*Mumbai, India, March 30, 2010*—IFC, a member of the Word Bank Group, will provide a $300,000 investment to a microfinance start-up, Utkarsh Micro Finance Pvt Ltd., to serve small borrowers in India’s low-income state of Uttar Pradesh and other parts of northern India. In the next five years, Utkarsh expects to reach more than 500,000 women borrowers in the most poorly served markets.
Access to microfinance in India is limited, particularly in low-income states like Uttar Pradesh. IFC’s support to Utkarsh will help make microcredit accessible in rural, semi-urban, and underserved areas. It will also equip the company to build extensive banking relationships that will be critical as the company expands and seeks debt funding.
“Utkarsh initially will operate in eastern Uttar Pradesh and gradually expand to other parts of the state and the adjoining states of Madhya Pradesh and Bihar with low microfinance penetration. With IFC’s support, we expect to expand significantly into rural and semi-urban areas where the need for microcredit is highest,” said Govind Singh, Managing Director and CEO, Utkarsh Micro Finance.
India’s microfinance market is potentially the largest but among the least-served market in the world. The current annual microcredit demand in the country is estimated at about $22 billion from 245 million low-income families, but the supply from microfinance institutions was only about $7 billion in 2009. The formal credit system has not been able to reach
low-income, less educated, small-time borrowers adequately. IFC, along with Aavishkar Goodwell India MFI Fund, is a critical component of the current fundraising plan for Utkarsh to facilitate investment in low- income states.
“IFC’s support to Utkarsh aligns with our strategic focus of making microcredit available to small businesses, traders, and women borrowers, especially in those parts of India that have not seen the benefits of growth,” said Paolo Martelli, IFC Director for South Asia.
IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by helping microfinance institutions like Utkarsh expand borrowing to underserved women and other borrowers.
To learn more about IFC’s activities in India, visit www.ifc.org/southasia
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit www.ifc.org.**
Utkarsh Micro Finance Pvt Ltd. is a non-banking finance company registered with the Reserve Bank of India. The microfinance start-up is based in Varanasi in Uttar Pradesh and headed by Govind Singh, a former banker with
over 20 years of experience.