NBFIs (nonbank financial institutions) find the refinancing scheme more valuable. The funds disbursed through NBFIs increased to 48% of total facility for the SMEDP (Small and Medium-Sized Enterprise Development Project) compared to 20% for the previous SMESDP (Small and Medium Enterprise Sector Development Program). At the national level, banks and NBFIs disbursed SME loans at a rate of 87.8% and 2.2% in 2013. This disproportionate performance can be explained by the higher cost of NBFI funds as compared with banks, as the refinancing scheme provided them an opportunity to reduce their weighted average cost of capital. This indicates that NBFIs would be more interested than banks in any innovative interventions in the financial market.
Small and Medium-Sized Enterprise Development Project