34476 - AU NCD

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Summary of Investment Information

Project Number

34476

Company Name

AU SMALL FINANCE BANK LIMITED

Date SPI Disclosed

Feb 17, 2014

Country

India

Region

South Asia

Projected Board Date

Mar 19, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : May 12, 2014
Signed : Jun 2, 2014
Invested : Jun 13, 2014

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

Au FINANCIERS (INDIA) LIMITED (Au or the Company) is a regional non-banking finance company (NBFC), operating in the low income state of Rajasthan and other states such as Maharashtra, Gujarat, Madhya Pradesh, Punjab, Goa, Chhattisgarh and Delhi. It primarily originates loans which are classified under priority sector and agriculture lending as per Reserve Bank of India (RBI) guidelines. These loans are targeted at segments that find it challenging to access bank financing.

Au originates vehicle loans, small business loans against collateral mainly in semi-urban and rural areas. Au offers MSME loan with a ticket size of INR0.5-1.5 million and tenor of 5 years, for income generating activities of micro and small manufacturers and service enterprises, and agriculture based SMEs. The clientele include truck/ tractor body manufacturer, auto ancillary units, brick making units, carpenters, schools and other educational institutions. It has also launched a housing finance subsidiary – Au Housing Finance Limited to provide small ticket affordable housing loans for new purchase, self-construction and home improvements.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

Development Impact

1. Demonstration effect: In the current market environment, the proposed investment would encourage other institutional investors to consider investment in the Indian corporate debt market through the FII route.

2. Additional reach: The investment is expected to reach additional low income customers between FY14-17.

3. Growth in low income states: Au is among the largest NBFCs operating in Rajasthan and catering to the poor segment. IFC''s support would help in scaling-up operations of Au in the semi-urban and rural areas.

1. Long term partner: The project would demonstrate IFC''s continued support to an NBFC focused towards serving an underserved market and targeting customers at the base of pyramid in the low income states.

2. Funding diversification: IFC''s investment would allow Au to meet its funding requirements from a diversified source.

3. Stamp of approval: IFC''s debt support to Au will help the Company attract other FIIs as takers of its corporate debt.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The lending profile of Au Financier is focused on personal and commercial vehicle financing which represents roughly 80% of the portfolio, followed by small business financing to micro and small manufacturers, tiny units and agri based small businesses aggregating 20%. Housing finance is undertaken by its subsidiary, and the financing is for house purchase, construction and repair. 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. Hence, the E&S risk of the proposed investment is medium and the project is categorized as FI-2. The applicable Performance requirements will be i) the IFC- FI Exclusion List; ii) The host country E&S laws and regulations.

Task Description	Anticipated completion Date
Upgrade the SEMS procedures: Au Financiers shall upgrade its existing SEMS procedures to address E&S risks and impacts of SME and housing finance.	One month from subscription
Staff training: Au shall ensure that all staff responsible for implementation of the Social & Environmental Management System procedures are trained to be able to ensure its effective implementation.	At all times

Contacts

For Inquiries About the Project, Contact

Mr. Sanjay Agarwal,
19-A Dhuleshwar Garden
Ajmer Road
Jaipur 302 001
Telephone : (+91)(0141) 391 0000
Fax : (+91)(0141) 236 8815
Email : mailto:sanjay@aufin.in

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