New Delhi: The government is in talks with foreign lenders to provide as much as $14.5 billion in credit to millions of its small firms, two officials said, in a sign the country’s banking system may not be robust enough to do the job on its own.
The government is in discussions with multiple foreign lenders, including Germany’s state-owned development bank KfW Group, the World Bank and some Canadian institutions to extend lines of credit to small enterprises, one of the officials, who did not want to be identified, told Reuters.
KfW’s India office confirmed the discussions, though the main focus was on credit lines to support small businesses’ solar power generation. The talks were at an early stage, KfW said.
The World Bank’s India spokesperson did not reply to an email.
The official said the government plans to source up to Rs 1 lakh crore of loans from foreign institutions because Indian banks were not in a position to provide enough capital for the small business sector, which is seen as critical to job creation.
“We are exploring, we are having discussions with various funding agencies if something can be done (for small and medium firms),” the second official said.