Yes Bank has teamed up with the Overseas Private Investment Corporation (OPIC), the US Government's Development Finance Institution, by signing a memorandum of understanding to explore OPIC financing of up to USD 220 million to increase lending to micro, small and medium enterprises (MSMEs) in India.
Specifically, USD 100 million of the financing would be used to support either Micro-SMEs or SMEs in underserved rural and urban markets. US-based lender Wells Fargo Bank will act as sponsor and co-lender to the project.
Elizabeth Littlefield, OPIC's President and CEO, signed the memorandum while traveling with US President Barack Obama for India's Republic Day celebrations. The agreement, signed alongside Rana Kapoor, MD & CEO, Yes Bank, underscores OPIC's commitment to growing the small and medium business sector in India. Potential loan guarantee support from OPIC would allow Yes Bank, an experienced local lender with a broad network in India to more confidently extend their financing to MSMEs.
"This significant co-financing agreement with OPIC reinforces the faith reposed by the world's leading development finance institutions in Yes Bank's business model. This is the first MoU signed by OPIC, the US Government's Development Finance Institution, with an Indian Bank since the formation of the New Government in India. This will further boost Yes Bank's focus on the MSME sector, generating a multiplier effect on job creation and consequently on the Indian economy," said Rana Kapoor, managing director & CEO, Yes Bank.
"We are excited to announce the next step in our partnership with YES BANK in anticipation of the economic growth it will spur," said Elizabeth Littlefield, OPIC's President and CEO.
"OPIC's history of partnering with established banks in emerging markets has allowed the agency to have an outsized impact on critical development objectives around the world. By joining a longstanding partner like Wells Fargo and a proven regional institution like Yes Bank, OPIC and the US Government can help catalyze economic growth that is both inclusive and sustainable."
The World Bank estimates that viable and addressable demand for MSME lending in India debt surpasses supply by USD 48 billion, a shortfall that holds back the transformative effect a thriving entrepreneur class can have on a developing economy. This gap is particularly pronounced in India's low income states, where approximately two-thirds of the MSME debt gap resides.
