Russia’s state-owned MSP Bank, which focuses on providing finance to small and medium enterprises (SMEs), has signed a pact with New Delhi-based SPA Capital to finance small businesses and start-ups predominantly in hi-tech and innovations space.

The agreement was signed on the sidelines of India-Russia business summit addressed by Prime Minister Narendra Modi and Russia’s President Vladimir Putin on Friday. According to MSP Bank Board Chairman, Dmitry Golovanov, this is the first step towards expanding sources of finance for SMEs of both counties.

“We have been looking for partners in India who could share their experience in accelerating SMEs and start-ups and who could become co-investors in those companies working in the area of industrial and IT innovations,” Golovanov told BusinessLine .

“In Russia, investing and financing such start-ups is one of our priorities. We would like to test our approaches to such financing in new markets,” he added.

MSP Bank, a part of MSP Corporation, has so far invested over $225 million in hi-tech and innovation start-ups in Russia and has a mandate to expand the portfolio further.

“Our idea is to finance already operational businesses after they had already secured the initial funding and taking these innovative start-ups to a new level by financing projects for scaling up the manufacturing of their products,” Golovanov added.

According to him, Russia currently has changed its legal environment for SMEs making it possible for wholly-owned subsidiaries of foreign entities get financing from MSP Corporation.

“Russia has opened up a huge market for SMEs, both in terms of opportunities and demand for products and services generated by the country’s economy,” Golovanov said. “Indian SMEs could as well explore these opportunities,” he added.