IFC, a member of the World Bank Group, has signed an agreement with Bangaluru-headquartered Belstar Investment and Finance Limited to provide equity help to establish a sustainable microfinance operation for the poor in rural and semi-urban areas. Belstar is a non-banking finance company registered with Reserve Bank. Headed by S.S. Swaminathan, it is the microfinance delivery arm of Hand in Hand, an Indian non-governmental organization based largely in Tamil Nadu, with a presence in Karnataka, Puducherry and Madhya Pradesh.
Hand in Hand is engaged in reducing poverty by creating enterprises and jobs.
Executive Vice-President and CEO of IFC Lars Thunell, on Thursday, signed an agreement with Belstar to provide equity of up to $1.15 million to support this initiative. IFC's equity funding will enable Belstar to obtain support from international investors, domestic banks and financial institutions, says a release.
Belstar's product offerings will focus on low-income households that are unable to access such services from commercial banks. Apart from microfinance, Hand in Hand provides training and advisory support to its women members engaged in micro-enterprises in India and helps them build linkages with larger corporations to make their operations more sustainable. ``In its efforts to strengthen and scale up its operations, Hand in Hand seeks to work with experienced partners that can provide technical and financial support. IFC is one such key partner for us," the release quoted Percy Barnevik, Chairperson of Hand in Hand International, as saying.
Besides providing equity support, IFC Advisory Services will also go a long way in helping Belstar put in place risk management and internal control systems while improving staff training, broadening the company's product range and building a sustainable microfinance institution. "IFC's participation and support in this transformation will be crucial to our sustainability and ability to attract other domestic and international investors," the release quoted Kalpana Sankar, Managing Director of Belstar, as saying. IFC's global microfinance portfolio as of June 30, 2009 is $1.2 billion, invested in over 140 microfinance institutions in 60 countries.
ACCION TIE-UP IN BIHAR
Meanwhile, ACCION International, a pioneer in global microfinance, announced that it had invested $500,000 for a 49.5 percent equity stake in Saija Finance Private Limited, a microfinance start-up that provides financial services to micro entrepreneurs and low- and middle-income families in one of India's most underserved regions. The investment was made through ACCION's equity investment arm, the ACCION Gateway Fund, and represents the fund's fourth investment in India. Other Gateway investments in India include Swadhaar FinServe, Lok Capital and United Villages.
Based in Patna, Saija was founded by the husband and wife team of S.R. Sinha and Rashmi Sinha. It currently operates two branches in Patna. Registered as an NBFC, it is the only Bihar-based microfinance institution. Over the next five years, Saija would reach out to households in states such as Bihar, Jharkhand, Chhattisgarh, Madhya Pradesh and Uttar Pradesh. Saija, a release said, aimed to serve 400,000 customers by 2014 with group and individual loans, micro-insurance and remittances. It would also roll out financial literacy training, as well as consumer protection assessment work through ACCION's Centre for Financial Inclusion, the release added.