The International Finance Corporation (IFC), a member of the World Bank Group, has announced that it plans to purchase a 10 percent stake in Nirdhan Utthan Bank Ltd, a microfinance institution in Nepal with a gross loan portfolio of USD 12.1 million and 68,203 active borrowers [1]. The pricing of the placement was not disclosed.
IFC will assist the bank with outreach and will work with the bank to “strengthen its business model” [2].
Chief Executive Officer of Nirdhan Utthan Bank Harihar Pant commented, “With IFC’s support, we expect to build confidence among the investor community. And as a result, we feel more investors and stakeholders will come forward to support our expansion in the microfinance sector” [2].
According to IFC’s press release, “The project will also help improve access to credit in underserved hilly areas, which are [less easily reached] by the formal banking sector” [2].
By Julia Korn, Research Associate
About The International Finance Corporation (IFC):
A member of the World Bank Group, the International Finance Corporation (IFC) uses loan and debt securities, equity investments and guarantees with the intent of alleviating poverty. It invests in financial institutions and other companies in emerging markets as well as providing technical assistance. The IFC has 182 member countries that “collectively determine its policies, and approve investments.” In fiscal year 2009, its new investments totaled USD 14.5 billion.
About Nidhan Utthan Bank:
Established on 1993, Nidhan Utthan Bank’s mission is to provide financial services in underserved areas of Nepal. As of the end of 2008, it had total assets of USD 16.9 million, a gross loan portfolio of USD 12.1 million, 68,203 active borrowers, average loan balance per borrower of USD 178, USD 3.6 million in deposits and 96,732 depositors. It offers loans, voluntary savings, insurance and fund transfer services. The minimum loan size is USD 65, the maximum loan size is USD 260, and the maximum loan term is one year.
Sources and Additional Resources:
[1] MIX Market. Nirdhan Utthan Bank Ltd. http://www.mixmarket.org/mfi/nirdhan
[2] The International Finance Corporation. “IFC Supports Nirdhan Utthan Bank to Help Serve Small Borrowers in Nepal” on June 14, 2010. http://www.ifc.org/IFCExt/pressroom/IFCPressRoom.nsf/0/96C238466EA019D985257742005241DE?OpenDocument\
MicroCapital Universe: Nidhan Utthan Bank. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nir…
MicroCapital Universe: The International Finance Corporation. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Int…
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