International Finance Corporation will provide $150 million (Rs 1,028 crore) in the form of a five-year senior loan to private-sector lender RBL Bank.
The World Bank’s private-sector investment arm said in a disclosure RBL Bank would use $100 million to increase lending to micro, small and medium enterprises and the remaining to finance climate projects.
In addition, Mumbai-listed RBL will arrange one-and-a-half times the amount IFC is providing to increase lending towards the MSMEs, individual business loans and climate projects across the country.
The loan will strengthen the balance sheet of the bank, which had only 5% of its borrowings with a tenor of five years or more at the end of March 2018.
The bank, which was established in 1943 and was previously known as Ratnakar Bank, renamed itself to RBL Bank in 2014 and went public two years later. It has a diversified shareholder base with 29% of its stake held by retail investors and 36% by foreign investors such as CDC Group Plc.
RBL Bank posted a 39% rise in net profit from a year earlier to Rs 247.18 crore for the fourth quarter ended March 2019 while net interest income jumped 48% to Rs 738.72 crore. The bank's asset quality was good with gross bad loans at 1.38% and net bad loans at 0.69% of its total loans.
The bank has 5.82 million customers and a network of 288 branches and 390 ATMs across India.
IFC is one of the most active investors in India. It makes debt investments and direct private equity-style bets across sectors. It also invests in private equity and venture capital firms focussed on India.
In the financial services sector, IFC has provided debt funding to several non-bank lenders in recent months as a liquidity crunch hits the sector.
It led a $550-million investment round in L&T Finance Ltd and proposed to make a debt investment of $150 million each in non-banking finance companies Bajaj Finance Ltd and Piramal Capital & Housing Finance Ltd.
IFC’s other debt investments in the financial services sector this year include Cholamandalam Investment and Finance Company Ltd, affordable housing loan provider Aavas Financiers Ltd and Mahindra & Mahindra Financial Services Ltd.