Proposed investment is in the form of senior debt via subscription to NCDs issued by the company
IFC is planning to invest up to Rs 135 crore in Grameen Koota, a Bangalore-based microfinance company.
IFC's proposed investment is in the form of senior debt via subscription to non-convertible debentures (NCD) issued by the company.
The proposed investment by the World Bank's arm will help Grameen Koota diversify its sources of funding and expand the outreach of access to microfinance to borrowers who have little or no access to formal sources of financing, said IFC.
This investment will promote a more balanced growth of microfinance in India. Grameen Koota's operations are expanding in western and central India where MFI penetration has historically been low. This project will support the Company in expanding the outreach of access to microfinance to borrowers, especially low-income households, who have little or no access to formal sources of financing, said IFC.
IFC debt would be for a longer tenor (five years) than is typically available for NBFC-MFIs, particularly as the RBI guidelines for priority sector lending stipulate that lending by banks should be co-terminous with loans provided by MFIs to avail priority sector lending benefits, effectively restricting tenor of bank loans to 1-2 years;
Headquartered in Bengaluru, the Company currently operates in five States including Karnataka, Maharashtra, Tamil Nadu, Madhya Pradesh and Chhattisgarh across 71 districts through 298 branches.
The company has a borrower base of around 1.2 million woman borrowers, a loan portfolio of around $272 million. It is the sixth largest MFI (in terms of gross loans) in India as of December 2015.
Grameen Koota has been promoted by Vinatha Reddy and Suresh K Krishna as a micro-lending project in 1999 under the NGO, T Muniswamappa Trust and was subsequently converted into a NBFC in 2006-07.
As of December 31, 2015, the shareholders of the company include promoters (7.7 per cent), CreditAccess Asia NV. (81.2 per cent), Creation Investments Social Funds II (10.23 per cent) and employees (0.87 per cent);
CreditAccess Asia NV is a holding company incorporated in Netherlands with interests across several Asian microfinance institutions such as Grameen in India, One Puhunan in Philippines and Bina Artha in Indonesia and a minority interest in Equitas Holdings Limited in India. Its regional companies in Asia have a total portfolio of EUR 240 million with over 1.3 million clients.