MICROCAPITAL BRIEF: IFC Raises Stake in Indian Microlender Bandhan Financial Services with $94m Equity Investment

The International Finance Corporation (IFC), a member of the US-based World Bank Group that offers financial services to businesses and governments in developing countries with the aim of increasing economic growth, recently raised its stake in Bandhan Financial Services, an India-based microfinance institution (MFI) that offers loans for health emergencies and microenterprise, with an investment of INR 5.8 billion (USD 94.4 million).In 2010, IFC bought an 11-percent stake in the organization for INR 1.6 billion (USD 35 million). Bandhan has not disclosed what percentage stake IFC holds following the new investment. According to a statement attributed to Chandrasekhar Ghosh, the chairman of Bandhan, “IFC is taking considerable equity stake in our bank. There will be a few more investors of international repute.”

Bandhan, which is based in the Indian city of Kolkata, reported as of February 2014 a gross loan portfolio of INR 50.7 billion (USD 967 million) and 5.5 million borrowers. As of March 2013, it reported return on assets of 4.73 percent and return on equity of 26.1 percent. As of 2014, Bandhan is in the process of acquiring a banking license that would allow it to accept deposits. IFC has 184 member countries and reported total assets of USD 77.5 billion as of fiscal year-end 2013.

By Ananya Tiwari, Research Associate

About Bandhan Financial Services
Bandhan Financial Services Private Limited is a microfinance institution (MFI) based in Kolkata, India, that was founded in 2002. As of 2014, it operates approximately 2,000 branches in 22 states and union territories in India. Bandhan offers loans for microenterprises and health emergencies and as of 2014 is led by Chairman and Managing Director Chandra Shekhar Ghosh. Bandhan’s investors have included the Punjab National Bank (PNB), the World Bank Group’s International Finance Corporation and the Small Industries Development Bank of India (SIDBI). As of December 2013, Bandhan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 860 million, a gross loan portfolio of USD 826 million and 5 million active borrowers – all women. As of March 2013, it reported return on assets (ROA) of 4.73 percent and return on equity (ROE) of 26.1 percent. As of 2014, Bandhan is in the process of acquiring a banking license that would allow it to accept deposits.

About International Finance Corporation (IFC)
The International Finance Corporation (IFC), a US-based multilateral development bank and member of the World Bank Group, offers loans, equity investments and advisory and risk mitigation services to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2014, IFC has 184 member countries that drive its policies and approve disbursements. In June 2014, IFC reported net income of USD 1.4 billion, total assets of USD 84.1 billion, return on assets of 1.8 percent and total investment mobilization of USD 38.1 billion.

Sources and Additional Resources

[1] Times of India, http://timesofindia.indiatimes.com/business/india-business/IFC-to-raise-stake-in-Bandhan-Finance/articleshow/45904633.cms

MicroCapital, February 7, 2014, “International Finance Corporation (IFC) Loans $20m to Attawfiq Micro-Finance for Microlending in Morocco,” https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-loans-20m-to-attawfiq-micro-finance-for-microlending-in-morocco/

MicroCapital, January 14, 2014, “Standard Chartered Bank Loans $12m to India’s Bandhan Financial Services for Microenterprise Lending,” https://www.microcapital.org/microcapital-brief-standard-chartered-bank-loans-12m-to-indias-bandhan-financial-services-for-microenterprise-lending/

MicroCapital, July 23, 2013, “India’s Bandhan Microfinance Institution to Cut Interest Rates as a Commercial Bank,” https://www.microcapital.org/microcapital-brief-indias-bandhan-microfinance-institution-to-cut-interest-rates-as-a-commercial-bank/

MicroCapital Universe Profile: Bandhan Financial Services Private Limited https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bandhan+Financial+Services+Private+Limited

MicroCapital Universe Profile: International Finance Corporation (IFC) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

MicroCapital Universe Profile: The World Bank Group https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group

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