSMEs in 13 locations. The LoC contracted was fully utilized in 18 months ahead of its targeted 36 months.
• The Project’s strong performance results are captured in the findings of a baseline survey and evaluation report (prepared by SIDBI) which shows that more than 300 MSMEs that were surveyed have reported 18% growth in sales and 17% growth in profits after availing long term finance from SIDBI.
• Two thirds of the MSMEs financed allocated their resources to technology up gradation, resulting in increase in productivity.
• A review undertaken by the World Bank shows that Project outcomes have well exceeded the intermediate target values for all the key outcome indicators.
• Following the success of first LoC, the Word Bank agreed to provide additional LoC of USD 400 million to SIDBI, expanding to new geographical areas and offering new products.
• The LOC has, till now, already benefitted about 6826 MSMEs( 2326 direct loans + 4500 Loans through refinance to Bank of Maharashtra  and NBFCs) at 45 locations utilizing more than 81% of the LOC
• The Recent Review mission taken up by World Bank has rated the project as “Satisfactory”.
• 150 plus officers trained on Environmental &Social issues and procurement

The KfW, Germany of LoC is for EURO 43.5 million with the objective to facilitate credit to MSMEs.

SIDBI has utilized the full LOC by providing financial support to 367 MSMEs in 11 states. As against timeline of three years, it has been channelised to MSMEs in a brief span of 15 months. Major industrial sectors covered are textiles, engineering units, mining, automotives, plastics, etc.