Belstar Investment and Finance Ltd, a Bangalore-based microfinance firm, has signed an agreement with International Finance Corporation (IFC) to raise $1.15-million fund. Belstar, which is the microfinance arm of Hand in Hand International (HHI), offers equity to establish a sustainable microfinance operation to the poor in rural and semi-urban areas in India. 

“The funding and association with IFC will help us to obtain support from other international investors, domestic banks and financial institutions,” said Kalpana Sankar, MD, Belstar in a statement. IFC, the private investment arm of the World Bank Group, finances and provides advisory services to private sector ventures and projects for the eradication of poverty in developing countries. 

Last month, VCCircle reported that the company is planning to raise a venture capital round of $3.6 million and is in discussions with investors, including IFC. 

Through Belstar, HHI also plans to expand into a for profit micro finance institution (MFI). The firm would initially look at expansion in Tamil Nadu, Karnataka and Pondicherry with a subsequent expansion into Madhya Pradesh. 

IFC has made some significant investments in microfinance space in India that include Bhartiya Samruddhi Finance Ltd and Asomi Finance Ltd. It has also invested in several MFI focused funds like Aaviskaar Goodwell and Lok Capital. As of June 2009, IFC has invested in over 140 microfinance institutions in 60 countries totaling a portfolio investment of $1.2 billion.

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