IFC and SBI Sign $150 Million Loan Agreement to Expand Agricultural Lending to Rural Women

The International Finance Corporation (IFC), the private-sector arm of the World Bank Group, has provided a $150 million social loan to the State Bank of India (SBI).  

According to news reports, the loan will be used to increase agricultural credit for rural women across India. The funding is expected to reach around 864,000 women working in crop cultivation, animal husbandry, fisheries and food processing. 

Loan Allocation Through SHGs 

Up to 90% of the loan will be used to provide finance to women borrowers through Self-Help Groups (SHGs). The remaining amount will go towards individual Micro Enterprise Loans for women entrepreneurs graduating from group-based lending under SBI's Svayam Siddha Scheme. 

The lending arrangement covers women who borrow collectively through SHGs as well as those seeking individual loans for their enterprises. 

First IFC Investment in a State-Owned Indian Bank 

The transaction is IFC's first credit line to a public-sector bank in India. It is also the organisation's first investment in a state-owned bank in the country. 

The agreement includes a cross-currency swap carried out under an International Swaps and Derivatives Association (ISDA) Master Agreement recently signed by the two institutions.  

SBI has become IFC's first domestic swap counterparty in India and its first local swap counterparty in South Asia. The swap will allow IFC to source long-term funding in Indian rupees for private-sector investments.  

IFC's Rupee Financing Activity 

Over the last three years, IFC has funded ₹300.4 billion, or approximately $3.7 billion, through the US dollar-Indian rupee cross-currency swap market. The SBI agreement is expected to add to its long-term rupee funding for investments related to productivity, competitiveness and job creation. 

IFC Principal Country Officer Roshika Singh said State Bank of India (SBI) would help the organisation reach rural SHGs and support private-sector financing.  

SBI Deputy Managing Director Satyendra Kumar Singh said the arrangement would increase credit access for women-led SHGs and rural entrepreneurs. 

Read More: Tata Trusts Under Scrutiny as Mehli Mistry Seeks Inquiry into Trustee Appointments and Finances! 

Conclusion 

The agreement covers both agricultural credit for rural women and long-term rupee financing for private-sector investments. It is IFC's first credit line to a public-sector bank in India. 

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