According to a disclosure by IFC, the funds will be extended in the form of a sub-debt, which will be used by the bank to support microfinance borrowers.
Founded by Baskar Babu, Suryoday was one of the ten entities to receive a licence from RBI to start banking operations in 2016.
Suryoday operates in urban and semi-urban areas through 241 branches in seven Indian states and one union territory and has over to 3,000 employees. It claims to have a borrower base of over 850,000 and its loan portfolio was around Rs 19.4 billion as of June 2018.
Its key shareholders include specialised microfinance funds such as Lok Capital Group, other domestic and foreign private equity funds and HNI investors, in addition to the HDFC Group through HDFC Holdings Limited and HDFC Standard Life Insurance.
“The Project will help in expanding the outreach of access to microfinance to borrowers who have little or no access to formal sources of financing, including borrowers in low income states of India which have amongst the highest population densities and poverty rates in the country,” IFC said.
IFC had previously also backed Suryoday Microfinance Private Ltd, a Pune-based microfinance institution operating as a non-banking finance company. In 2013, it disclosed its plans to make a quasi-equity and senior debt investment of up to $11 million through ECB route in the financier.
The disclosure follows IFC announcing its intent to invest up to $50 million in the form of a loan in Ujjivan Small Finance Bank earlier this month.
In May this year, IFC had said it was considering a loan proposal of up to $150 million for HDB Financial Services Ltd, a subsidiary of HDFC Bank. Prior to that, it had proposed to offer a long-tenor debt of about $20 million to Kolkata-based Arohan Financial Services Pvt. Ltd.