IFC to make $20 mn debt investment in RGVN North East Microfinance

International Finance Corporation has proposed to make a debt investment of up to $20 million (about 130 crore) in Guwahati, Assam-based RGVN (North East) Microfinance Ltd.

The World Bank’s private-sector investment arm said in a disclosure that RGVN will use the funds to expand its presence and loan offerings in India’s north-eastern states catering to the unbanked sections of the population.

The microlender was one of 10 applicants that got the Reserve Bank of India’s in-principle approval in September 2015 to start a small finance bank. Small finance banks form a new category of lenders allowed by the central bank to push financial inclusion in the country.

IFC’s planned investment comes about three months after RGVN said it had lined up Rs 146 crore to meet the RBI’s requirement for small finance banks having a minimum paid-up capital of Rs 100 crore and for the promoters to be Indian residents.

RGVN began as Rashtriya Gramin Vikas Nidhi in 1990 to help non-profit and communit-based organisations. It started microfinance activities in 1995 with assistance from Small Industries Development Bank of India (SIDBI). It was incorporated as a public limited company in 2008 and registered as a non-banking finance company in 2010.

Its largest shareholder is Dia Vikas Capital (19.36%), the Indian arm of an Australian impact investing firm. Norwegian microfinance fund NMI (15.59%) and Dutch investment firm Oiko Credit (12.89%) are the other major shareholders.

After the recent fundraise, its new investors include SIDBI Trustee Company Ltd (14.4%), Ratan Tata’s investment arm RNT Associates Pvt. Ltd (10.2%) and Pi Ventures LLC (7.2%). Other investors include SIDBI (8.4%) and North Eastern Development Finance Corporation (5.04%).

RGVN has assets under management of Rs 610 crore across Sikkim, Meghalaya, Tripura, Nagaland, Assam and the northern part of West Bengal. It has 133 branches and reaches 300,000 women clients. Assam accounts for more than 75% of RGVN’s portfolio exposure.

IFC has previously invested in several Indian microlenders including Grameen Koota Financial Services Pvt Ltd, Equitas, Satin Creditcare Network and Swadhaar FinServe. It has also backed a host of sector-focused fund managers like Aavishkaar and Lok Capital.

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