French development agency Proparco made a $75 million (about Rs 560 crore) loan to mid-sized private-sector lender IndusInd Bank for its microfinance division.
“This will allow the bank to increase the number of microcredits for women entrepreneurs in seven of the poorest states in India,” Proparco said in a statement.
The bank will develop its microfinance project portfolio across states including Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh.
It is estimated that Proparco’s loan should provide some 250,000 women with access to microcredit, the statement said.
IndusInd Bank’s microfinance division mainly works in the livestock and small trade sectors offering loans to small groups of borrowers, mostly women.
The bank bought microlender Bharat Financial Inclusion in 2019. After the acquisition, the bank has over eight million borrowers and claims to be the second largest player in microfinance in India.
The bank operates in 24 states across one lakh plus villages.
Proparco has been investing in India for a decade via both debt and equity deals.
It holds investments in firms such as JK Paper, Sonata Finance, IFMR Holdings, Prabhat Dairy, Jain Irrigation Systems, NSL Renewable Power, Educomp Solutions, and Avaada Energy.
It has also invested in two funds of Lok Capital, Rabo Equity Advisors’ India Agri Business Fund II and a fund managed by Aavishkaar Venture Management.
In September 2019, Proparco provided debt financing to NeoGrowth Credit, a fintech lender focused on small and medium enterprises.
In January 2020, it allocated $15 million of financing to microlender Annapurna Finance.