SMBC Signs $440 Million Loan Agreement with India’s Hudco to Support Sustainable DevelopmentIntroduction
In a significant move towards sustainable development, Sumitomo Mitsui Banking Corporation (SMBC) has signed a $440 million loan agreement with India’s Housing and Urban Development Corporation Limited (Hudco). This agreement marks Hudco’s second external commercial borrowing (ECB) from SMBC and its first foreign-currency blue loan transaction. The loan aims to support the Jal Jeevan Mission, an ambitious program launched by the Government of India to provide functional household tap water connections to every rural household by 2024.To get more news about SMBC, you can visit our official website.
Details of the Agreement
The $440 million loan, equivalent to 64 billion yen, is a syndicated ECB with a blue loan tranche. SMBC, along with two other banks, acted as the mandated lead arranger and bookrunner, joint ESG loan coordinator, agent bank, and authorized dealer bank in this landmark transaction. The blue loan tranche is particularly noteworthy as it aligns with the Green Loan Principles and Social Loan Principles, methodologies designed to achieve positive social outcomes and support green initiatives.
Purpose and Impact
A portion of the loan will be used to support the Jal Jeevan Mission, specifically the Har Ghar Nal Se Jal initiative, which aims to provide tap water connections to rural households in India. Hudco has sanctioned a total financial assistance of 70.91 billion rupees (approximately $847.6 million) towards the Government of Rajasthan, covering various districts in the state. This initiative is expected to significantly improve the quality of life for rural communities by providing access to clean and safe drinking water.
Sustainable Financing Framework
SMBC worked closely with Hudco to establish a sustainable financing framework that aligns with globally recognized methodologies such as the Green Loan Principles and Social Loan Principles. These principles, developed by the Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA), and Syndications and Trading Association (LSTA), are designed to ensure that the financing achieves positive social and environmental outcomes.
Statements from Key Stakeholders
Hiroyuki Mesaki, Country Head of SMBC India, emphasized the significance of the deal, stating, “The deal with Hudco is a testament to SMBC’s credentials globally and further embodies our mission towards investing a cumulative total of 50 trillion yen into sustainability-related financing globally by 2030. This deal will also contribute towards creating a better life for underserved communities”.
Rakesh Garg, Chief Business Officer at SMBC India, expressed pride in partnering with Hudco, saying, “We are excited and proud to partner with Hudco on their second offshore borrowing and maiden blue loan transaction, and in their mission to provide better infrastructure including tap water and drinking water facilities while also improving the quality of life for the community”.
Conclusion
The $440 million loan agreement between SMBC and Hudco represents a significant step towards sustainable development and improving the quality of life for rural communities in India. By supporting the Jal Jeevan Mission and aligning with globally recognized sustainable financing principles, this partnership exemplifies the positive impact that strategic financial collaborations can have on society and the environment. As Hudco continues to work towards its mission of providing better infrastructure and improving living conditions, this loan agreement will play a crucial role in achieving these goals.
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