Microfinance firm Bandhan Financial Services Pvt Ltd states that it has raised private equity funding of Rs 135 crore from International Finance Corporation (IFC).
The deal marks the single-largest exposure by the World Bank arm to India’s microfinance sector. Till date, IFC has invested in smaller MFIs like Satin Creditcare Network and Swadhaar FinServe, besides backing a host of sector-focused fund managers like Aavishkaar and Lok Capital.
The investment will enable Kolkata-based Bandhan, which is registered as a non-banking finance Company (NBFC), to shore up its networth to nearly Rs 650 crore by March 2012. Bandhan is projected to reach out to 6.5 million customers with a loan book of Rs 5,000 crore, maintaining minimum capital adequacy ratio (CAR) of 17 per cent.
Bandhan aims to reach out to nearly 1,000,000 poor women and disburse Rs 5,300 crore during FY 2011-12. It also aims to increase its loan book to Rs 3,200 crore by March 2012.
Bandhan currently reaches 3.5 million poor women through its network of 1,553 branches, spread across 18 states of the country, with a loan book of more than Rs 2,400 crore. Most of its loan portfolio is accounted by West Bengal and North-Eastern states.
“Bandhan already has SIDBI, a highly reputed national financial institution, as its investor. Equity infusion by IFC will help us increase our capital not only to reach out to additional 1,000,000 poor but also help build world class good governance and system. We are happy that like-minded institutions are joining hands to address the common objective of development of the poor,” said Chandra Shekhar Ghosh, chairman and managing director of Bandhan.
“We are privileged to participate in the work being done by Bandhan in West Bengal and other low-income states of India to promote financial inclusion, one of the key strategic priorities for IFC in India,” said Thomas Davenport, IFC director for South Asia.
The deal is one of the largest investments in an MFI after Citi Venture Capital International led the Rs 65 crore third-round funding of Bangalore-based microfinance institution Janalakshmi Financial Services in June this year.
Bhartiya Samruddhi Finance Ltd had recently raised Rs 200 crore in equity and preference capital from IFC, Matrix Partners, Axis Bank?, Hivos-Triodos Fund, Lok Capital LLC, SIDBI and HDFC Bank Ltd?.