The World Bank Report No: ISR6668 Implementation Status & Results India SME Financing & Development (P086518) Public Disclosure Copy Operation Name: SME Financing & Development (P086518) Project Stage: Implementation Seq.No: 15 Status: ARCHIVED Archive Date: 02-Jan-2012 Country: India Approval FY: 2005 Product Line: IBRD/IDA Region: SOUTH ASIA Lending Instrument: Financial Intermediary Loan Implementing Agency(ies): Small Industries Development Bank of India Key Dates Board Approval Date 30-Nov-2004 Original Closing Date 30-Jun-2008 Planned Mid Term Review Date Last Archived ISR Date 02-Jan-2012 Effectiveness Date 29-Apr-2005 Revised Closing Date 30-Jun-2012 Actual Mid Term Review Date 06-May-2011 Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of this project is to improve SME access to finance (particularly longer term financing) and business development services, thereby fostering SME growth, competitiveness and employment creation, which are key to achieving GoI's overall objectives of economic growth and poverty reduction. The project is designed to achieve its objective through a multi-pronged approach that will that will address key bottlenecks to SME financing and development in India, by focusing on: (a) creating a more enabling policy, regulatory and institutional framework for SME financing by banks (the primary target group for this project); (b) helping banks gain better access to longer term financing for lending to the SME sector, thereby facilitating capital formation and technology up-grading; (c) mitigating banks' risks related to SME lending and reducing transactions costs of such lending while, at the same time, ensuring that banks enhance the quality of their SME loan portfolios; and (d) strengthening business development services and market linkage programs for SMEs (the secondary target group), thereby helping SMEs to improve profitability and competitiveness, and become more creditworthy. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Credit Facility 380.00 Public Disclosure Copy Risk Sharing Facility 18.00 TA 37.00 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating Page 1 of 4 The World Bank Report No: ISR6668 Implementation Status Overview The implementation of the initial project by the Small Industries Development Bank of India (SIDBI) had been excellent and the objectives of expanding access to long term finance to SMEs and improving the quality of lending to SMEs were achieved under the original parent project. Public Disclosure Copy Overall progress on the Additional Financing Project outcome indicators remains satisfactory. Disbursement is also broadly on track with US$380 million out of US$400 million having already been disbursed. Adherence to project implementation arrangements has been good -- notably the project has developed a model “good practice� Environmental and Social Safeguards Framework for lending to SMEs. While the Credit Facility has progressed well and has scaled up refinancing activities over the last year, the Risk Sharing Facility (RSF) is a concern. Despite clearance to (re)launch the RSF and good progress on market research and promotion activities, and contrary to expectations conveyed in recent months, the launch of the RSF has not yet taken place. Lack of budgeting for the component has resulted in a significant risk that this component may not be implemented in the short time that remains before project closure on June 30, 2012. While overall project achievements are significant, and while the project has leveraged and contributed to market infrastructure development, cluster development, capacity building, and TA activities (including improving responsible lending practices) and funding (direct financing and refinancing) activities, there is lack of progress on the RSF. It is urgent that a decision on this component be taken. Locations No Location data has been entered Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target 30% increase in lending (including term Percentage Value 0.00 156.00 30.00 lending) to SMEs by PFIs Date 31-Mar-2008 31-Mar-2011 30-Jun-2012 Comments (a) 15,087 (b) 19,276 (a) 38,656 (an increase of 156%) portfolio growth in participating branches (b) 43,553 (an increase of 126%) portfolio growth in PFI Controlled net NPL ratio on the SME loan Percentage Value 0.25 0.18 3.00 portfolios of all PFIs Date 31-Mar-2008 31-Mar-2011 30-Jun-2012 Public Disclosure Copy Comments Improved profitability of SME business in all Percentage Value 1.01 1.10 1.00 PFIs as measured by RoA of 1% or more Date 31-Mar-2008 31-Mar-2011 30-Jun-2012 Comments Scale-up of benefiting SME#s operations (as Percentage Value 589.00 774.00 15.00 measured by a 15% increase in turnover) Date 01-Apr-2008 31-Mar-2011 30-Jun-2012 Comments Baseline (FY08) and end of Baseline (FY08) and end of project target (FY11) to be project target (FY11) to be Page 2 of 4 The World Bank Report No: ISR6668 established through a established through a baseline and follow-up baseline and follow-up surveys of a sample of SMEs surveys of a sample of SMEs Public Disclosure Copy Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Percentage Growth in the number of SMEs that Percentage Value 0.00 320.00 100.00 receive funds Date 31-Mar-2008 31-Mar-2011 30-Jun-2012 Comments 3176 new SME loans were supported under AF Percentage of the Credit Facility to PFIs Percentage Value 0.00 97.00 100.00 disbursed to eligible SMEs Date 31-Mar-2008 31-Mar-2012 30-Jun-2012 Comments Percentage of the RSF gurantees issued Percentage Value 0.00 0.00 100.00 Date 30-Jun-2009 31-Mar-2012 30-Jun-2012 Comments Volume of Bank Support: Lines of Credit - SME Amount(USD) Value 12000000.00 500000000.00 520000000.00 Date 31-Mar-2008 31-Mar-2012 30-Jun-2012 Comments Data in USD covers initial financing original parent project and additional financing (P086518 +P102767). Outstanding SME Loan Portfolio Amount(USD) Value 5.00 8.50 8.00 Date 31-Mar-2008 31-Mar-2011 30-Jun-2012 Comments bn dollars SIDBI's overall SME portfolio bn dollars bn dollars Percentage of project-supported institutions Percentage Value 0.00 2.00 3.00 that are reporting on this indicator Public Disclosure Copy Sub Type Supplemental No of active loan accounts -SME Number Value 5548.00 30000.00 Date 31-Mar-2008 31-Mar-2010 30-Jun-2012 Comments Estimated measure of SIDBI's Approx measure of SIDBI's No target available number of SME clientele number of SME clientele Data on Financial Performance (as of 29-Mar-2012) Financial Agreement(s) Key Dates Page 3 of 4 The World Bank Report No: ISR6668 Project Loan No. Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P086518 IBRD-72630 Closed 30-Nov-2004 14-Jan-2005 29-Apr-2005 30-Jun-2009 P086518 IBRD-76940 Effective 30-Apr-2009 05-Jun-2009 30-Jul-2009 30-Jun-2012 Public Disclosure Copy Disbursements (in Millions) Project Loan No. Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P086518 IBRD-72630 Closed USD 120.00 120.00 0.00 120.00 0.00 100.00 P086518 IBRD-76940 Effective USD 400.00 400.00 0.00 380.11 19.89 95.00 Disbursement Graph Key Decisions Regarding Implementation Public Disclosure Copy It is targeted that by mid-May 2012, a decision will be communicated to the Bank about how to address the RSF component and its funding allocation. Restructuring History CD Approved on 12-May-2008 Related Projects P102767-SME Financing and Development Project: Additional Financing Page 4 of 4