The Asian Development Bank (ADB), a development finance institution, reportedly is providing partial credit guarantee to loans to microfinance institutions (MFIs) in India. The Institute for Financial Management and Research (IFMR) Capital, a financial institution that facilitates funding for organizations that support low-income individuals, will serve as the structure, lead arranger and co-guarantor in the partial guarantee, and Ratnakar Bank Limited (RBL), a commercial Indian bank, will act as a domestic partner. RBL will provide Indian Rupee (INR) loans, which will be co-guaranteed by ADB and IFMR Capital. IFMR Capital and RBL reportedly will recommend partner MFIs to ADB, and IFMR Capital will also provide portfolio monitoring and surveillance support.
The first round of the deal is approximately INR 1.5 billion (USD 26.9 million), which MFIs will use to on-lend to borrowers in approximately 300 districts.
ADB reported a total capitalization of USD 64 billion as of December 31, 2010.
By Charlotte Newman, Research Associate
About Asian Development Bank
Established in 1966 and headquartered in Manila, the Philippines, the Asian Development Bank (ADB) is a development finance institution that consists of sixty-seven members, of which forty-eight are located in the region. ADB has three strategic priorities: to foster inclusive growth, to facilitate regional integration and to ensure environmentally sustainable growth. To accomplish these objectives, ADB uses loans, technical assistance programs, grants, equity investments and guarantees to private companies in member countries in the region. ADB reported a total capitalization of USD 64 billion as of December 31, 2010.
About IFMR Capital
IFMR Capital is a subsidiary of IFMR Trust, a private trust that aims to provide Indian enterprises with access to financial services. IFMR Capital’s goal is to provide liquidity and debt capital to the microfinance industry and other sectors that offer products and services for low-income households. IFMR Trust is an affiliate of the Indian nonprofit Institute for Financial Management and Research (IFMR), a Chennai-based research and educational institution.
Sources and Additional Resources:
MoneyLife: “Asian Development Bank, IFMR Capital and Ratnakar Bank Structure First-of-its-Kind Partial Guarantee Program for MFIs in India,” http://www.moneylife.in/prnews/asian-development-bank-ifmr-capital-and-ratnakar-bank-structure-first-of-its-kind-partial-guarantee-program-for-mfis-in-india/201208130030PR_NEWS_EURO_ND__30066887en_Public.html
MicroCapital.org story, March 31, 2012, “MICROCAPITAL BRIEF: Asian Development Bank (ADB) to Lend $20m to Chinese Banks to Support Microfinance Institutions in Rural China,” https://www.microcapital.org/microcapital-brief-asian-development-bank-adb-to-lend-20m-to-chinese-banks-to-support-microfinance-institutions-in-rural-china/
MicroCapital.org story, March 1, 2012, “MICROCAPITAL BRIEF: Philippine Government Promote Microinsurance With Support from Asian Development Bank,” https://www.microcapital.org/microcapital-brief-philippine-government-promote-microinsurance-with-support-from-asian-development-bank-adb/
MicroCapital Universe Profile: Asian Development Bank
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MicroCapital Universe Profile: IFMR Capital
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=IFMR+Capital
MicroCapital Universe Profile: IFMR
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Institute+for+Financial+Management+and+Research+%28IFMR%29
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