ADB, Shriram Finance Partner to Empower MSMEs and Drive EV Adoption in India

India's MSMEs form the backbone of the national economy, contributing nearly 30% of the GDP and providing employment to more than 123 million people.

In a significant move to enhance financial inclusion and environmental sustainability in India, the Asian Development Bank (ADB) and Shriram Finance Limited have signed a $150 million loan agreement aimed at boosting access to finance for micro, small, and medium-sized enterprises (MSMEs). The financing will also support the transition to electric and low-emission vehicles across the country, with a strong emphasis on reaching women-owned businesses and underserved regions.

A Comprehensive $306 Million Financing Initiative

This initiative is part of a broader $306 million financing package led by ADB in its capacity as the mandated lead arranger and bookrunner. The package includes:

• ADB’s direct loan of $150 million

• $150 million co-financing from the Japan International Cooperation Agency (JICA)

• An additional INR 500 million (approx. $6 million) loan from the Export-Import Bank of India

Together, these funds are set to significantly expand Shriram Finance Limited’s lending capacity to MSMEs, particularly those operating in rural and semi-urban areas, and contribute to India’s push for cleaner transportation solutions.

Addressing the Credit Gap in India’s MSME Sector

India's MSMEs form the backbone of the national economy, contributing nearly 30% of the GDP and providing employment to more than 123 million people. However, access to formal financial services remains a significant challenge—only around 25% of the MSME credit demand is currently met by financial institutions.

ADB’s India Country Director, Mio Oka, highlighted the importance of this project in tackling the credit gap. “This project underscores ADB’s commitment to supporting financial inclusion and sustainable development in India while addressing the significant financing gap faced by MSMEs,” she said.

She further emphasized the dual impact of the initiative—promoting economic empowerment, especially for women entrepreneurs, while also supporting India’s efforts to combat air pollution and transition to low-carbon transportation.

Focus on Women Entrepreneurs and Lagging States

A major focus of this financing package is to empower women-owned MSMEs, who often face additional challenges in accessing credit due to gender biases, limited collateral, and social constraints. The project aims to help overcome these hurdles by enhancing Shriram Finance's ability to deliver customized financial products tailored to their needs.

The loan will also focus on lagging states—those that are economically less developed—ensuring that regional disparities in credit access are reduced. Shriram Finance’s extensive branch network and presence in underserved markets make it well-positioned to reach these demographics.

Accelerating India’s Transition to Electric Mobility

Beyond MSME financing, a key component of this initiative is to support the adoption of electric vehicles (EVs) and low-emission Bharat Stage-VI compliant commercial vehicles for business purposes.

This aligns with the Indian government’s EV30@30 initiative, which aims for 30% of new vehicle sales to be electric by 2030. The program will help businesses transition to cleaner transportation solutions, thereby contributing to India’s climate goals and air quality improvement efforts.

A Strong Partnership for Inclusive and Green Growth

Umesh Revankar, Executive Vice Chairman of Shriram Finance Limited, expressed gratitude for the partnership with ADB, noting that the funding would enable the company to scale up its support to underserved MSMEs and facilitate the adoption of sustainable mobility solutions.

"We value ADB’s support and funding, which will enable us to expand our financing to underserved MSMEs and promote the adoption of electric vehicles. Our continued partnership with ADB aligns with our corporate mission to drive inclusive growth and support India’s transition to a greener economy,” said Revankar.

Shriram Finance: Driving Growth in Rural and Semi-Urban India

Founded in 1979, Shriram Finance Limited is a flagship of the Shriram Group and one of India’s largest non-banking financial companies (NBFCs), with deep expertise in commercial vehicle financing and MSME lending. With a network of 3,196 branches, a workforce of over 79,000 employees, and assets under management worth INR 2.54 trillion, the company serves over 9 million customers—primarily in rural and semi-urban India.

Its strategic focus on financial inclusion and mobility solutions makes it an ideal partner for ADB’s development agenda in India.

ADB’s Commitment to Sustainable Development in Asia-Pacific

The Asian Development Bank, established in 1966 and owned by 69 member countries, continues to play a pivotal role in promoting inclusive, resilient, and sustainable growth across Asia and the Pacific. Through partnerships like this, ADB leverages innovative financing and strategic collaboration to help member countries tackle complex development challenges—from infrastructure to climate change and financial inclusion.

This latest collaboration with Shriram Finance represents a powerful step toward bridging the credit gap for MSMEs, empowering women entrepreneurs, and decarbonizing India’s transportation sector, marking a significant milestone in the country’s sustainable development journey.