World Bank, India sign Rs 5,600 crore support to COVID-19 hit MSMEs

New Delhi: The World Bank on Monday signed a 750 million dollar (about Rs 5,600 crore) agreement with the government for MSME Emergency Response Programme to support the increased flow of finance into the hands of micro, small, and medium enterprises (MSMEs) severely impacted by the Covid-19 crisis.

The programme will address immediate liquidity and credit needs of nearly 15 lakh viable MSMEs to help them withstand the impact of the current shock and protect millions of jobs. This is the first step among a broader set of reforms that are needed to propel the MSME sector over time.

The agreement was signed by Sameer Kumar Khare, Additional Secretary at the Department of Economic Affairs, on behalf of the government and Junaid Ahmad, Country Director (India) on behalf of the World Bank.

Khare said that the Covid-19 pandemic has severely impacted the MSME sector leading to loss of livelihoods and jobs. The government is focused on ensuring that abundant financial sector liquidity available flow to non-banking finance companies (NBFCs) and that banks which have turned extremely risk-averse continue taking exposures in the economy.

"The project will support the government in providing targeted guarantees to incentivise NBFCs and banks to continue lending to viable MSMEs to help sustain them through the crisis," he said in an official statement.