Ahmedabad-based Shree Mahila SEWA Sahakari Bank may raise $10 million in funding from International Financial Corporation (IFC), the private investment arm of World Bank. Gujarat-based SEWA Bank, part of the SEWA group founded by Ela Bhatt, will use the funding to expand its geographic presence and strengthen capacity.
SEWA Bank plans to expand through district associations (DAs) affiliated with SEWA to integrate its 1.3 million members. The expansion is first planned in the rural areas of Gujarat and SEWA eventually plans to become a first class Indian bank serving poor women.
SEWA was founded as a trade union in 1972 in Ahmedabad and has more than 120 organizations. SEWA Bank was registered as a co-operative bank in 1974 and operates under the dual control of the Reserve Bank of India (RBI) and the state government of Gujarat. Its operational area is restricted to Ahmedabad and a few other districts of Gujarat. As of September 30, 2010, SEWA Bank provided loans to 25,000 borrowers and had mobilized deposits from 348,000 savers.
SEWA had deposits of Rs 74 crore with loans & advances of Rs 32.45 crore and profit of Rs 52 lakh in 2007-08, according to the bank’s website.
IFC has invested in several companies serving the bottom of the pyramid, especially microfinance institutions. IFC had invested in Delhi-based Satin Creditcare Network and Mumbai’s Swadhaar Finserve. IFC, along with Motilal Oswal PE, invested Rs 55 crore in AU Financiers, which offers loans to low income segment to buy commercial, mult-utility vehicles and tractors.
Besides MFIs, IFC has also backed financial services companies like Cholamandalam Investment and Finance Company and low cost housing finance firm Aadhar Housing Finance. It has also backed banks like South Indian Bank, Federal Bank and Centurion Bank of Punjab, among others.