35181 - Grameen Koota Financial Services

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Summary of Investment Information

Project Number

35181

Company Name

CREDITACCESS GRAMEEN LIMITED

Date SPI Disclosed

May 16, 2016

Country

India

Region

South Asia

Projected Board Date

Jun 20, 2016

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 15, 2022

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Nov 22, 2016
Signed : Apr 21, 2017
Invested : May 31, 2017

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed investment envisages a senior debt investment in Grameen Koota Financial Services Private Limited (“Grameen Koota” or the “Company”) which is a Reserve Bank of India (“RBI”) registered non-banking finance company microfinance institution (“NBFC-MFI”) and has been in micro-credit operations since 1999. The Company operates in 5 Indian States across 71 districts through 298 branches and has a borrower base of around 1.2 million woman borrowers, a loan portfolio of INR1,800 million (approximately US$272 million equivalent). It is the 6th largest MFI (in terms of gross loans) in India as of December 2015. IFC’s proposed investment will help Grameen Koota to diversify its sources of funding 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	20.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

1. Access to Microfinance: This project will support the Company in expanding the outreach of access to microfinance to borrowers, especially low-income households, who have little or no access to formal sources of financing.
2. Balanced growth of Microfinance: This investment will promote a more balanced growth of microfinance in India. Grameen Koota''s operations are expanding in western and central India where MFI penetration has historically been low.

1. Diversification of borrowing sources: IFC''s debt investment will help the Company diversify sources of funding by providing comfort to potential lenders.

2. Longer tenor: IFC debt would be for a longer tenor (5 years) than is typically available for NBFC-MFIs, particularly as the RBI guidelines for priority sector lending stipulate that lending by banks should be "co-terminous" with loans provided by MFIs to avail priority sector lending benefits, effectively restricting tenor of bank loans to 1-2 years;

3. Global Best Practices: IFC, through its global experience with MFIs and other low income financing entities is uniquely positioned to help Grameen Koota in its plan of becoming a comprehensive financial services provider for low income households.

E&S Category Rationale / Risks and Mitigation

The project involves financing Grameen Koota Financial Services Private Limited through subscription of secured, rated, listed non-convertible debentures (“NCD”) issued by the Company. The company portfolio comprises microfinance lending for income generation, education, family emergency, home improvement (water and sanitation provisioning, repair and renovation) and house construction. This present limited to no E&S risks and impacts and the project is categorized as Category FI-3. The company HR policies are in accordance with IFC PS-2. The company will need to implement screening mechanism for the microfinance exclusion list and key E&S regulations applicable to the income generation loans.

Contacts

For Inquiries About the Project, Contact

Grameen Koota Financial Services Pvt Ltd,
#49, 46th Cross, 8th Block, Jayanagar,
Bangalore, Karnataka
India – 560071,
http://www.grameenkoota.org

Mr. Diwakar B R
mailto:diwakar@gfspl.in

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