Venture funding for micro credit players

The Bellwether Microfinance Fund, which aims to commercialise micro finance and open up access of funds for micro finance institutions in the country, has invested Rs 70 lakh to acquire a 26 per cent stake in Ujjivan Financial Services a start up micro finance institution in Bangalore.

The projected capital is Rs 5 crore, to be made up of a domestic investment is Rs 2.5 crore and foreign investment of Rs 2.6 crore.

"The domstic investment of Rs 2.5 crore is over and now we will approach the RBI for registration and start raising the FDI portion of the capital by November," said Samit Ghosh, chief executive, Ujjivan Financial Services.

Ujjivan's micro finance programme, which will start operations by November this year, will focus initially on approximately 2 million poor living in the urban agglomeration of Bangalore city and aims to cover at least 50,000 poor working women, both salaried and self-employed.

It will extend family loans and business loans and after one year will give housing and education loans. The firm will charge an interest rate compatible with the rates charged by other micro finance institutions.

It aims to reach 5 lakh customers by the sixth year of its operation.

Ujjivan aims to combine and adapt the best of the Grameen and SHG models and retail banking.