IFC plans to invest $40 million in Ujjivan Financial

Ujjivan is a microfinance lender and it will soon enter into small finance banking

International Finance Corporation (IFC) is planning to invest up to $40 million (around Rs 260 crore) in Ujjivan Financial Services in the form of a senior debt investment.

Ujjivan is one of the 10 recipients of the Small Finance Bank License (SFB). IFC's proposed investment will help the company expand its outreach and access to low income borrowers who have little or no access to formal sources of financing and strengthening its balance sheet through availability of long-tenor debt during its transformation phase, said IFC.

IFC, the World Bank's investment arm, further said that the support in terms of long-tenor debt would benefit the company by supporting growth and helping it manage liability during early years of transition to SFB.

"IFC's long term support to microfinance sector will help strengthen investor confidence in this sector," said IFC.

Ujjivan is a microfinance lender, which will soon enter into small finance banking.

The company will foray into micro, small and medium enterprise lending with new loan products. IFC is providing support to the company through subscribing its non-convertible debentures.

Ujjivan was founded by Samit Ghosh, who has been an international banker for over 30 years and was part of the team which launched consumer banking in India at Citibank in 1985.

He led the launch of retail banking for Standard Chartered in the Middle East and South Asia, and for HDFC Bank in India. Also, he was the CEO of Bank of Muscat.

The listed entity Ujjivan is backed by CX Partners, NewQuest, CDC, Bajaj, Sequoia and Caspian.

Ujjivan has a borrower base of more than 2.5 million borrowers and a loan portfolio of approximately Rs 41 billion as of September 2015.

Ujjivan is among the few large micro financial institutions which focus on providing micro loans to women borrowers in urban and semi-urban areas. Its target customers include self-employed women working as vegetable or fruit vendors, small shop owners, sari sellers, tailors, salaried women working in garment factories, hospitals, cooks, house maids, and piece rate workers involved in incense stick rolling, tailoring etc.