IFC invests $200m in Mahindra Finance to create a pool to fund MSMEs

IFC/World Bank HQ. Photo: IFC

World Bank Group’s subsidiary International Finance Corp (IFC), on Monday, invested $200 million in Mahindra & Mahindra Financial Services Ltd (Mahindra Finance), 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. While IFC has invested $75 million from its own account and is mobilizing another $125 million as parallel loans, the $100 million for women entrepreneurs will be supported through blended finance from the IFC-Goldman Sachs’ Women Entrepreneurs Opportunity Facility.

“To expand financial services for MSMEs, IFC has been systematically supporting India’s NBFC sector,” said Hemalata Mahalingam, manager, financial institutions group, South Asia at IFC.

Mahindra Finance has further committed $225 million to this pool.

“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 at Mahindra Finance.

Mahindra Finance is a non-banking financial company, focused on the rural and semi-urban sector, which provides vehicles tractor and agricultural equipment financing through its physical network of over 1,300 branches as well as digitally, and through rural distribution initiatives like ‘loan melas’ across the country. So far, it has lent to more than 6.4 million customers in over 3.7 lakh villages in the country and has $10 billion assets under management.

It plans to use the fresh funding to further enhance credit in rural and semi-urban geographies, with customized solutions for women borrowers in low-income states, according to its press statement.

However, a lot needs to be done in the country as the total credit gap for MSMEs in India is estimated to be $397.5 billion, around 15 percent of its gross domestic product, according to an IFC study conducted in 2018. The financing gap for MSMEs is more acute in low-income states, while targeted lending to women-owned MSMEs is even less prevalent, the report said.

In the same month, gold-loan non-banking financial company Manappuram Finance Ltd. said that IFC planned to invest $35 million in the company to help low-income households and small enterprises avail loans against their gold assets. In July, PNB Housing Finance Ltd raised $100 million from IFC to expand its affordable housing loan portfolio.

This article was first published in livemint.com

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.