International Finance Corporation (IFC) plans to offer up to $50 million (Rs 350 crore) in debt financing to Bengaluru-based Ujjivan Small Finance Bank.
The proposed investment will help the lender expand outreach to low-income borrowers and strengthen its balance sheet through availability of long-tenor debt, the World Bank arm said in a disclosure.
IFC plans to provide the money via subordinated debt, or junior debt. Subordinated debt ranks after senior debt in case of a company's bankruptcy.
The small finance bank is a wholly owned subsidiary of Ujjivan Financial Services Ltd, in which IFC held a 4.43% stake at the end of September.
IFC’s loan will help Ujjivan extend finance to microfinance and small and micro enterprises.
The loan proposal will be placed before IFC’s board on 28 February next year.
The small finance bank’s total gross loan book stood at Rs 7,787 crore in June. The total loan disbursements stood at Rs 2,092 crore for the quarter ended June.
Ujjivan Small Finance Bank operates through 462 branches, that is, 187 asset centres and 275 banking outlets. It has close to 12,300 employees.
Ujjivan Financial Services started its small finance bank operations in February 2017. Earlier a microfinance institution, Ujjivan Financial Services listed itself in May 2016.
IFC’s investments
Apart from providing debt financing, IFC also makes direct private equity-style investments in India across sectors. Besides, IFC is an investor in private equity and venture capital firms focused on India.
In the same month, IFC proposed to offer long-tenor debt of about Rs 130 crore ($20 million) to Kolkata-based Arohan Financial Services Pvt. Ltd.
