Chennai
Of the total amount, $92 mn is from IFC’s own account and the rest syndicated from First Abu Dhabi Bank ($50 mn), MUFG Bank Ltd ($50 mn), National Bank of Ras Al-Khaimah PJSC ($20 mn), and CTBC Bank Co., Ltd ($10 mn).
By bringing foreign banks as investors, IFC is helping CIFCL diversify its funding sources. This is the company’s first US dollar-syndicated deal since January 2019, when the Reserve Bank of India permitted NBFCs to tap into the offshore credit market.
NBFC’s are an important source of credit for the country’s small road transport operators (SRTOs) and micro, small, and medium enterprises (MSMEs), which are critical to the Indian economy. MSMEs account for 31% of India’s GDP and 45% of exports. The biggest constraint they face is access to finance, with the credit gap pegged at $397 billion.
“Supporting productive asset financing NBFCs is part of our financial inclusion strategy because it offers income opportunities and an escape from poverty to low-income households,” said Jun Zhang, IFC Country Head, India. “Cholamandalam’s wide reach amongst small road transport operators and MSMEs makes it the right partner for us to reach these underserved segments.”
CIFCL’s core business is in providing commercial vehicle finance and loan against properties. The company has recently forayed into affordable housing loans for low-income customers. Almost half of CIFCL’s clients are in low-income states and 80 pc of them are first-time buyers or drivers-turned-owners. The company plans to expand further in these states and in rural and semi-urban geographies.
“Digitally-enabled financial services are a key driver for the nation-building efforts of the government. We have pioneered technology-driven lending that is helping build credit histories of our customers, thus pulling them into the formal financing channels,” said Arun Alagappan, ED, CIFCL.
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