Janalakshmi Financial to raise $50 million from IFC

Janalakshmi Financial Services plans to raise around $50 million from International finance Corporation (IFC). IFC's investment will be in the form of a senior debt investment. Janalakshmi is one of the 10 recipients of the Small Finance Bank License (SFB) awarded by the Reserve Bank of India in mid-September 2015.

IFC's proposed investment will help the company expand the outreach of access to low-income borrowers who have little or no access to formal sources of financing.

IFC's long-term support to microfinance sector will help strengthen investor confidence in this sector, said IFC. The World Bank's investment arm proposes to invest up to $50 million (around Rs 330 crore) in Janalakshmi in the form of a senior debt investment.

The investment support in terms of long tenor debt would benefit the company to support growth and manage liability during the early years of transition to SFB.

Janalakshmi currently has pan-India presence and its operations are further expanding in eastern and northern India where MFI penetration has historically been low. Further, the funding will support individual / small business loans which is a crucial gap in the current market, thereby promoting sustenance activities with larger funding needs which will enable asset and job creation, said IFC.

IFC also said that through its global experience with MFIs and other low-income financing entities, it is uniquely positioned to help the company in its plan to become a comprehensive financial services provider for low-income households and smoothly transform into SFB.

The project will help in expanding the outreach of access to microfinance to borrowers who have little or no access to formal sources of financing, including borrowers in low-income states of India which have among the highest population densities and poverty rates in the country, said IFC.

Janalakshmi Financial Services is a leading urban focused microfinance institution headquartered in Bangalore with a borrower base of more than 4.6 million borrowers and a loan portfolio of around Rs 9,100 crore as of March 2016.

Janalakshmi was founded in 2006 as a not-for-profit initiative by Ramesh Ramanathan and it became an NBFC in 2008 and was among the first NBFCs to be awarded the NBFC-MFI classification in September 2013. Janalakshmi is one of the 10 recipients of the Small Finance Bank License (SFB) awarded by the Reserve Bank of India in mid-September 2015.

IFC's proposed investment will help the company expand the outreach of access to low-income borrowers who have little or no access to formal sources of financing.