World Bank, UN Women and SIDBI plan ‘women’s livelihood bond’ to raise ₹300 cr
Proceeds will help rural women set up, scale up their enterprises
The World Bank, UN Women (a United Nations entity dedicated to gender equality and empowerment of women), and Small Industries Development Bank of India (SIDBI) have come together to launch a five-year tenor ‘women’s livelihood bond’ to raise ₹300 crore.
The proceeds from these social impact bonds, which will be unsecured and unlisted, will be used to help rural women in the country’s poorest States to set up or scale up their own enterprises.
The bonds, which will be raised by SIDBI with the support of World Bank and UN Women, will be placed with leading wealth managers and corporates in the country on private placement basis. The coupon rate on these bonds will be 3 per cent per annum.
Junaid Ahmad, Country Director, World Bank, said investors expect greater social impact of their investment, which will fetch them a reasonable return of 3-4 per cent per annum.
He added that investments in such bonds should be made tax exempt to attract investors.
Mohammad Mustafa, CMD, SIDBI, said his institution will ensure that microfinance institutions (MFIs) that get funds, raised via the women’s livelihood bond (WLB) for on-lending to women entrepreneurs, don’t charge more than 13 per cent interest. Currently, MFIs charge borrowers between 20-24 per cent. Loans up to ₹1.50 lakh will be disbursed by MFIs.
Mustafa said SIDBI has also put together its own ₹1,000 crore social-impact fund ‘Prayaas’ for providing funding support to women entrepreneurs. Under a pilot, SIDBI has lent to women entrepreneurs in a few districts in Uttar Pradesh and Karnataka.
Under WLB, women in Bihar, Jharkhand, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh and North-East, among others, are expected to receive most of the credit.
The bonds will be backed by a corpus fund to be mobilised through corporate social responsibility contributions and via grant support from the UK’s Department for International Development. The corpus guarantee cover will enable women entrepreneurs to access credit at much lower rates of interest, according to a World Bank statement.