The International Finance Corporation (IFC), the investment arm of the World Bank Group, a multilateral development finance organization based in Washington DC, will make an INR 1.6 billion (USD 35.1 million) equity investment in Bandhan Financial Services, a microfinance institution (MFI) based in Kolkata, India, to expand its operations in the country. The deal is reportedly the largest equity investment in an Indian MFI since the turmoil in the microfinance industry in Andhra Pradesh began in late 2010.
The deal will reportedly help Bandhan expand its operations outside of the 18 states in which it now conducts business. With the funding, Bandhan also aims to add to its product portfolio and establish better operating practices: an effect of the recent ordinances passed by the Andhra Pradesh government. In 2009, Bandhan received a INR 487 million (USD 10.7 million) tranche of capital from Small Industries Development Bank of India (SIDBI), an investor in the microfinance industry and other sectors that is based in Lucknow.
According to the Microfinance Information Exchange (MIX), the microfinance information clearinghouse, Bandhan Financial Services reported a gross loan portfolio of USD 333 million, total assets of USD 424 million, 2.3 million active borrowers, return on equity (ROE) of 38.2 percent and return on assets (ROA) of 3.52 percent in 2009 [1,2].
By John Howard-Smith, Research Associate
About Bandhan Financial Services: Bandhan Financial Services Private Limited is a microfinance institution (MFI) based in Kolkata, India. It was founded in 2002. As of 2011, it operates in 18 states in India with approximately 1,550 branches. It offers loans for microenterprises as well as for individuals to pay for health emergencies. According to the Microfinance Information Exchange (MIX), the microfinance information clearinghouse, Bandhan Financial Services reported a gross loan portfolio of USD 333 million, total assets of USD 424 million, 2.3 million active borrowers, return on equity (ROE) of 38.2 percent and return on assets (ROA) of 3.52 percent in 2009.
About International Finance Corporation (IFC): A member of the World Bank Group, the International Finance Corporation (IFC) offers loan and debt securities, equity investments, advisory services and technical assistance intended to alleviate poverty and promote open and competitive markets in developing countries. The IFC has 182 member countries that “collectively determine its policies, and approve investments.” In fiscal year 2009, IFC’s new investments totaled USD 14.5 billion. For more information, see MicroCapital’s wiki on the World Bank Group: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group
[1] The Financial Express: “IFC invests Rs 160 crore in Bandhan MFI”, http://www.financialexpress.com/news/ifc-invests-rs-160-crore-in-bandhan-mfi/737930/1
[2] VCCircle: “MFI Bandhan Financial May Raise $35M From IFC”, http://www.vccircle.com/500/news/mfi-bandhan-financial-may-raise-35m-from-ifc
MicroCapital.org story, December 17, 2010: “MICROCAPITAL BRIEF: Local Government in Indian State of Andhra Pradesh Considers Additional Microfinance Regulation, Requires Disclosure of Operational Procedures”, https://www.microcapital.org/microcapital-brief-local-government-in-indian-state-of-andhra-pradesh-considers-additional-microfinance-regulation-requires-disclosure-of-operational-procedures/
MicroCapital.org story, November 15, 2010: “MICROCAPITAL BRIEF: India’s Microfinance Industry on Brink of “Collapse” Due to Credit Freeze in State of Andhra Pradesh”, https://www.microcapital.org/microcapital-brief-indias-microfinance-industry-on-brink-of-collapse-due-to-credit-freeze-in-state-of-andhra-pradesh/
MicroCapital’s Microfinance Universe profile: Bandham Financial Services, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bandhan+Microfinance
MicroCapital’s Microfinance Universe profile: International Finance Corporation (IFC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+(IFC)
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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