Asian Development Bank, IFMR Capital and Ratnakar Bank Structure First-of-its-Kind Partial Guarantee Program for MFIs in India

Asian Development Bank, IFMR Capital and Ratnakar Bank Structure First-of-its-Kind Partial Guarantee Program for MFIs in India PR Newswire CHENNAI, August 13, 2012 CHENNAI, August 13, 2012 /PRNewswire/ -- In a first large scale partial guarantee program for microfinance institutions in India, Asian Development Bank ("ADB") has provided partial credit guarantee to loans to Microfinance Institutions (MFIs) in India. IFMR Capital is the structurer, lead arranger and co-guarantor to the transaction. Ratnakar Bank ("RBL"), acting as a domestic banking partner for this facility, will provide the liquidity by extending rupee loans to MFIs in India backed by the partial guarantees. Under the structure, IFMR Capital and RBL will recommend to ADB eligible partner MFIs to avail of rupee loans which would be funded by RBL and partially co-guaranteed by ADB and IFMR Capital, the proceeds of which the MFIs would use to on-lend to end borrowers, spread over an estimated 300 districts across the footprint of their operations. IFMR Capital would provide portfolio monitoring and surveillance support to ADB and Ratnakar Bank on the underlying MFIs. "This risk-sharing arrangement will result in scaled-up assistance to people in India currently unable to access funds, such as the poor, women, and cash- strapped micro- and small enterprises.