IFC Plans To Invest $35 Mn In MFI - Bandhan

IFC is planning to invest $35 Mn in Kolkata-based Microfinance firm - Bandhan to fund its credit growth and expansion plans.

Founded by Chandra Shekhar Ghosh, Bandhan Financial Services Private Limited (BFSPL) provides micro loans to women and families, small businesses, as well as cottage industries and other SMEs.

Reported earlier on dealcurry, Bandhan was planning to raise Rs.100 Cr for its expansion and had appointed Intellecap as an advisor for the same.

Transaction Reference: IFC

Bandhan has 3.3 Mn members and operates through 1,553 branches in 18 Indian states with 9,094 employees. It has a loan portfolio of Rs.2,339 Cr as on December 2010.

In 2006, Bandhan acquired Ganga Niryat Pvt Ltd, an NBFC registered in Kolkata.

SIDBI holds 10.81% stake in Bandhan and three irrevocable public charitable trusts, including the Financial Inclusion Trust, the North East Financial Inclusion Trust and the Bandhan Employees Welfare Trust, together hold about 87% stake.

Last week, IFC had proposed to invest $10 Mn in Ahmedabad-based MFI Shri Mahila SEWA Sahakari Bank (SEWA Bank).

Year 2010 was a mixed bag for MFI sector - The largest MFI in India, SKS Microfinance raised Rs.1,650 Cr through IPO in July, followed by removal of its CEO - Suresh Gurmani from the firm. His removal raised questions on corporate governance of MFIs. Also, MFIs charging high interest rates of over 30% came under the news.

Followed by a number of suicides in Andhra Pradesh due to high interest rates charged by MFIs, created more problems for the sector.

Andhra Pradesh accounts for nearly half of the MFI business in India, with major players like SKS Microfinance, Spandana Sphoorty Financial, Basix, etc. present in the state.

In October, RBI set up a sub-committee, headed by YH Malegam, to look into MFI activities, including their interest rate structures. Committee is expected to submit its report by end of this month.

In spite of all this, the sector also saw some PE/VC deals - Pune-based Suryoday Microfinance raised second round of funding of Rs.17.5 Cr from Lok Capital and from its existing investor, Aavishkaar Goodwell; Equitas Microfinance raised Rs.45 Cr from Canaan Partners; Kerala-based - Hope Microcredit raised first round of funding of Rs.10 Cr ($2.3 Mn) from Incofin's Rural Impulse Fund II; among others.

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March 12, 2011 12:02 PM

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