World Bank assistance in promoting energy efficiency initiatives & inclusive finance projects

World Bank assistance in promoting energy efficiency initiatives & inclusive finance projects

Question - Recently, the Asian Infrastructure Investment Bank has gained significant mileage among leading nations including India. Discuss how the World Bank is assisting India in promoting energy efficiency initiatives and inclusive finance projects.

WHO: Financing for Energy Efficient Initiatives

• The Central government and World Bank have signed an agreement for USD 43 million for partial risk sharing for energy efficiency projects

• The financing is to mobilise ease of access to finance for energy initiatives in the industrial sector

• The World Bank is aiming to assist enterprises and energy service companies/ESCOs for mobilising commercial finance for investments pertaining to energy efficiency

• This operation will help in removing market obstacles for energy efficient initiatives through provision of coverage to lower risks of commercial institutions for financing EE projects

• World Bank will also work towards capacity building and financing of ESCOs to finance energy efficient projects in a manner which is sustainable commercially

• USD 43 million project includes partial risk sharing facility of USD 37 million; this is funded from a Global Environment Facility/GEF contribution of USD 12 million backed by Clean Technology Fund/CTF contingent guarantees of USD 25 million

• A technical assistance and capacity building component of USD 6 million funded by the Global Environment Facility

Financing for SIDBI For MSME Growth Innovation and Inclusive Finance Project

• Loan agreements for World Bank/IBRD assistance of USD 500 million to Small Industries Development Bank of India/SIDBI for MSME Growth Innovation and Inclusive Finance Project was signed between the Indian government and the World Bank

• The project aims to improve the reach to finance of MSME in manufacturing as well as service sectors from early to growth stage

• The project aims to support growth and employment creation through opportunities for firm growth provided by the financing

• Funded MSMEs are the prime recipients of the loan. MSMEs will be financed under the MSME Act
• This project benefits SIDBI through increase in its financial and institutional capacity in early phases, service and manufacturing sector financing and also provide support for other Participating Financial Institutions/PFIs

• The project comprises a tripartite component including spurring early stage and risk capital finance, supporting service sector financing models and supporting finance to manufacturing MSMEs

Facts and Stats

• The Agreement for Partial Risk Sharing Facility for Energy Efficiency/PRSF was signed between the World Bank and the Department of Economic Affairs, Ministry of Finance

• This is a landmark project which is the first guarantee operation of the WB in the nation without a counter guarantee given by the government

• The PRSF project will close by the year 2022 and the CTF Facility could continue with funds prevalent for close to 20 years

• Programme for risk sharing coverage through partial credit guarantees will be for a duration of 15 years

• Guarantee Agreement was signed by World Bank and Department of Economic Affairs, Ministry of Finance

• Loan agreement has an implementation period of 5 years; the implementing agency is SIDBI
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