Chennai, India, September 29, 2003—The
International Finance Corporation, the private sector arm of the World
Bank Group, has signed an agreement to provide a loan of 2 billion rupees
(USD43.5 million equivalent) to Sundaram Finance Limited, India.
IFC’s loan will help the company broaden its funding base and support
its operations. Sundaram Finance Limited’s increasing activity in
southern India’s transportation sector, specifically in the area of commercial
vehicle and automobile financing, constitutes an important part of the
small and medium enterprise market.
Karl Voltaire, IFC’s Director for Financial Markets, sees IFC’s participation
in this project as “part of the Corporation’s ongoing effort to assist
India’s non bank financial institutions in meeting an increasing demand
for high-quality, customer-focused financial services.”
According to Dimitris Tsitsiragos, IFC’s Director for South Asia, “Providing
support for the development of a vibrant, sustainable private sector economy
in Southern India is one of IFC’s key priorities in the region. Commercial
vehicle finance has direct impact on market access for small and medium
enterprises in rural and semi rural communities.”
Mr. T. T. Srinivasaraghavan, Managing Director of Sundaram Finance Limited,
said, “We have been associated with IFC since the early 1980s. In January
2000, IFC made an equity investment in Sundaram Home Finance and also provided
loan financing. We look forward to continuing our excellent partnership
Sundaram Finance Limited was founded in 1954 by T.S. Santhanam, a member
of the T.V. Sundaram Iyengar family, which owns the TVS Group, one of India’s
largest business houses with substantial interests in the automobile sector.
SFL has traditionally been involved in providing financing for small
road transportation operators in semi urban and rural areas. Over
the years it has evolved into a financial services group catering to retail
customers with housing finance, asset management, and general insurance.
The mission of IFC is to promote sustainable private sector investment
in developing countries, helping to reduce poverty and improve people's
lives. IFC finances private sector investments in the developing world,
mobilizes capital in the international financial markets, helps clients
improve social and environmental sustainability, and provides technical
assistance and advice to governments and businesses. From its founding
in 1956 through FY03, IFC has committed more than $37 billion of its own
funds and arranged $22 billion in syndications for 2,990 companies in 140
developing countries. IFC's worldwide committed portfolio as of FY03 was
$16.8 billion for its own account and $6.6 billion held for participants
in loan syndications.
With a portfolio of over $1 billion for its own account and $73 million
for syndicated loan participants, India is IFC’s third largest investment
destination. IFC’s investments in India are focused on the manufacturing
sector (42 percent), the financial sector (29 percent) and infrastructure,
including power and telecoms (17 percent). Within the financial sector,
IFC has invested in a range of banks and non bank financial institutions
to expand the availability of long-term financing to spur economic development,
particularly in rural and semi rural areas.