IFC to invest $50m in India's Janalakshmi
The International Finance Corporation (IFC), the investment arm of the World Bank, will invest up to $50 million in Indian microfinance institution (MFI) Janalakshmi Financial Services.
IFC's funding will be made in the form of senior debt, and will help the company expand its outreach to low-income borrowers in India, according to a disclosure. The company will also use the capital for its growth in eastern and northern India; it already has a presence in these areas, but seeks to overcome the historically low penetration of microfinance there.
Founded in 2006, Janalakshmi has become one of India's largest MFIs, with more than 4.6 million borrowers and a total loan portfolio of INR91 billion ($1.4 billion) as of March 2016. The company is a registered non-banking finance company, allowing it to access funding from banks. It has also received in-principle approval from the Reserve Bank of India for a small finance bank license, which would allow it to perform basic banking services such as acceptance of deposits and lending.
Janalakshmi's main business is providing small batch loans to joint lending groups; it also lends to selected individuals with good credit history, as well as micro, small and medium-sized enterprises. The company has received support from several private equity players, including TPG, which led a $150 million round in April with participation by Morgan Stanley Private Equity Asia and Havells India. UK-based development finance institution CDC Group also invested INR3.3 billion this year to help the company meet capital requirements for the small finance bank license.
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