Shriram Finance, an NBFC, plans to raise $150 million through a social loan, led by HSBC, to support its microfinance and small enterprise lending business.
Social loans aim to create a positive social impact and fund projects that promote social and environmental development. In this instance, the loan will enable Shriram Finance to assist more microfinance and small enterprise borrowers who lack access to traditional banking services.
The social loan will likely be structured as a blended finance instrument, combining commercial and concessional financing. Development finance institutions (DFIs) like the International Finance Corporation (IFC) will provide the concessional financing.
Shriram Finance has achieved a significant milestone by securing this social loan. This is the first time they have obtained a loan of such magnitude. The loan will enable the expansion of their microfinance and small enterprise lending business. They will be able to reach a larger number of financially underserved individuals.
The social loan is a positive step for the microfinance sector in India. It signifies the growing interest of DFIs in supporting microfinance institutions. This development is likely to lead to an increase in the availability of social loans for microfinance institutions in the country. The provision of such loans will play a significant role in promoting financial inclusion and fostering economic growth.
