The World Bank and India on Friday signed two agreements for a total loan of $ 407 million to scale up microfinance services in unbanked areas and improve capacity to generate quality statistics.
The assisted projects are 'Scaling up Sustainable and Responsible Microfinance Project' ($ 300 million loan) and 'India Statistical Strengthening Project' ($ 107 million loan), the government said in a statement.
"The objective of the project is to scale up access to sustainable microfinance services to the financially excluded, particularly in under-served areas of India," it said.
The project will be implemented by the Small Industries Development Bank of India (SIDBI) over a period of 5 years.
SIDBI will use the funding for on-lending to microfinance institutions (MFIs). The funding, among other things, will enable MFIs to leverage private commercial funds to on-lend larger amounts to the under-served.
"Increasing access to finance for millions of India's financially under-served people remains a challenge," said World Bank senior financial sector specialist Niraj Verma.
While $ 100 million is a credit from World Bank's concessionary lending arm International Development Association, the remaining $ 200 million is a loan from the International Bank for Reconstruction and Development.
Further, the second project has been formulated by Indian government to support statistical reforms in the country.
The main policy reform areas include strengthening institutions of leadership and coordination of the national statistical system, and increasing the support provided by the Central government and the Ministry of Statistics and Programme Implementation (MoSPI) to the statistical systems of states and union territories.
The other two reform areas are strengthening the capacity and performance of the statistical systems, and improving the coverage, quality, timeliness and credibility of statistics generated by the states and UTs in India.
The project is being implemented as a centrally sponsored scheme and the implementing agency for the project is MoSPI.
"It is a single tranche policy based operation and the closing date will be twelve months after the loan has become effective," the government said.
The World Bank said India's rapid economic and social transformation over the past decade has brought to the fore a need for better and timelier statistical information.
"A renewed and modernised statistical system has become essential in order to measure rapid economic and social change, monitor the effects of reform, and to calibrate policy change both in the states and at the centre," said World Bank senior economist Farah Zahir.