CDC invests Rs 330 cr in Janalakshmi Financial

CDC, a microfinance institution, is poised to becoming a small finance bank

CDC Group plc, the UK-based development finance entity, has invested $50 million (Rs 330 crore) as Tier-II capital in Janalakshmi Financial Services Ltd, a microfinance institution.

Srini Nagarajan, CDC Regional Director (South Asia), in statement, said the MFI was poised to make an even bigger social impact with an in-principle approval from the Reserve Bank of India (RBI) to set up a small finance bank.

Bengaluru based-Janalakshmi is a pan-India institution represented in over 170 cities across 19 states and has loans and advances outstanding of $900 million (Rs 6,000 crore) as of September 2015.

Ramesh Ramanathan, chairman and founder of Janalakshmi, said the urban financial inclusion space was large. This investment would facilitate the MFI’s progress as it transitions into becoming a small finance bank, he said.

In September 2015, Janalakshmi, along with nine other MFIs, received an in-principle approval from RBI to set up a small finance bank. It offers potential for Janalakshmi to broaden the scope of its operations and deliver financial inclusion more holistically to its customers.

Janalakshmi’s other shareholders comprise a mix of resident as well as global private equity investors.

Its core product is a small batch loan disbursed to joint lending groups. It also provides individual loans to those with a successful credit track record as borrowers under the format, as well as loans to micro, small and medium enterprises (MSMEs).

It distributes micro pensions, savings accounts on behalf of other financial institutions and has a fledgling payments business.