SIDBI, Shell Foundation Launch $3.1M Green Finance Facility for India's Nano-Entrepreneurs

NEW DELHI, India – May 05, 2026

The Small Industries Development Bank of India (SIDBI) and the independent charity Shell Foundation have announced a landmark US$3.1 million partnership aimed at unlocking green finance for India’s smallest businesses. The initiative, named the “Empower Nanopreneurs for Green Transition Risk Sharing Facility (EN-Trans RSF),” seeks to bridge a critical financing gap for nano-entrepreneurs, enabling them to adopt clean energy technologies that boost income while supporting the nation's climate goals.

This project, also funded as part of the Transforming Energy Access (TEA) partnership with the UK Foreign, Commonwealth & Development Office (FCDO), is designed to catalyze approximately INR 250 crore (about US$30 million) in green loans. By de-risking lending to a segment that has historically been excluded from formal credit, the facility aims to accelerate India's transition to a sustainable economy from the ground up.

Fueling the Grassroots Economy

India's economic landscape is powered by an immense, often invisible, engine: its nano-entrepreneurs. These businesses, numbering in the tens of millions and sustaining the livelihoods of an estimated 500 million people, range from small retail shops and food vendors to local artisans and repair services. According to recent government data, the unincorporated sector, where most of these businesses operate, comprises over 65 million enterprises.

Despite their vital role, these entrepreneurs face formidable barriers when seeking capital, especially for green investments. A staggering 97% of India's MSMEs are informal, often operating without formal registration, audited accounts, or the collateral required by traditional lenders. This informality, coupled with a lack of awareness about available green technologies and financing options, has created a significant credit gap. Research indicates that while over 70% of MSMEs intend to invest in sustainable operations, a similar percentage are unaware of how to access the necessary green finance.

The EN-Trans RSF is designed to directly address these challenges. By providing access to capital for productive-use energy (PUE) solutions—such as solar-powered dryers for agricultural produce, energy-efficient cookstoves for food businesses, and solar looms for weavers—the initiative empowers these entrepreneurs to enhance their productivity, reduce operational costs, and build resilience. Over its six-year cycle, the project is expected to impact between 112,000 and 443,000 people, depending on the average loan size, fostering economic growth in low-income communities.

An Innovative Model to De-Risk Green Lending

At the heart of the EN-Trans RSF is an innovative financial mechanism designed to change the risk calculus for lenders. The facility is structured as a "second-loss" guarantee, a model that encourages banks and other financial institutions to lend to higher-risk segments by sharing the potential downside.

Under this structure, the Participating Financial Institutions (PFIs)—which include a wide array of lenders from public and private sector banks to Non-Banking Financial Companies (NBFCs) and microfinance institutions—will absorb the initial 3% of any loan defaults. The EN-Trans RSF, backed by the $3.1 million grant from Shell Foundation, will then cover the next 10% of losses, from 3% up to 13%. This significantly mitigates the credit risk for lenders, making the prospect of financing thousands of small-ticket green loans to nano-entrepreneurs commercially viable.

This risk-sharing model is crucial for unlocking private capital at scale. Financial institutions that were previously hesitant to enter this market due to perceived risks and high transaction costs are now incentivized to participate. The model ensures lenders retain "skin in the game" by bearing the first losses, which encourages diligent credit assessment while the guarantee provides a substantial safety net.

Jonathan Berman, CEO of Shell Foundation, commented on the strategic importance of this approach. “Nano-entrepreneurs are at the heart of India’s economy, yet too often they are excluded from the finance needed to adopt clean, productive technologies," he stated. "This partnership with SIDBI demonstrates how smart risk-sharing mechanisms can unlock private capital at scale, enabling low-income entrepreneurs to grow their businesses while accelerating India’s transition to a low-carbon future. This initiative reflects our commitment to solutions that deliver both economic opportunity and climate impact.”

A Dual Dividend: Economic Growth and Climate Action

The initiative's impact extends beyond individual businesses, creating a powerful synergy between economic development and environmental sustainability. By financing the adoption of green technologies, the EN-Trans RSF directly contributes to India's ambitious goal of achieving Net Zero emissions by 2070.

The targeted technologies offer tangible benefits. For instance, a farmer using a solar dryer can reduce post-harvest losses, add value to their produce, and access new markets, all while displacing the need for fossil-fuel-based drying methods. A street food vendor with an efficient clean cookstove saves money on fuel, reduces harmful indoor air pollution, and lowers their carbon footprint. Similarly, a weaver adopting a solar-powered or energy-efficient loom can cut electricity bills, increase output, and compete more effectively in a market that increasingly values sustainable production.

This focus on PUE technologies is a core tenet of the UK-backed Transforming Energy Access (TEA) program, which supports the development of clean energy solutions that drive economic activity. The EN-Trans RSF serves as a practical implementation of this philosophy, demonstrating that climate action and poverty alleviation are not mutually exclusive goals but can be pursued in tandem.

To ensure the program's success, the financial support is complemented by comprehensive technical assistance. This includes training for both the financial institutions and the entrepreneurs, research to identify the most impactful technologies, and robust monitoring and evaluation to measure progress. By building capacity across the ecosystem, the initiative aims to create a self-sustaining market for green finance that will continue to thrive long after the initial project cycle is complete.