MICROCAPITAL BRIEF: IFC Loans $93m to Mahindra Finance for Microloans Targeting Farmers, SMEs, Women in India

The International Finance Corporation (IFC), a unit of the World Bank Group, recently loaned INR 6.4 billion (USD 93 million) to Mahindra & Mahindra Financial Services Limited (Mahindra Finance), a non-banking financial company owned by the India-based Mahindra Group. Mahindra Finance plans to use the funding to expand its lending to small and medium-sized enterprises (SMEs) as well as to farmers for equipment purchases intended to increase productivity. According to Arun Kumar Sharma, the Chief Investment Officer for the Global Financial Markets Department at IFC, “to make a significant impact in the agriculture sector, we need to provide patient capital and deliver climate-smart solutions. Mahindra Finance brings the scale and expertise, and we aim to develop agribusiness solutions focused on women.”

Established in 1991, Mahindra Finance is a microfinance institution (MFI) that provides people in rural and semi-urban India with insurance; investment services; and loans for farm equipment, housing, consumption, SMEs and vehicles. As of March 2018, the MFI reported total assets of INR 544 billion (USD 8.4 billion), long-term outstanding loans of INR 276 billion (USD 4.3 billion), short-term outstanding loans of INR 234 billion (USD 3.6 billion) and 5.3 million customers served via 1,284 offices covering all 36 of India’s states and union territories. For the year ending March 2018, it reported return on assets (ROA) of 1.9 percent.

Founded in 1945 and based in Mumbai, the Mahindra Group is an international conglomerate with holdings in the agribusiness, automotive, defence, farm equipment, financial services, information technology, real estate and hospitality sectors. For the year ending March 2018, the group reports revenue of INR 939 billion (USD 14 billion) and pretax profits of INR 103 billion (USD 1.6 billion).

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. IFC has 184 member countries, and it reports total assets of USD 93 billion as of June 2017. During the year ending that month, it disbursed a total of USD 10 billion and earned ROA of 1.6 percent and return on equity of (ROE) of 5.9 percent.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2018, it has 189 member nations. The group encompasses (1) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (2) IFC; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During 2017, the World Bank Group disbursed a total of USD 44 billion.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/EDF7B75492387851852582C0004A20B3?OpenDocument

Mahindra Finance background
http://www.mahindrafinance.com/about-us-overview.aspx

Mahindra Finance annual report
http://www.mahindrafinance.com/pdf/Mahindra-Finance-AR-2018.pdf

Mahindra Group background
http://www.mahindra.com/about-us

Mahindra Group annual report
http://www.mahindra.com/resources/investor-reports/FY18/Announcements/M-M-Annual-Report-2016-17.pdf

MicroCapital Brief; June 22, 2018; IFC Loans $1.2m to AFK of Kosovo for Microlending to Smallholder Farmers; Micro-, Small Enterprises (MSEs)
https://www.microcapital.org/microcapital-brief-ifc-loans-1-2m-to-afk-of-kosovo-for-microlending-to-smallholder-farmers-micro-small-enterprises-mses/

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