The fund will support SMEs in states like Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal, IFC vice president for global industries Rashad Kaldany said.
With an eye on the growing SME sector in low-income states, International Finance Corporation (IFC), a member of the World Bank Group, has decided to invest $20 million (around Rs100 crore) in Pragati Equity Advisors to fund projects in these regions.
“Considering that there is a huge scope for development in SMEs in low income states, we have decided to invest $20 million in Pragati Equity that will provide support to SMEs outside major urban centres creating jobs and promoting inclusive economic growth,” IFC vice president for global industries Rashad Kaldany told reporters.
The fund will support SMEs in states like Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal and areas, where attracting private investment has traditionally been a challenge, he said.
“IFC's investment in Pragati will help enterprises in these states to access finance, thereby creating employment opportunities for the underserved,” he said.
IFC, which has earmarked around $1 billion for the year ended June 2012, plans to invest around 20%-30% of the funds in SMEs in low income states, Kaldany said.
“SMEs operating in the country's low-income states are constrained by limited funds. We see a huge opportunity in this sector as it not only gives job opportunities to the locals and ensure over all development of the region, but also gives a good commercial rate of return to our investments,” Kaldany said.
Emphasising on the opportunity in low-income states, he said, “Nearly 45%-50% of population is in these areas that have attracted around 2.6% of the total foreign direct investment (FDI). There is tremendous growth opportunity here. Since investing directly in SMEs is difficult, we are looking at co-investment opportunities like the one with Pragati.”
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“We are on the verge of reducing rates for SMEs,” SBI chairman Pratip Chaudhuri said
State Bank of India (SBI) said it will cut lending rates on loans given to small and medium enterprises (SME) this month.
“We are on the verge of reducing rates for SMEs. If that happens, some lending rates will be reduced by 1%-2%. So, as we get a greater sense and certainty about liquidity we will cut the rates in all likelihood by April,” SBI chairman Pratip Chaudhuri said.
Currently, the lending rate for SME sector varies from 12.5% to 17%.
Base rate or the minimum lending rate of SBI is currently at 10%.
In February, SBI slashed education loan rate by up to 1%.