34571 - Bandhan Sub Debt

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Summary of Investment Information

Project Number

34571

Company Name

BANDHAN FINANCIAL SERVICES LIMITED

Date SPI Disclosed

Feb 18, 2014

Country

India

Region

South Asia

Projected Board Date

Mar 21, 2014

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 7, 2022

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Apr 30, 2014
Signed : Jun 24, 2014
Invested : Sep 2, 2014

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed project envisages a subordinated debt investment in Bandhan Financial Services Private Limited (“Bandhan” or the “Company”) which is India’s largest microfinance institution in terms of number of borrowers and portfolio outstanding. Bandhan is registered as an NBFC-MFI and is headquartered in Kolkata, West Bengal with a borrower base of more than 5 million women borrowers and a loan portfolio of approximately INR54,000 million (US$870 million equivalent).

Bandhan has predominantly rural operations in 22 Indian states including some of the eastern and north eastern states and has emerged as amongst the key players in the area of provision of formal credit services to low income households.

IFC’s proposed investment will manifest its support for an existing portfolio investee and help Bandhan in its plan to become a comprehensive financial services provider for low income households, to diversify its sources of funding by providing subordinated debt which will enable it to increase its regulatory capital and to expand the outreach of access to microfinance to borrowers who have little or no access to formal sources of financing.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	26.68
Equity

Development Impact

1. Access to Microfinance: This Project will help in expanding the outreach of access to microfinance to borrowers who have little or no access to formal sources of financing to women borrowers, including in low income states of India which have amongst the highest population densities and poverty rates in the country.

2. Balanced growth of Microfinance: This Project will promote a more balanced growth of microfinance in India. Bandhan''s operations are expanding in rural / semi-urban parts of India where access to finance has historically been low.

1. Global Best Practices: IFC, through its global experience with MFIs and other low income financing entities is uniquely positioned to help Bandhan in its plan to scale up its operations by becoming a focused financial services provider for low income households.

2. Demonstration Effect: 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 Base of the Pyramid

3. Diversification of Funding: IFC''s debt investment will help the Company diversify sources of funding by providing comfort to potential lenders and investors. IFC''s debt would also be subordinated which would enable Bandhan to meet its regulatory capital requirements.

E&S Category Rationale / Risks and Mitigation

The lending profile of Bandhan is focused on micro loans to individuals and micro enterprises in sectors such as agriculture, small cottage industries, and small businesses. Overall, the lending portfolio presents minimal environmental or social risks or impacts that will be readily addressed through mitigation measures. Hence, the E&S risk of the proposed investment is low and the project is categorized as FI-3. The applicable Performance requirements will be (i) the IFC- MFI Exclusion List; and (ii) The host country E&S laws and regulations.

Contacts

For Inquiries About the Project, Contact

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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