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CDC invests $50 million in Janalakshmi Financial Services
This will enable the microfinance institution to provide a broader range of products and services
Image: Getty Images
Ramesh Ramanathan, founder of Janalakshmi
UK’s development finance institution CDC Group (CDC) has invested $50 million (or nearly Rs 330 crore) in tier II capital in the Bangalore-headquartered Janalakshmi Financial Services Ltd., India’s largest microfinance institution (MFI).
Janalakshmi Financial Services was established in 2006 and is a purpose-driven, for-profit institution focussed on improving the lives of the urban poor. It is a pan-India institution represented in over 170 cities across 19 states and has loans and advances outstanding of $900 million as of September 2015.
While its core product is a small batch loan (SB) disbursed to joint lending groups, the company also provides individual loans to those who have demonstrated a successful credit track record as borrowers under the SB format, as well as loans to micro and small and medium enterprises (MSMEs). It distributes micro pensions, savings accounts on behalf of other financial institutions and has a fledgling payments business.
“This is a significant transaction that enables Janalakshmi to deepen its reach as well as provide a broader range of products and services to its customers. The institution is poised to make an even bigger social impact with an in principle approval from the RBI to set up a Small Finance Bank, and we are excited to be associated with Janalakshmi at this stage in its journey,” said Srini Nagarajan, CDC Regional Director for South Asia, in a statement.
“The urban financial inclusion space is large and this large investment will facilitate our progress especially as we transition into becoming a small finance bank,” said Ramesh Ramanathan, founder of the company.
In September 2015, Janalakshmi, along with nine other MFIs received an in-principle approval from the Reserve Bank of India to set up a Small Finance Bank, thereby offering the potential to broaden the scope of its operations and delivering financial inclusion more holistically to its customers.
