International Finance Corporation (IFC), the World Bank’s private-sector lending arm, will invest up to Rs 135 crore ($20 million) in microlender Grameen Koota Financial Services Pvt Ltd via debt.
The investment will help Grameen Koota to diversify its sources of funding and provide microfinance to more borrowers who have little or no access to formal sources of financing, IFC said in a disclosure. The investment will be made through non-convertible debentures, it said.
Grameen Koota has been in micro-credit operations since 1999 and is the sixth-largest microfinance institutions in terms of gross loans in India as of December 2015, IFC said.
The Bangalore-based company operates in five states-- Karnataka, Maharashtra, Tamil Nadu, Madhya Pradesh and Chhattisgarh--across 71 districts through 298 branches and has around 1.2 million woman borrowers.
Grameen Koota is majority owned by CreditAccess Asia NV (81.2%), a company incorporated in the Netherlands with interests across several Asian microfinance institutions including Equitas Holdings Ltd in India. Creation Investments Social Funds II, Grameen's promoters and employees own the remaining stake in the lender.
IFC has previously invested in a number of Indian microlenders including Bandhan Financial, which has now turned into a commercial bank, as well as Satin Creditcare Network and Swadhaar FinServe, besides backing a host of sector-focused fund managers like Aavishkaar and Lok Capital.
The World Bank arm also invests in several other sectors through both equity and debt deals. Most recently, it proposed to invest up to Rs 266 crore in Repco Home Finance Ltd as part of its plan to support mortgage lenders that offer loans for low-cost houses. This came after IFC said last month it would invest $38 million in three housing finance companies in India—Aspire Home Finance Corporation, Micro Housing Finance Corporation and Aptus Value Housing Finance India Ltd.
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