33626 - Ujjivan ECB

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Summary of Investment Information

Project Number

33626

Company Name

UJJIVAN FINANCIAL SERVICES LIMITED

Date SPI Disclosed

Apr 22, 2013

Country

India

Region

South Asia

Projected Board Date

May 23, 2013

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Feb 15, 2014
Signed : Jun 9, 2014
Invested : Jun 30, 2014

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed project envisages a senior debt investment in Ujjivan Financial Services Private Limited (“Ujjivan” or the “Company”), which is a leading Microfinance Institution (“MFI”) in India.
Ujjivan is amongst the few large MFIs that focus on providing micro loans to women borrowers in urban and semi-urban areas. Its target customers include self-employed women working as vegetable or fruit vendors, small shop owners, sari sellers, tailors etc; salaried women working in garment factories, hospitals, cooks, house maids, and piece rate workers involved in incense stick rolling, tailoring etc. Ujjivan today has about 1.1 million members and a loan portfolio of about US$206 million equivalent.

Ujjivan has over the years, established itself as one of the most customer centric institutions with a strong emphasis on responsible lending and good HR practices.

The proposed investment would manifest IFC’s support for an existing portfolio investee and would be amongst the first few ECB transactions in the microfinance space and is particularly important as a source of long tenor funding.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

Development Impact

1. Increasing access to finance in low income states in India, including states in the northern and eastern parts of the country which have amongst the highest population densities and poverty rates in the country
2. Promoting a more balanced growth of microfinance by supporting an institution that been a front-runner in adopting technology, is a pioneer in focusing on consumer service and responsible financing and offers customized products for various financial and non financial needs of its members

1. Demonstration Effect: IFC''s continued investment in a portfolio MFI is expected to build confidence in the MFI sector post the AP crisis, and have a demonstration impact by catalyzing other investors, network partners and stakeholders to support Ujjivan''s expansion over the medium term. IFC''s investment would underline the faith in the sustainability of the microfinance business post the changed regulatory investment in addition to building investor confidence in the low income states towards provision of financial services to the BoP.
2. Diversification of Funding: IFC''s investment will help the Company diversify sources of funding for a new debt category (ECB) and potentially attract a new set of investors. IFC''s debt would also be for a longer tenor (greater than 5 years) which would enable Ujjivan to manage its ALM more efficiently

E&S Category Rationale / Risks and Mitigation

This transaction involves a senior loan to Ujjivan through ECB route and the overall portfolio risk is considered to be low. The project has therefore been categorized as FI-3 in accordance with IFC’s Environmental and Social Review Procedure. Ujjivan primarily lends to groups of individuals (group lending, 96%) and the remaining 4 % is individual lending. The existing portfolio of the group lending include business loans for small shops, vegetable/fruit/flower stalls, sweet/confectionary shops, milk vending, tailoring, handicraft items, education loans, and family emergency loans. Individual loans include loans for cattle purchase, house construction/extension, individual business (including similar businesses like small shops, provision stores, trade business, milk vendors, tailoring etc) and purchase of water purifiers etc. The largest and average loan sizes have been under US$ 2,000 and US$ 300 respectively.

These lending activities entail minimal or no adverse environmental or social risks and/or impacts. For this project the client will be required to screen loans against the IFC Exclusion List and the Indian E&S laws and regulations

Contacts

For Inquiries About the Project, Contact

Sudha Suresh
mailto:sudha.suresh@ujjivan.com

Ujjivan Financial Services Private Limited,
#93, Jakkasandra Extension, Sarjapur Main Cross Road,
1st Block, Koramangala,
Bangalore – 560 034

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