The Asian Development Bank (ADB) has signed a $150 million loan agreement with Shriram Finance to enhance financial access for micro, small, and medium-sized enterprises (MSMEs) in India. This funding will primarily support business loans, the acquisition of electric vehicles (EVs), and low-emission commercial vehicles, with a strong focus on women-owned businesses and enterprises in underdeveloped regions.

This agreement forms part of a broader $306 million financing initiative led by ADB, which also includes contributions from the Japan International Cooperation Agency and the Export-Import Bank of India. The initiative aims to promote financial inclusion, sustainable development, and green mobility across the country.

Shriram Finance, a key non-banking financial company under the Shriram Group, specializes in commercial vehicle financing and MSME lending. MSMEs play a vital role in India’s economy, accounting for 30% of the GDP and employing more than 123 million people. However, they often face difficulties in securing formal credit, with only about 25 per cent of the market currently served by financial institutions. Women entrepreneurs, in particular, encounter additional challenges such as limited collateral and social barriers.

The loan will allow Shriram Finance to offer customized financial solutions to underserved communities, particularly in rural and semi-urban areas. It will also help accelerate the adoption of EVs and low-emission vehicles that comply with Bharat Stage-VI standards, in alignment with India’s goals to reduce air pollution and transition to a greener economy.

With a wide operational footprint of over 3,100 branches and a customer base exceeding 9 million, Shriram Finance is well-positioned to drive inclusive growth. ADB’s strategic partnership is expected to significantly boost efforts in transforming India’s MSME landscape and supporting its climate commitments.

News source: KNN India