JICA Signs First Co-Financing Deal with India Exim Bank to Boost Rural MSMEs The agency remains committed to supporting inclusive and sustainable development in India through targeted investments and innovative financing solutions.
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The Japan International Cooperation Agency (JICA) has signed a loan agreement with Shriram Finance Limited (Shriram) in Mumbai, marking its first co-financing project in India with the Export-Import Bank of India (India Exim Bank). The Asian Development Bank (ADB) is also a co-financier in the deal, highlighting a notable step in strengthening cooperation among key financial institutions to support India's socio-economic development.
The JICA loan aims to enhance financial access for micro, small, and medium enterprises (MSMEs) involved in agriculture and food-linked transportation, particularly in rural and underserved states. With around 65 per cent of India's population residing in rural areas, improving financial access for these enterprises is expected to boost rural livelihoods, reduce poverty, and drive sustainable economic growth.
The initiative aligns with India's "Priority Sector Lending" policy, which encourages financial institutions to support socially vulnerable groups. It also complements Japan's broader development agenda. At the G7 Hiroshima Summit in 2023, former Prime Minister Fumio Kishida announced two major programs to promote sustainable development: the facility for accelerating financial inclusion (FAFI) and the facility for supporting agricultural supply chain and food security enhancement (SAFE). These facilities, backed by $1.5 billion and $1 billion respectively, aim to tackle global challenges such as financial inclusion and food security.
Shigeo Honzu, deputy director general of JICA's private-sector investment finance division, underscored the significance of the agreement. "This project is a testament to the strong partnerships we have built with Shriram Finance, ADB, and India Exim Bank. I deeply appreciate the tireless efforts of our partners, which have brought us to this significant moment. This initiative will not only strengthen financial inclusion but also help address critical challenges such as rural poverty and the need for sustainable economic opportunities in India," he said.
The loan is designed to empower MSMEs that face barriers to accessing capital, particularly in rural areas where infrastructure and financial services are often limited. By improving access to financing, the initiative is expected to support the expansion of agricultural supply chains and strengthen food security, ultimately contributing to India's broader economic resilience.
