India: IFC Invests Rs 160 Crore in Bandhan MFI

Jan 2011
New Delhi, India , January, 16 2011 - International Finance Corporation (IFC), World Bank's investment unit in the private sector, will pick up stakes in Bandhan Financial Services, India's fourth-largest microfinance company, investing Rs 160 crore.

The details about stake purchase would be decided on February 17, Chandrasekhar Ghosh, chairman, Bandhan, said.

According to Ghosh the Rs 25,000-crore microfinance sector has been facing trouble after some companies were reported to be indulging in unsound practices in regards to lending and recovery of loans. This at times, has also reportedly led to suicides by many borrowers. Since Andhra Pradesh, India’s biggest microfinance market, has introduced strict laws for the disbursal and sanction of loans, there has been many defaults and loan disbursement has nearly collapsed. While banks were reluctant to lend to the cash-strapped micro finance institutes, the IFC investment has brought a breather to the micro finance sector, Ghosh felt.

According to a Badhan release, in December 2009, Small Industries Development Bank of India (Sidbi) acquired 10.92% in Bandhan for Rs. 50 crore, or a little more than $10 million, valuing the institution at around $100 million. The investment, according to the release would boost Bandhan’s networth to Rs 510 crore rom Rs 350 crore.


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