The World Bank reached an agreement Thursday to provide a $400 million additional loan for India’s Small Industries Development Bank of India (SIDBI) to improve access to finance Small and Medium Enterprises (SMEs).

This additional financing will help disburse original project which had been approved by the World Bank on November 30, 2004.

The lending from the original project has covered 927 SMEs spread across 10 Indian states. A survey showed that nearly two-thirds of the SMEs financed upgraded their technology.

The project targeted particularly at SMEs to help them addressing the credit slowdown that has resulted from the financial crisis. It is a part of a larger program which the government of India requested for funding in light of the financial crisis.

Achieving and sustaining growth and employment will require a sharp step up in industrial and services growth. This needs to be spurred by SMEs which have the greatest potential to provide employment. said Roberto Zagha, World Bank Country Director for India.

Under this project, the SIDBI will also explore refinancing other banks and financial institutions for on-lending to SMEs.

This integrated project will help SMEs improve their profitability and competitiveness, and become more creditworthy, said Niraj Verma, World Bank Senior Financial Sector Specialist and project team leader.

The loan from the International Bank for Reconstruction and Development is backed by a Republic of India guarantee. It has a 15 year maturity which includes a 5-year grace period.