IFC invests $29.6m in MFI Bandhan Financial
The International Finance Corp. (IFC), the investment arm of the World Bank, has acquired nearly 11% of microfinance firm Bandhan Financial Services for a reported INR1.35 billion ($29.6 million). The deal first came to light last month.
Bandhan, which focuses on loans to women in the nearby areas of West Bengal, will use the capital for business expansion, The Economic Times reported. This investment tranche would be the second for Bandhan, which has previously received capital from the government-owned Small Industries Development Bank of India. The collective capital will boost its net worth from INR3.77 billion, reported in March, to INR5.1 billion.
Early August, news of IFC's interest in Bandhan sparked interest among observers keen to determine if capital would begin to flow back into India's microfinance (MFI) sector. Reports at the time suggested that IFC's investment would be one of the largest private equity commitments in India's MFI sector since October of last year. This was when regulators implemented legislation intended to curb over-aggressive debt collecting procedures by MFIs following a series of suicides by borrowers who were allegedly hounded by their lenders.
In July, the central government also introduced a regulatory draft to define the legal parameters for the MFI industry, which also boosted confidence in the industry.
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