MUMBAI, Oct 30: IFMR Capital, Asian Development Bank (ADB) and IndusInd Bank today signed a partial guarantee programme to provide local currency financing to microfinance institutions (MFIs) in the country.
The guarantee from ADB and IFMR Capital will cover default risk of selected MFIs at agreed proportions, IFMR said in a statement.
“ADB’s partial guarantee facility is designed to enable flow of credit to deserving microfinance companies across Asia,” ADB head of microfinance Hasib Ahmed said.
IndusInd Bank will be the local currency lender with initial allocation of up to USD 20 million of guarantee limits from ADB.
This is the second partial guarantee programme to provide local currency financing to MFIs in the country by ADB.
Under the programme, ADB, so far, has supported USD 207 million in local currency loans to 1.23 million individuals, a majority of whom are women.
“The guarantee allows banks to leverage their risk appetite and significantly increase their lending to MFIs while diversifying their exposure across new geographies and districts,” IFMR manging director and CEO Kshama Fernandes said. (PTI)
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