State Bank of India (SBI) on Wednesday said it has signed a loan agreement of up to $1 billion with The Japan Bank for International Cooperation (JBIC).

The loan will facilitate the operations of Japanese car companies in India.

While $600 million will be financed by JBIC, the rest will come from other participating lenders which include the Sumitomo Mitsui Banking Corporation, MUFG Bank, , Mizuho Bank, Shizuoka Bank and Bank of Yokohama.

JBIC will provide a guarantee for the portion co-financed by the participating banks.

A statement from JBIC said the the loan was intended to provide, through SBI, funds necessary for the manufacturing and sales business of suppliers and dealers of Japanese automobile manufacturers and for the provision of loans for the purchase of Japanese automobiles.

The Japanese financial institution said India, the world’s fifth largest automobile market in 2018-19 in terms of units sold, is expected to grow further.
Japanese automobile manufacturers account for the majority share in India. The country is thus an important market for them..

It however, added that economic activities in India have been stagnating because of the Covid-19 pandemic, and this is expected to hinder the automobile market.