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Lok Capital, Proparco Invest $5M In IFMR Rural Channels & Services

17 August, 2016

Lok Capital, a venture capital firm focused on bottom-of-the-pyramid (BoP) market, and Proparco, the private sector investment arm of the French development body Agence Française de Développement (AFD), have invested $5 million (Rs 26 crore) in IFMR Rural Channels & Services.

This is the first round of funding received by IFMR and will be used to ramp up its Kshetriya Gramin Financial Services (KGFS) and also to diversify its portfolio of services and products.

The IFMR Trust is related to the Chennai-based B-school Institute for Financial Management and Research and has started promoting its KGFS model in 2008. The KGFS portfolio includes loan products (group loans, retailer loans, asset-backed loans, micro enterprise and emergency loans), insurance (accident, life, livestock), pensions, savings, remittances and investment products. IFMR has 110 branches across Tamil Nadu, Uttarakhand and Orissa, and caters to around 200,000 customers.

“Lok Capital and Proparco’s investment in IFMR Rural Channels and Services (IRCS) indicates their alignment with our mission of delivering high quality financial services in a way that has a profound impact on rural households. This investment also validates the sustainability of the KGFS model that believes in the core philosophy of adding value to the customer and thereby becoming valuable as a business. With this infusion, we envisage further expansion of the KGFS model to other remote rural locations across the country in a phased manner,” said SG Anilkumar, CEO of IFMR Rural Channels and Services.

“We are happy to back KGFS for its commitment to the cause, the unique customer-centric approach, the robustness of the business model and the relevant product offerings that it has put together. This model can be scaled to cover deep rural geographies across the country and potentially change the way rural India gets access to finance. Operating entirely from branches and with very strong understanding of the customers, we believe that the KGFS model has the potential to mitigate many of the risks that we have seen in different models of microcredit,” said Venky Natarajan, managing partner at Lok Advisory Services.

“Proparco supports initiatives that provide access to financial services to the people not being served by the formal financial sector. Proparco has been closely watching the rural financial services landscape in India and we feel that the KGFS model, executed by the IFMR Rural Channels and Services, is robust and sustainable. The way KGFS model focuses on the design of a financial plan for each household sets it apart from other institutions and builds confidence in the consumers,” said Etienne Viard, CEO of Proparco.

Lok Capital, which manages two funds with a corpus of over $85 million, has invested in companies like Ujjivan, BASIX, Janalakshmi and Ashirwad. Last September, it had invested $3 million in the rural BPO firm RuralShores. Two months ago, itclosed its second round of funding of $65 million.

Proparco is one of the main bilateral development finance institutions in the world. It invests in four continents encompassing major emerging countries like India, and has a high level of requirement in terms of social and environmental responsibility.


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Lok Capital, Proparco Invest $5M In IFMR Rural Channels & Services

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