Microfinance Organization Commits Important Financial Support
to Indian Partners Facing Tight Liquidity
BANGALORE, March 1, 2011– ACCION® International, a pioneer and leader in microfinance, has announced that it recently issued credit guarantees through its Global Bridge Fund to two Indian microfinance institutions (MFIs). Through these guarantees, ACCION is underscoring its commitment to strengthening microfinance in India in the midst of funding constraints created by the uncertainty surrounding microfinance regulation.
On February 22, 2011, ACCION issued a $1 million standby letter of credit (SBLC) for its partner Swadhaar FinServe Pvt. Ltd. to secure a 24-month loan facility of Rs. 50 million, extended by Ratnakar Bank Ltd. In addition, on December 23, 2010, Bihar-based partner Saija Finance Pvt. Ltd. began accessing a 35-month Rs. 30 million loan facility extended by State Bank of India which was made possible by the issuance of a $500,000 SBLC from ACCION.
Over the last few months, most Indian banks have restricted their lending to MFIs pending the Reserve Bank of India’s release of final guidelines on how microfinance Non Banking Financial Companies (NBFCs) will be regulated. With these two SBLCs, ACCION’s guarantee facility is encouraging the flow of funds for important client services.
Swadhaar FinServe is an NBFC registered with the Reserve Bank of India in May 2008, and headquartered in Mumbai. Since ACCION issued its first credit guarantee to Swadhaar in February 2010, the SBLC has been collateralizing a 24-month rupee loan facility extended by Standard Chartered Bank to Swadhaar in the amount of $1 million to finance its on-lending activities. Swadhaar currently serves nearly 47,000 microentrepreneurs, with an outstanding loan portfolio of $8.8 million.
“These lines of credit are critical to meeting demand,” said Veena Mankar, CEO of Swadhaar. “The credit markets have tightened considerably for microlenders over the past few months, but we still need to serve our clients. They come first.”
Saija Finance Pvt. Ltd., an NBFC headquartered in Patna, India, currently reaches more than 15,000 microentrepreneurs, with an outstanding loan portfolio of $1.8 million.
“The demand for microfinance products here in Bihar is enormous,” said S.R. Sinha, chairman and CEO of Saija. “This guarantee has provided us access to an important source of funds to help us meet that demand.”
ACCION launched the first-ever loan guarantee fund for MFIs in 1984 to serve as a conduit between socially responsible investors and MFIs that, without the guarantees, would have limited access to financing from traditional lending institutions or local capital markets. Since then, ACCION’s Bridge Funds have provided guarantees for nearly $80 million to 28 MFIs in 12 countries. The Global Bridge Fund, a guarantee vehicle incorporated in 2005 to meet the demand for guarantees from MFIs located outside of the ACCION Network and beyond Latin America, leverages individual investments starting as low as US $2,000. To request a private offering memorandum, to receive further information about the fund or to make a loan, please contact Pablo F. Rieckhof at +1 202-393-5113 x1636 firstname.lastname@example.org.
About ACCION International
ACCION International is a private, nonprofit organization with the mission of giving people the financial tools they need—microenterprise loans, business training and other financial services—to help work their way out of poverty. A world pioneer in microfinance, ACCION was founded in 1961 and issued its first microloan in 1973 in Brazil. Over time, ACCION has helped build 62 microfinance institutions in 31 countries on four continents. Those institutions are currently reaching millions of clients. In the United States, the U.S. ACCION Network is the largest microfinance lending network in the country and has served tens of thousands of clients with over $275 million in loans since the inception of its pilot program in 1991. For more information, visitwww.accion.org.
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ACCION Technical Advisors India
+91 98867 59587
Global Bridge Fund contact:
Pablo F. Rieckhof
+1 202-393-5113 x1636