ADB, HSBC tie up to set up $ 100 M partial guarantee programme for MFI.

ADB, HSBC tie up to set up $ 100 M partial guarantee programme for MFI.

What is the news :

• The Asian Development Bank (ADB) and HSBC Indiahave signed an agreement to establish a $100 million partial guarantee program to support more than 0.4 million micro-borrowers, especially women running small businesses.

About the Agreement :

• The agreement will provide financing of an equivalent of $30 million that will be initially disbursed to three micro finance institutions (MFIs) in India by April 2022.
• The partial guarantee arrangement will help MFIs to access funding for on-lending activities as they expand operations after the coronavirus pandemic.
• ADB, a Manila-based multilateral funding agency, in a statement said HSBC will expand its lending to microfinance institutions (MFIs) and non-bank finance companies, with ADB partially guaranteeing the loans.
• This will expand HSBC’s risk appetite and deployed capital, helping to enhance private sector financing and improve financial inclusion in India. It is ADB’s first partnership with HSBC.
• MFIs have emerged as lifelines for underserved clients such as low-income households and small businesses as they struggled to access finance during the pandemic.

What is microfinance :

• Microfinance is a banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.

Microfinance in india :

• Microfinance in India has had a massive impact on people’s lives as they struggled to cope with the global pandemic.
• It plays a critical role in enabling financial inclusion and ensuring last-mile delivery of microcredit.
• ADB’s Microfinance Program was launched in 2010 and has provided more than $1.8 billion in loans and helped mobilize $881 million in co-financing. It has provided access to microloans for more than eight million borrowers, 98 per cent of them women.

About ADB:

• Founded : 19 December 1966.
• Headquarter: Mandaluyong, Philippines.
• President : Masatsugu Asakawa.

Recent news about ADB :

Asian Development Bank lends record $ 4.6-bn loans to India in 2021

• The Asian Development Bank (ADB) said it provided a record USD 4.6 billion loans to India in 2021, including USD 1.8 billion towards coronavirus response.
• “The Asian Development Bank committed a record USD 4.6 billion in sovereign lending to India in 2021 for 17 loans, including USD 1.8 billion for the country’s coronavirus disease (COVID-19) pandemic response,” the multilateral funding agency said in a statement.
• Of the COVID-19-related assistance, USD 1.5 billion was towards vaccine procurement and USD 300 million to strengthen primary health care in urban areas and the country’s future pandemic preparedness.
• The ADB’s regular funding programme to India is made to support transport, urban development, finance, agriculture, and skills building.