39454 - Small Finance Bank RGVN

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Summary of Investment Information

Project Number

39454

Company Name

RGVN (North East) Microfinance Limited

Date SPI Disclosed

Mar 29, 2017

Country

India

Region

South Asia

Projected Board Date

May 31, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 9, 2022

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : May 22, 2017
Signed : Jun 15, 2017
Invested : Sep 26, 2017

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed project envisages a debt investment in RGVN (NE) Microfinance Limited (“RGVN” or the “Company”) which is a MFI headquartered in Guwahati, Assam. RGVN has an asset under management (“AUM”) of INR6.1bn (US$89mn) across 6 north-eastern states and West Bengal has 133 branches and an outreach of 300,000 women clients. RGVN is focused mainly on the north eastern region of India.

RGVN is one of the 10 recipients of the Small Finance Bank License (“SFB”) awarded by the Reserve Bank of India in mid-September 2015.The proposed investment would provide long term liquidity support to RGVN while it starts building its retail savings base post transformation and would help it to continue its efforts towards financial inclusion. The proceeds of the loan would be utilized to extend microfinance and microenterprise loans in the northeastern states of India.

Associated Advisory Engagement

None

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.08
Equity

Development Impact

1. Access to Microfinance: The project will help in expanding the outreach of access to microfinance to borrowers who have little or no access to formal sources of financing, including borrowers in the north eastern states of India. 2. Balanced growth of Microfinance: RGVN is exclusively focused on the northeastern states of India where financial inclusion is amongst the lowest in India. This places the Company in a unique position to pioneer the spread of banking in this region. 3. Demonstration Effect: IFC's long term support to this sector will help strengthen investor confidence for capital market/foreign investors who are gradually opening up to this sector/region but are adopting a conservative view.

1. Supporting Transformation: IFC' support in terms of long tenor debt would benefit the company to support growth and manage liability during early years of transition to SFB. 2. Product diversification: IFC's support through the long tenor debt would help RGVN diversify its product suite by offering longer tenor loans to its mature microfinance clients for micro and small enterprises. 3. Sharing Best Practices: IFC, through its global experience with MFIs and other low income financing entities is uniquely positioned to help the company in its plan to become a comprehensive financial services provider for low income households & smoothly transform into SFB. IFC can also help the RGVN to gear up to become a SFB by sharing best practices in corporate governance, product design and other key functional areas such as treasury management and risk management and SME advisory.

E&S Category Rationale / Risks and Mitigation

The company is microfinance NBFC catering primarily to women borrowers through joint liability group and self-help group models. The company provides credit for petty trade, handicraft, handloom, animal husbandry and agriculture and allied loans primarily to the rural borrowers. Micro-enterprise portfolio is less than 1%. Going forward as the company graduates into a small finance bank, it is expected to launch more credit products such as term loans and working capital lending of a higher ticket sizes as compared to a micro loan and in a phased manner start catering to the SME segment. This will increase the overall E&S risk profile from low to medium level. The risks will need to be managed in accordance with IFC Exclusion list and national E&S laws and regulations. Hence the project is categorized as FI-2.

Main E&S risk and impacts of the project arise from the term lending to SMEs. The typical risks and impacts will be related to occupational health & safety, waste-water discharge, compliance to labour laws and potentially land and biodiversity impacts depending on the nature of the activities to be financed. The bank will develop an appropriate E&S Management System (ESMS) benchmarked to E&S laws of the country as applicable to SME sector. The bank will also appoint an E&S officer and provide training to relevant staff. As part of branch roll out the bank will ensure that fire safety provisions are made in line with local regulations.

Contacts

For Inquiries About the Project, Contact

RGVN (NE) Microfinance Limited
Prem
Vice President
+91-361-2464612
prem@rgvnnemfl.com
H.No.2, Padma path, Bye Lane No.8, Zoo Road Tiniali,Guwahati, Assam - 781 024.
http://www.rgvnnemfl.com/

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Task Title & Description	Anticipated Completion Date
Nominate officers	07/31/2017
Establish SEMS	11/28/2017
Staff Training	01/27/2018

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