33000 - Ratnakar Bank

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Summary of Investment Information

Project Number

33000

Company Name

RBL Bank Limited

Date SPI Disclosed

Feb 12, 2013

Country

India

Region

South Asia

Projected Board Date

Mar 15, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Mar 20, 2013
Signed : Mar 21, 2013
Invested : Mar 21, 2013

Sector

Commercial Banking - General

Project Description

The proposed project would involve an equity investment of up to INR 1.3 billion (around US$24 million) in The Ratnakar Bank Ltd. (the Bank or RBL), through a preferential allotment, subject to IFC’s Board and Indian regulatory approvals. The project is in line with IFC’s strategy of supporting financial inclusion and providing access to finance to MSMEs. The project intends to support a small bank in scaling up its business and give a strong market signal for foreign investment. Further, the project is expected to support the Bank in (i) augmenting its capital base and to prepare it for Basel III implementation and (ii) growing its assets, increasing its reach and improving its market share especially in the MSME space.

Established in 1943, RBL is a Kolhapur based small sized old private sector bank. It was granted the status of a scheduled commercial bank in 1959. It was established as a commercial bank with the core objective of catering to the needs of small and medium businesses. The Bank grew its branch footprint across Maharashtra, Karnataka, Goa with a small presence in Delhi and Gujarat – the focus continued on small and medium businesses.

Currently, the bank serves the trading, agriculture & manufacturing sectors through 1,750 employees, 117 branches and 158 ATMs. The Bank''s customer base is largely semi-urban and rural, with a judicious mix of urban customers. It has a client base of over 400,000 customers across wholesale, consumer/retail banking and financial inclusion verticals.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	22.07

Development Impact

Increased access to finance for Micro, Small, Medium Enterprises (MSMEs) sector - The investment will support RBL focus on growing its business in the micro, small and medium businesses, and agriculture sectors. By FY 2016, RBL intends to grow advances to Micro & Small Enterprises segment from INR 400 mn in FY12 to INR 4,500 mn. Also, the Joint Liability Group (JLG) loans is expected to increase from INR 230 mn in FY 12 to INR 10 bn in FY 16. The bank''s growth strategy also involves increasing its women borrowers from around 10,350 in FY12 to 450,000 in FY16.

IFC expected additionality includes:

(i) helping the Bank to build institutional capacity through best practice tools and standards targeting the SME segment;
(ii) helping the bank to grow in trade finance;
(iii) helping to prepare the bank for a potential IPO and helping to explore other sources of funding;
(iv) facilitating development of a social and environmental management system for sustainable development of the business.

E&S Category Rationale / Risks and Mitigation

The lending profile of RBL is focused on mid and large corporate and SME sector through various funded and non-funded products, which include short and long term lending, working capital, trade finance, and bank guarantees. It also provides end to end supply chain finance, dealer/vendor funding and vehicle /equipment finance as a strategic support sector for its corporate banking customers. Going forward the bank will also foray into project and structured finance. Overall, the existing lending portfolio present potentially limited adverse environmental or social risks or impacts that will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. In rare circumstances, it may also include a very limited number of business activities with potential significant adverse environmental or social risks or impacts that are diverse, irreversible, or unprecedented. Hence, the E&S risk of the proposed investment is medium and the project is categorized as FI-2.The lending profile of RBL is focused on mid and large corporate and SME sector through various funded and non-funded products, which include short and long term lending, working capital, trade finance, and bank guarantees. It also provides end to end supply chain finance, dealer/vendor funding and vehicle /equipment finance as a strategic support sector for its corporate banking customers. Going forward the bank will also foray into project and structured finance. Overall, the existing lending portfolio present potentially limited adverse environmental or social risks or impacts that will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. In rare circumstances, it may also include a very limited number of business activities with potential significant adverse environmental or social risks or impacts that are diverse, irreversible, or unprecedented. Hence, the E&S risk of the proposed investment is medium and the project is categorized as FI-2.

Main E&S risk and impacts of the project emanates from the mid and large sized corporate exposure and SME finance. These includes impacts like occupational health & safety concerns, fire and life safety, waste and pollution management and possibly land and biodiversity impacts depending on the nature and location of the project. At present RBL does not have an adequate E&S risk management system in place. RBL was found to be in gross compliance with IFC's requirements of PS-2 on Labour and Working Conditions, except for a grievance mechanism.Main E&S risk and impacts of the project emanates from the mid and large sized corporate exposure and SME finance. These includes impacts like occupational health & safety concerns, fire and life safety, waste and pollution management and possibly land and biodiversity impacts depending on the nature and location of the project. At present RBL does not have an adequate E&S risk management system in place. RBL was found to be in gross compliance with IFC's requirements of PS-2 on Labour and Working Conditions, except for a grievance mechanism.

Contacts

For Inquiries About the Project, Contact

Naresh Karia
Chief Financial Officer
The Ratnakar Bank Limited
One Indiabulls Centre, Tower 2B, 6th floor
841, Senapati Bapat Marg, Lower Parel (W), Mumbai – 400 013
Email: mailto:nareshkaria@ratnakarbank.in
Website: http://www.ratnakarbank.co.in
Contact Number: +91 22 4302 0510
Fax: +91 22 4302 0520

Minakshi Seth
IFC South Asia
4th Floor Maruti Suzuki Building
Nelson Mandela Marg, Vasant Kunj
Delhi 110070
Telephone: 91 4111 1000
Fax: 91 4111 1001

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Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Nominate officers	03/21/2013	Completed	Completed	03/21/2013
Establish SEMS	06/21/2013	Completed	Completed	06/27/2013
Staff Training	06/21/2013	Completed	Completed	06/27/2013
Upgrade HR policy	06/21/2013	Completed	Completed	07/01/2013

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