World Bank, UN Women, and Small Industries Development Bank of India (SIDBI) have joined hands to launch a new social impact bonds exclusively for women, called Women’s Livelihood Bonds (WLBs), with an initial corpus of Rs 300 crore.
The proposed bond will enable individual women entrepreneurs in sectors like food processing, agriculture, services and small units to borrow around Rs 50,000 to Rs 3 lakh at an annual interest rate of around 13-14 per cent or less.
The bonds, which will have a tenure of five years, will be launched by SIDBI with the support of World Bank and UN Women. SIDBI will act as the financial intermediary and channel funds raised to women entrepreneurs through participating financial intermediaries like banks, NBFCs or microfinance institutions.
The WLBs will be unsecured, unlisted bonds and offer fixed coupon rate of 3 per cent per annum to bond investors. Some of the top wealth management firms like Centrum, ASK, Ambit and Aditya Birla Capital, among others, have reached out to high net worth individuals and impact investors to raise the funds.
Corporate houses like Tata Communication, Tata Chemicals, Trent and Voltas have expressed interest in investing in the bonds.
“The first tranche of Rs 100 crore at 3 per cent per annum coupon rate per annum will be mobilised over the next four months through a bond placement by Sidbi. Similar tranches with a targeted cumulative amount of Rs 300 crore will be subsequently placed by Sidbi,” said Mohammad Mustafa, Chairman and MD, SIDBI.
“… A corpus fund catalysed with support from the UK Department for International Development plus future CSR and other grant money will be created to support implementation of the WLB, capacity building of women entrepreneurs including links to markets and appropriate technologies, as well for credit default risk mitigation,” said Jaunaid Kamal Ahmad, Country Director, World Bank.
The new bonds will not only enable women self help groups to graduate from ‘group borrowing’ to ‘individual borrowing’ but will also allow them to shift from development assistance towards more market-financed prograammes,