| Grameen Foundation (USA), Citicorp Finance (India) and IFMR Trust have set up Grameen Capital India (GCI) to act as an investment banker to microfinance institutions (MFIs), in an effort to provide them wider access to the capital markets. |
| Grameen Foundation (USA) and IFMR Trust hold 43 per cent and Citigoup Finance (India) holds 14 per cent in GCI. |
| The non-banking financial company (NBFC) will have a capital base of Rs 5 crore. |
| "Scalability and sustainability are critical for microfinance to achieve its potential in India. The availability and the cost of funds are key concerns. GCI seeks to address these aspects through innovative product structuring and capital market engagement, enabling the MFIs to scale up on a sustainable basis. The NBFC will perform an advisory role for now. However, we could explore the possibility of setting up a wholesale fund and attract investors. This fund could be either equity or debt-oriented and the contours will be worked out later,'' said Royston Braganza, CEO, GCI. |
| The NBFC will perform advisory services and enable MFIs in securitisation, microfinance loan syndication and other innovative debt and equity areas to work closely with rating agencies and investors. |
| It will also provide credit enhancement and capital advisory services to enable the MFIs to raise low-cost funds. The microfinance institutions need around $50 billion, but only around $2 billion is currently available. |
| Muhammad Yunus, founder, Grameen Bank said, "GCI is a significant development for India. We need to form a wholesale fun4 to which an MFI can walk up and borrow funds from, to lend to the people. We are taking steps to ensure that microfinance reaches 100 million households by 2012. GCI was needed as a transitional element until MFIs were legally permitted to mobilise deposits. If MFIs could mobilise funds, the poor would have access to cheaper funds. We have to meet the need for funds till the legal arrangements fall in place.'' |
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