$200 million World Bank loan to Sidbi

The World Bank will extend a $200 million loan to the Small Industries Development Bank of India (Sidbi) by September to enhance credit to small companies.

"The World Bank has agreed to give $150 million credit line and $50 million as grant support to Sidbi and the agreement will be signed by September," Sidbi chairman VK Chopra told the media here.

The nodal bank for small and medium-sized industries is also holding talks with international lending agencies like the Asian Development Bank and KFW of Germany to raise more funds for the sector.

Sidbi had already set up a Rs 10,000 crore SSI fund to give cheap loans to SSIs at 2 per cent less than it's prime lending rate (or 9.5 per cent) and is also providing loans through state finance corporations at 7.5 per cent.

"To help new companies, which face problem in getting loans due lack of collateral securities, the bank has set up a credit guarantee fund trust of Rs 800 crore which will be subsequently increased to Rs 2500 crore," chopra said.

The Government and the Sidbi would have a contribution in the ratio of 80:20 in the fund, he said, adding Sidbi will give a guarantee of 75 per cent of the loan granted to such companies.