Last Updated : Tuesday, December 3, 2019 14:45:39

IFC to invest USD $200M in MAHINDRA FINANCE to Boost MSME Lending

NEW DELHI | MUMBAI | AHMEDABAD-GANDHINAGAR | RAJKOT – In a regulatory update as submitted to the Indian Stock Exchanges, Mumbai headquartered financial arm of India Conglomerate Mahindra Group – Mahindra & Mahindra Financial Services Ltd said of World Bank’s financing arm IFC (International Finance Corporation) having agreed to invest $200 million in the company to boost lending for MSME (Medium & Small Medium, of which the $100 million will be earmarked for women entrepreneurs.

In a press-release as submitted by the company to the Indian Bourses, titled – “IFC to Anchor $200 Million Investment in Mahindra Finance to Boost MSME Lending, $100 Million Earmarked for Women Entrepreneurs” it further read that, IFC, part of the World Bank Group, has anchored an investment round of $200 million in Mahindra & Mahindra Financial Services Ltd.

(Mahindra Finance) to create a dedicated pool of financing for micro, small and medium enterprises (MSMEs) in low-income states.

At least $100 million will be earmarked for women owned MSMEs.

IFC has invested $75 million from its own account and is mobilizing another $125 million as parallel loans.

The $100 million dedicated to women will be supported by blended finance from the IFC-Goldman Sachs’ Women Entrepreneurs Opportunity Facility.

Mahindra Finance has further committed $225 million to this pool.

Non-Banking Financial Companies (NBFCs) are an important source of credit for India’s MSME sector.

The sector feeds crucial industrial value chains and employs 124 million people, including semi-skilled and unskilled workers.

MSMEs account for more than 80 percent of industrial enterprises and over 45 percent of exports.

The biggest constraint they face is access to finance.

An IFC study, conducted in 2018, estimates the total credit gap for MSMEs in India to be $397.5 billion, around 15 percent of GDP.

The financing gap for MSMEs is more acute in low-income states.

Targeted lending to women-owned MSMEs is even less prevalent.

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