Industry: Financial services
World Bank Group’s International Finance Corp. (IFC) on Monday said it was leading a $200-million debt financing in Mahindra and Mahindra Financial Services Ltd as part of its plan to create a dedicated pool of financing for micro, small and medium enterprises (MSMEs) in low-income states.
The development-focused investor has earmarked at least $100 million for women-owned MSMEs, Mahindra Finance said in a stock exchange filing. The $100 million for women entrepreneurs will be supported through blended finance from the IFC-Goldman Sachs’ Women Entrepreneurs Opportunity Facility, the statement added.
IFC is investing $75 million from its own account and mobilizing another $125 million as parallel loans.
“To expand financial services for MSMEs, IFC has been systematically supporting India’s NBFC sector,” said Hemalata Mahalingam, manager of financial institutions group, South Asia at IFC.
“Although, the financing needs of rural and women-owned enterprises are not radically different, the level of financial exclusion is higher. The dedicated gender line and focus on unreached segments will contribute to addressing these gaps and demonstrate the commercial viability of investing in women and low-income groups,” she added.
Mahindra Finance has further committed $225 million to this MSME pool, the statement said.
“Mahindra Finance has been powering inclusive growth in rural communities for over 25 years. Our experience in these markets reveals that to achieve true financial inclusion, access to formal credit for financially under-served segments is a necessity. Availability of credit for income generation, especially to women and low-income households, will further accelerate financial inclusion,” said Ramesh Iyer, vice chairman and managing director, Mahindra Finance.
This is not the first time that IFC has invested in Mahindra Finance.
In July 2018, IFC had pumped in $100 million in the company to boost growth by extending loans to individuals, including farmers, to buy tractors, vehicles and other equipment, along with financing SMEs.
Mahindra Finance is a non-banking financial company focused on the rural and semi-urban sectors, offering vehicle loans and agricultural equipment financing through its physical network of over 1,300 branches, as well as digitally, and via rural distribution initiatives such as “loan melas”. So far, it has lent to more than 6.4 million customers across over 370,000 villages in India, with $10 billion of assets under management.
It plans to use the fresh funding to further enhance credit in rural and semi-urban regions, with customized solutions for women borrowers in low-income states.
The news comes amid IFC’s push towards supporting women leading businesses in low-income and rural areas. As of last year, IFC had provided 386,000 SME loans worth $11.2 billion to women-owned enterprises across the world.
IFC has emerged as one of the significant providers of debt capital for NBFCs at a time when the sector is struggling with a liquidity crunch.
In May, IFC led a $222 million debt investment round in Chennai-based Cholamandalam Investment and Finance Company Ltd, which mainly provides commercial vehicle financing and loans against property. In the same month, gold loan NBFC Manappuram Finance Ltd said IFC planned to invest $35 million in the company to help low-income households and small enterprises avail of loans against their gold assets. In July, PNB Housing Finance Ltd raised $100 million from IFC to expand its affordable housing loan portfolio.Source: Mint