Small Industries Development Bank of India (SIDBI) and France-based Agence Française de Développement (AFD) have signed a $100 million (~₹1.15 million) credit facility agreement to scale green finance solutions for Indian micro, small, and medium enterprises (MSMEs) investing in renewable energy solutions.

The agreement aims to support sustainable growth and drive the transition towards a low-carbon economy.

Under this agreement, AFD will provide credit to help expand affordable financing access for MSMEs investing in energy-efficient technologies, renewable energy solutions, and climate-friendly business practices.

Lise Breuil, AFD Country Director, India, said the agreement complements AFD’s Greening Indian Financial System (GIFS) platform. GIFS targets integrating sustainability and a climate perspective into the Indian financial stakeholders’ strategies starting with development finance institutions in the public sector.

Manoj Mittal, Chairman and Managing Director of SIDBI, said that the development bank will utilize the credit to provide long-term financial solutions to help MSMEs adopt cleaner technologies, improve energy efficiency, and reduce their carbon footprint.

SIDBI supports MSMEs with multiple credit and developmental measures to traditional enterprises, domestic small entrepreneurs, bottom-of-the-pyramid entrepreneurs, and high-end knowledge-based entrepreneurs.

It also provides green finance, particularly for MSME-led solar and wind projects. SIDBI provides term loans and, as of September 2024, offers interest rates at 7.5% to 8.6% for loans up to ₹75 million (~$863,280.75) under an end-to-end energy model.

The AFD Group provides funding and support to initiatives focusing on climate, biodiversity, peace, education, urban development, health, and governance. It is executing over 4,200 projects in France’s overseas departments and territories and 150 countries.

Last year, the Green Climate Fund approved $215.6 million for SIDBI’s Financing Mitigation and Adaptation Projects in Indian MSMEs. The projects aim to help MSMEs adopt low-emission and climate-resilient technologies. They will also increase climate finance for MSMEs by using private sector investments from non-banking financial companies, small finance banks, and microfinance institutions.