India: Supporting Microentrepreneurship for Women's ...

1 Grant Assistance Report Project Number: 43158-01 April 2010 Proposed Grant Assistance india : Supporting Microentrepreneurship for Women's empowerment (Financed by the Japan Fund for Poverty Reduction) CURRENCY EQUIVALENTS (as of March 2010) Currency Unit Indian rupee/s (Re/Rs) = $ $ = ABBREVIATIONS ADB Asian Development Bank CGTMSE Credit Guarantee Fund Trust for Micro and Small Enterprises CPS country partnership strategy JFPR Japan Fund for Poverty Reduction JICA Japan International Cooperation Agency M&E monitoring and evaluation MFI microfinance institution MIS management information system NBFC nonbanking financial company NGO nongovernment organization SARD South Asia Department SFMC SIDBI Foundation for Microcredit SIDBI Small Industries Development Bank of india SMEs small and medium-sized enterprises SMERA Small and Medium Enterprises Rating Agency SOE statement of expenditure TA technical assistance NOTES (i) The fiscal year (FY)

2 Of the Government of india and its agencies ends on 31 March. FY before a calendar year denotes the year in which the fiscal year ends, , FY 2009 ends on 31 March 2009. (ii) In this report, "$" refers to US dollars. Vice President X. Zhao, Operations 1 Director General S. H. Rahman, South Asia Department (SARD) Director A. Sharma, Financial Sector, Public Management and Trade Division, SARD Team leader Team members F. Tornieri, Social Development Specialist (Gender and Development), SARD S. Chakravarti, Senior Programs Officer, india Resident Mission, SARD P. Marro, Senior Investment Specialist, SARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 JAPAN FUND FOR POVERTY REDUCTION (JFPR) JFPR Grant Proposal I. Basic Data Name of Proposed Activity Supporting Microentrepreneurship for Women's empowerment Country india Grant Amount Requested $3,000,000 Grant Duration 36 months Regional Grant Yes / No Grant Type Project / Capacity building II. Grant Development Objective(s) and Expected Key Performance Indicators Grant Development Objectives: The primary objective of the grant is to help low-income female microentrepreneurs access financial resources, services, and market opportunities in selected Indian states ( , Madhya Pradesh, Maharashtra, Orissa, Rajasthan, and Uttar Pradesh).1 The grant will (i) assess existing gender policies, strategies, and practices including institutional arrangements adopted by the Small Industries Development Bank of india (SIDBI) and SIDBI Foundation for Micro Credit (SFMC), its partner microfinance institutions (MFIs), and banks (including cooperative banks); (ii) organize training targeting the specific needs of female microentrepreneurs for SIDBI partner MFIs, nonbanking financial companies (NBFCs), and banks; (iii) support SIDBI retailers in addressing the specific needs and constraints faced by low-income female microentrepreneurs in accessing financial services.

4 And (iv) establish a monitoring and evaluation (M&E) system to assess the results of financed activities under this grant. Expected Key Performance Indicators: Better quality of life for low-income female microentrepreneurs in the grant areas (20% increase at grant end compared to 2010 baseline). Increase in successful applications by low-income female entrepreneurs at SIDBI branches in selected states (20% increase at grant end compared to 2010 baseline). Increase in new female entrants in micro and small and medium-sized enterprises (SMEs) assisted by the grant (20% increase at grant end compared to 2010 baseline). III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures Category Amount of Grant Allocated ($) Percentage of Expenditures 1.

5 Training (including workshops, seminars, and lateral learning) 1,188,800 40 2. Consulting services (including livelihood enterprise learning advisors) 812,500 27 3. Project management 684,889 22 4. Direct intervention (financial services for the poor) 144,000 5 5. Contingencies 169,811 6 Total 3,000,000 100 1 The five proposed states have been selected based on criteria including (i) high incidence of poverty, low socioeconomic status, and gender indicators, gathered by comparing state and national data; (ii) those with which the Asian Development Bank (ADB) has engagement; (iii) existence of Small Industries Development Bank (SIDBI) and SIDBI Foundation for Micro Credit (SFMC) branches; (iv) sufficient number of committed financial partners willing to engage with SIDBI in the grant activities.

6 And (v) underserved status in availability of credit and other financial services targeting the missing middle segment. Considering the pilot nature of the grant, SIDBI requested to extend the pilots to five states to capture a broader spectrum of low-income female entrepreneurs from diverse socioeconomic contexts. This will add to the richness of the grant, increase options for lateral learning, and generate best practices for replication and scaling up. 2 JAPAN FUND FOR POVERTY REDUCTION JFPR Grant Proposal Background Information A. Other Data Date of Submission of Application 20 October 2009 Project Officer F. Tornieri, Social Development Specialist (Gender and Development) Project Officer s Division, E-mail, Phone Office of the Director General, South Asia Department (SARD) +632 632 5983 Other Staff Members Who Will Need Access to Edit and/or Review the Report S.

7 Chakravarti, Senior Programs Officer, india Resident Mission, SARD P. Marro, Senior Investment Specialist, SARD Sector (subsector) Industry and trade (SME development) Themes (subthemes) Economic growth (widening access to markets and economic opportunities), gender equity (economic opportunities), private sector development (private sector investment), capacity development (organizational development) Targeting Classification General intervention Was JFPR seed money used to prepare this grant proposal? Yes [ ] No [ ] Have Staff Review Committee (SRC) comments been reflected in the proposal? Yes [ ] No [ ] Name of Associated Asian Development Bank (ADB) Financed Operation(s) Micro, Small, and Medium-Sized Enterprise Development Project2 Executing Agency Ministry of Finance Grant Implementing Agency Small Industries Development Bank of india SIDBI Foundation for Micro Credit SIDBI Tower 15, Ashok Marg, Lucknow, Uttar Pradesh 226001 Tel.

8 : +91 522 228 8547/48/49/50 E-mail: B. Details of the Proposed Grant 1. Description of the Components, Monitorable Deliverables and/or Outcomes, and Implementation Timetable Component A Component Name Institutionalization of Gender-Related Policies, Strategies, and Programs 2 This JPFR grant is attached to the Micro, Small, and Medium Enterprise Development Project, which supports micro and SME access to term finance through (i) a partial credit guarantee facility of up to $250 million without government counterindemnity, to assist india s public sector banks with sizeable micro and SME business in raising long-term funding in international capital markets through the launch of a financial instrument partially guaranteed by ADB; and (ii) a loan up to $50 million to SIDBI with a sovereign counterguarantee for onlending to micro and SMEs, with 30% of the credit line to be targeted to female entrepreneurs.

9 The JPFR grant will complement the Micro, Small, and Medium-Sized Enterprise Development Project s proposed approach by providing much-needed capacity-building support to low-income female entrepreneurs in the unorganized sector. ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Partial Credit Guarantee to india for the Micro, Small, and Medium Enterprise Development Project. Manila (approved on 26 February). 3 Cost ($) $130,900 Component Description This component will strengthen the ability of SIDBI and its retailers to incorporate gender and social inclusion approaches into the development of policies, strategies, and More specifically, this will include (i) assessing existing gender policies and practices adopted by SIDBI, its partner MFIs, NBFCs, and banks to promote gender equality and female empowerment ;4 (ii) reviewing gender-sensitive and -inclusive programs of wholesalers and retailers to identify gaps, through workshops with heads of organizations and/or senior managers of SIDBI and its retailers.

10 (iii) revising policies and practices, and reformatting relevant loan processing forms as needed, to incorporate best practice standards; and (iv) organizing initial consultations and exchange and lateral learning initiatives among SIDBI, its partner MFIs, NBFCs, and banks to disseminate results and help institutionalize such practices (including business development, reporting, M&E, and gender equality), for highlighting considerations of poverty, social inclusion, and gender equity. Monitorable Deliverables and/or Outputs Gender-related practices in SIDBI, partner MFIs, NBFCs, and banks documented through workshops with heads and senior management of the organizations. Improved methods to institutionalize gender and socially inclusive approaches adopted, as needed.