MICROCAPITAL BRIEF: Janalakshmi Financial Services to Buy $90m in Products, Services From International Business Machines (IBM)

Janalakshmi Financial Services (JFS), a Bangalore-based microfinance institution (MFI) that offers lending and insurance services, and International Business Machines (IBM), a US-based information technology consulting company, have signed a six-year agreement worth INR 5.5 billion (USD 90 million) to provide JFS with IBM products and services in support of the MFI’s proposed growth in India. JFS reportedly is seeking to expand from 154 branches to 1,400 branches by 2020 and from 3 million accounts to approximately 20 million over the same time period. As part of the deal, IBM will improve upon the payment platform that JFS uses, allowing the MFI to offer new mobile and electronic payment products; gather and process customer information; and use analytics to help JFS with credit decisions and to improve distribution and collection models [1].

According to a statement attributed to Ramesh Ramanathan, the chairman of JFS, “Over the last few years, JFS has made rapid strides to drive financial inclusion for India’s urban unbanked population. As [the MFI continues] to expand, [it] needs a strategic partner like IBM with proven domain experience in the financial sector” [2].

As of 2014, JFS reported total assets of USD 420 million, a gross loan portfolio of USD 342 million and 1.4 million active borrowers. As of 2013, JFS reported return on assets of 1.97 percent and return on equity of 8.64 percent. The MFI does not accept deposits. For 2013, IBM reported USD 99.8 billion in total revenue and USD 16.5 billion in net income [3].

By Benjamin Krupp, Research Associate

About Janalakshmi Financial Services

Janalakshmi Financial Services (JFS) is a microfinance institution (MFI) located in India. It is focused primarily on offering loans and microinsurance in urban areas. As of 2014, JFS reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 420 million, a gross loan portfolio of USD 342 million and 1.4 million active borrowers. As of 2013, JFS reported return on assets of 1.97 percent and return on equity of 8.64 percent. The MFI does not accept deposits.

About International Business Machines (IBM)

International Business Machines (IBM) is a multinational computer, technology and consulting corporation with headquarters in the US state of New York. IBM manufactures and sells computer hardware and software and offers a variety of infrastructure, hosting and consulting services. For 2013, IBM reported USD 99.8 billion in total revenue, USD 16.5 billion in net income and USD 126.2 billion in total assets.

Sources and Additional Resources

[1] IBM: Janalakshmi Financial Services Chooses IBM Analytics, Cloud and Mobile Capbilities to Fuel Future Growth and Expansion

[2] Ciol: JFS Chooses IBM Analytics, Cloud and Mobile Capabilities

[3] IBM: Annual Report 2013

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MicroCapital, August 8, 2013: Standard Chartered Bank (SCB) Loans $13m to Indian MFIs Janalakshmi Financial Services Private Limited, Ujjivan Financial Services Private Limited

MicroCapital, June 11, 2010: IBM Launches New Center for Provision of Microfinance Services in Peru with Investment of $20m

MicroCapital Universe Profile: Janalakshmi Financial Services (JFS)

MicroCapital Universe Profile: International Business Machines (IBM)

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