New Delhi, India, April 8, 2013—IFC,
a member of the World Bank Group, is investing over $700,000 through a
rights issue in microfinance institution Utkarsh to support its planned
expansion in the low-income states of Uttar Pradesh and Bihar.
IFC’s total equity investment in Utkarsh stands just short of $2 million
after this round of funding. Other existing investors of Utkarsh, Aavishkaar
Fund II and Norwegian Microfinance Initiative, are investing $1.7 million
and $1.23 million along with IFC. Over the next six years, Utkarsh expects
to increase its reach five-fold to over 800,000 women borrowers in rural
and semi-urban markets.
“This additional capital will increase access to finance in the country’s
two most populous states,” said Govind Singh, Managing Director and CEO,
Utkarsh Micro Finance. “With IFC’s support, we expect to grow our operations
significantly in regions where the need for microfinance products is greatest.”
India’s microfinance market is potentially the largest but among the least-served
market in the world. It is estimated that around 80 percent of India's
population has no or limited access to financial services, particularly
in the low-income states. The sector has been able to meet only 10 percent
of the existing demand for financial products among the low-income segments.
“IFC’s investments in microfinance sector will help reach women customers
in un-served and under-served markets,” said Thomas Davenport, IFC Director
for South Asia. “The investment is in line with our strategy of promoting
greater financial inclusion.”
IFC made its first investment in Utkarsh in March 2010. IFC is also offering
advisory services to Utkarsh, helping it diversify its products, develop
sound internal systems, and introduce a system of social audit. Based in
Varanasi, Utkarsh has expanded its presence to 26 districts across five
states in the last four years. Despite the challenges faced by the Indian
microfinance sector, Utkarsh has grown its loan portfolio to $32.5 million
and attracted investments totaling to $10.7 million from various
investors since launching operations in September 2009.
IFC, a member of the World Bank Group, is the largest global development
institution focused exclusively on the private sector. We help developing
countries achieve sustainable growth by financing investment, mobilizing
capital in international financial markets, and providing advisory services
to businesses and governments. In FY12, our investments reached an all-time
high of more than $20 billion, leveraging the power of the private sector
to create jobs, spark innovation, and tackle the world’s most pressing
development challenges. For more information, visit www.ifc.org.