 "ADB, IFMR Capital partner with IndusInd Bank to lend to Indian MFIs")
Asian Development Bank (ADB), IndusInd Bank (IBL) and IFMR Capital have signed a partial guarantee programme to provide loans to microfinance institutions (MFIs) in India.
The guarantee from ADB and IFMR shall cover default risk of selected MFIs at agreed proportions. IndusInd Bank is the local currency lender, with initial allocation of up to $20 million of guarantee limits from ADB, according to a joint statement issued here.
“ADB’s partial guarantee facility is designed to enable flow of credit to deserving microfinance companies across Asia,” said Hasib Ahmed, head of microfinance in ADB’s private sector operations department.
Under the programme, ADB has to date supported $207 million in local currency loans to 1.23 million individuals, majority of whom are women. IndusInd Bank was also roped in as one of the partners for the programme earlier.
Suhail Chander, head – corporate & commercial bank at IndusInd Bank, said that the bank has committed significant capital and efforts to grow in underdeveloped markets in India, including MSME finance, microfinance, agricultural finance, affordable housing and other similar sectors.
The association with ADB and IFMR Capital in the partial guarantee facility will help the bank meet strategic objectives.
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“Through the partial guarantee program, MFIs catering to the very lowest income households across the country have access to an alternative source of debt financing and can expand their loan book and outreach. The guarantee allows banks to leverage their risk appetite and significantly increase their lending to MFIs while diversifying their exposure across new geographies and districts,” said Kshama Fernandes, Managing Director & CEO, IFMR Capital.
The partial guarantee programme was first structured and arranged by IFMR Capital in partnership with ADB in September 2012. The programme has since then financed approximately 270,000 households in rural and semi-urban parts of India.