This project paper provide an additional loan to the Small Industries Development Bank of India (SIDBI), with the

guarantee of the Republic of India, for the Small and Medium Enterprises Financing and Development Project (SMEFDP). The objectives and the Bank components of the parent project will not be changed. The additional financing will scale up the parent project and facilitate an: 1) increase in the geographical coverage of the project; 2) expansion of innovative SME loan products, including possibly loans to smaller SMEs, and receivables financing; 3) expansion of SME lending through other participating financial institutions, subject to demand; 4) exploration of the possibility of providing loans to promote investments in energy efficiency improvement technologies, subject to adequate demand from SME at the SIDBI for such funding; and 5) expansion of the coverage of the innovative Risk-Sharing Facility (RSF) that was initiated under the parent project. The additional financing project will substantially increase the development outcomes from this project. The parent project has consistently performed well and project supervision ratings are satisfactory for both project development objectives and implementation progress.