Mumbai: AU Small Finance Bank tied up with Small Industries Development Bank of India (Sidbi) on Saturday to launch a Rs200 crore fund for providing loans to micro, small and medium enterprises (MSMEs).

The programme will fund term loans in the Rs25 lakh to Rs2 crore ticket size. “This joint financing programme with Sidbi aims to enhance credit to MSMEs. We are looking at disbursing this amount in the next 12-15 months to nearly 100 units," its managing director and chief executive Sanjay Agrawal told PTI.

Under the advice of Sidbi, AU Bank will play the anchor in this programme as all the processes including disbursement, monitoring and recovery will be handled by them. The appraisal of the proposal shall be done jointly by AU Bank and Sidbi.

Both the financial institutions will earmark a corpus of Rs100 crore for lending under this agreement this financial year. The loans will be offered at a rate of 10% to MSMEs, he said. The corpus for the subsequent financial years will be decided after mutual consultation and seeing the progress, he added.