MICROCAPITAL BRIEF: Equitas, Ujjivan of India Each Borrow $10m from International Finance Corporation (IFC)

The International Finance Corporation (IFC), the private-arm of the World Bank Group, reportedly has announced it will lend USD 10 million in commercial funds each to Indian microfinance institutions (MFIs) Equitas and Ujjivan Financial Services. The funds will be disbursed in undisclosed increments over a 5-year period. The Reserve Bank of India (BRI) began allowing Indian MFIs to obtain up to USD 10 million in commercial funds from financial institutions outside India in January 2012, as was reported by MicroCapital at the time. Both Equitas and Ujjivan Financial Services intend to use the funds to expand outreach to poorer states in northern and eastern India.

Equitas currently operates in the Indian states of Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu. As of year-end 2012, Equitas reports to the US-based nonprofit Microfinance Information Exchange (MIX) assets of USD 199 million, a gross loan portfolio of USD 188 million, 1.2 million active borrowers, return on assets of 2.1 percent and return on equity of 7.22 percent. Ujjivan Financial Services has operations in 20 Indian states and reported assets of USD 199 million, a gross loan portfolio of USD 188 million, 1.2 million active borrowers, return on assets of 2.1 percent and return on equity of 7.22 percent in December 2012. Neither institution accepts deposits.

By Brian LeBlanc, Research Associate

About the International Finance Corporation (IFC)

A member of the US-based World Bank Group, the International Finance Corporation (IFC) offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2012, IFC reported total assets of USD 75.7 billion.

About Equitas

Equitas is a microfinance institution (MFI) that was created in December 2007 and is located in Chennai, India. The company provides microcredit to low-income households in India. Through its subsidiaries, Equitas HF and Equitas VF, it offers housing finance and vehicle loans, respectively. The objective of the company is to make credit available at a reasonable cost and in a transparent manner to the underbanked population of India, as well as achieve sufficient returns on investment in order to attract further capital. As of year-end 2012, Equitas reports to the US-based nonprofit Microfinance Information Exchange (MIX) assets of USD 199 million, a gross loan portfolio of USD 188 million, 1.2 million active borrowers, return on assets of 2.1 percent and return on equity of 7.22 percent.

About Ujjivan Financial Services

Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance products. It was founded in 2004 and focuses on serving low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of year-end 2012, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 186 million, a gross loan portfolio of USD 171 million, return on assets of 0.24 percent, return on equity of 1.06 percent and 855,000 active borrowers.

VCCircle article, http://www.vccircle.com/news/micro-finance/2013/04/23/ifc-lend-10m-each-ujjivan-and-equitas-through-ecb-route

MicroCapital article, January 11, 2012, “MICROCAPITAL BRIEF: Indian Microfinance Institutions Allowed to Raise $10m Each in External Commercial Borrowings,” https://www.microcapital.org/microcapital-brief-indian-microfinance-institutions-allowed-to-raise-10m-each-in-external-commercial-borrowings/

MicroCapital article, November 1, 2012, “MICROCAPITAL BRIEF: Equitas of India Receives $9.3m from MicroVentures, India Financial Inclusion Funds,” https://www.microcapital.org/microcapital-brief-equitas-of-india-receives-9-3m-from-microventures-india-financial-inclusion-funds-2/

MicroCapital article, December 8, 2012, “MICROCAPITAL BRIEF: Microfinance Institutions Ujjivan of India Reduces Interest Rates to 25% for New Group Loans, 24% for Returning Customers,” https://www.microcapital.org/microcapital-brief-microfinance-institution-ujjivan-of-india-reduces-interest-rates-to-25-for-new-group-loans-24-for-returning-customers/

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