28816 - Belstar

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Summary of Proposed Investment

Project Number

28816

Company Name

BELSTAR INVESTMENT AND FINANCE PRIVATE LIMITED

Date SPI Disclosed

Oct 2, 2009

Country

India

Industry

Financial Markets

Projected Board Date

Nov 5, 2009

Status

Completed

Sector

Commercial Banking - Microfinance and Small Business

Date Revised SPI Disclosed

Oct 9, 2009

Department

Regional Industry - FIG Asia & Pac

Environmental Category

Previous Events

Approved : Nov 11, 2009
Signed : Nov 12, 2009
Invested : Feb 19, 2010

Project Description

Belstar Investment and Finance Pvt. Ltd. (‘Belstar’ or ‘the Company’), is the microfinance delivery arm of the Hand in Hand (HIH) group in India, was acquired in 2008. The Company’s product varies from the typical microfinance group loan which is mostly for consumption and focuses more on creating microenterprises – trying to bridge the ‘missing middle’, by providing enterprise loans which are normally not provided by commercial banks. Apart from microfinance, HIH provides technical support, training and advisory support and also helps customers to link up with larger organizations to ensure that these family or group based enterprises are sustainable.

Belstar plans to raise equity capital of INR 175 mn (USD 3.6 mn) in FY 2010 to enable it to kick start the transformation of the NGO and fund its growth.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	1.17

Development Impact

The project is expected to provide access to finance to more than 300,000 women, engaged in micro enterprises. Belstar will primarily focus on providing microfinance for creation of sustainable micro enterprise in the ‘missing middle’ segment.

Belstar will operate primarily in the rural areas and support to the Self Help Groups and the women entrepreneurs to enable them to build sustainable enterprise along with HIH.

Financial inclusion is one of the three pillars of the IFC’s regional strategy (the other two being Climate Change and Regional Integration). An increased focus on investments targeted at the microfinance sector would increase financial inclusion for SMEs/MSMEs and low-income population.

This project, by addressing the financial service needs of underserved clients, forms an important tool for poverty reduction, private sector development and inclusive growth.

IFC will enable the MFI to have sustainable micro finance operations help and provide comfort to sponsors to raise additional funds needed for future expansion.

This project involves IFC’s support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Belstar will be required to:

- Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the IFC Microfinance exclusion list
- Identify qualified persons to manage and implement the procedure
- Demonstrate commitment and resources to implementing the procedure
- Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions
- Submit a periodic report to IFC as per a format to be provided by IFC

Contacts

For Inquiries About the Project, Contact

Ms. Kalpana Sankar
Belstar Investment and Finance Pvt. Ltd.
Mahbubani Tower
No. 48, 2nd Floor, North Boag Road, T. Nagar
Chennai 600 017
Telephone +91 44 45544024

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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