Stori es of Impact Financial Inclusion Creating Opportunity through Financial Services in South Asia Access to Finance. Access to Opportunity. Creating Opportunity through Financial Services Hundreds of millions of people live in poverty in The region's small and medium enterprises are a South Asia, cut off from essential services they key driver of growth and jobs in the private sector. need to build better lives. IFC, a member of the World Bank Group, through its investment and advisory services in the financial One of their greatest needs is improved access sector, helps private sector clients reach deeper to financial services—not just loans, but savings, into this innovative and under-served segment of insurance, payments, pensions, and other products. low-income entrepreneurs. When coupled with related nonfinancial services, such as consumer awareness, training, and It is just one of the many ways we carry out our market information, it can lead to breakthrough vision of creating opportunity for people to escape opportunities for people who have had limited poverty and improve their lives. economic avenues. IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. For more information, visit www.ifc.org. How IFC Helps IFC is the partner of choice in fighting poverty by expanding access to financial services. By seamlessly combining global and local knowledge of industries and markets, we provide integrated investment, advisory, and asset management services. IFC Investment Services IFC Advisory Services Our broad suite of financial products and services To help private sector’s growth in emerging markets, can ease poverty and spur long-term growth by IFC provides advice, problem solving, and training promoting sustainable enterprises, encouraging to companies, industries, and governments through entrepreneurship, and mobilizing resources that four business lines. would not otherwise be available. Access to Finance IFC provides: IFC helps increase the availability and affordability • Debt of financial services for individuals and for micro, • Equity small, and medium enterprises. • Quasi-Equity Sustainable Business Advisory • Guarantees and other Risk Mitigation Products IFC helps companies adopt environmental, social, • Direct Investment and Pooled Investment Vehicles and governance practices and technologies that create a competitive edge, transform markets, and improve people’s lives Public Private Partnerships IFC helps governments design and implement public private partnerships in infrastructure and other basic public services to harness the potential of the private sector and achieve long-term economic growth Investment Climate IFC helps governments implement reforms that improve the business environment, encourage investments and make it easier to do business, thereby creating jobs and fostering growth IFC Asset Management Company A wholly owned subsidiary of IFC that mobilizes and manages third-party funds for investment in developing and frontier markets. AMC was created in 2009 to expand the supply of long-term capital to these markets, enhancing IFC's development goals as well as investing profitably for others IFC’s Global Reach • IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector • We combine global knowledge from 55 years of investing in emerging markets with local presence in nearly 100 countries • IFC's microfinance clients provided $25 billion in financing to about 22.89 million micro enterprises worldwide • IFC’s housing finance clients provided $23.8 billion in housing finance loans to 450,000 homeowners • IFC’s Small and Medium Enterprise Banking clients provided almost $246 billion in financing and helped improve access to finance for about 5.85 million small and medium business owners IFC's South Asia Reach • In South Asia, IFC focuses its work around three main themes of inclusion, integration, and climate change • We work in Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka • IFC's microfinance and retail payments clients facilitated $4.7 billion in financing for about 60 million households and microenterprises • IFC’s housing finance clients provided $380 million in housing finance loans to 23,000 homeowners • IFC’s Small and Medium Enterprise Banking clients provided almost $19.8 billion in financing and helped improve access to finance for about 2 million small and medium business owners Stori es of Impa c t Financial Inclusion: Creating Opportunity through Financial Services in South Asia 1 Promoting Access to Microfinance SME Finance Finance for Households 11 India Sri Lanka 19 and Businesses Inspiring a Generation of Building Management Women Entrepreneurs Skills of Small and Micro/Retail Finance Medium Entrepreneurs Microfinance Payments 3 21 India 13 Nepal India Helping Women Become Creating Opportunity for Bringing Banking to Small Business Owners Promising Entrepreneurs the Unbanked 23 Sri Lanka India 5 Group Lending Housing Finance Investing in the Smallest 15 Improves Lives in Post India Dream Conflict Sri Lanka Arriving Home – Turning Dreams into Reality India 7 India India’s Women Entrepreneurs Get a Boost SME/Business Finance SME Finance 25 Scaling Up Models that Work Through Impact Investing Bangladesh 9 17 India Customized Financing Financial Infrastructure Of Small Loans and 27 for Small and Medium Big Dreams Enterprises Credit Bureau 27 Collateral Registry Promoting Access to Finance for Households and Businesses The need for financial services in South Asia is the greatest among those living in low-income, fragile, and frontier parts of the region. Improving access to finance for individuals and businesses in these geographies can provide broader development gains on a number of levels: • At the household level, it can help families build assets, manage risks, and increase consumption. • At the level of individual businesses, better access to finance can result in higher rates of job growth and higher tax payments. • On the macroeconomic level, there is evidence that better integrated financial systems increase growth and reduce inequality. IFC plays a critical role in increasing access to finance for households and businesses, not only through its investments and financing, but also through its advisory work, by providing diagnostics, capacity building, and sharing of best practices to its financial intermediary clients. A key aspect of our work is in close collaboration with the World Bank to deliver development results. 1 To expand access to finance and services among the under-served, IFC has identified many key areas of intervention. The publication captures stories of change and inclusion from our beneficiaries and clients in South Asia. Responsible Finance IFC and World Bank have played a key role in strengthening the microfinance sector through timely and crucial investments, as well as through comprehensive advisory interventions. At a time when most investors were moving away from the microfinance space, IFC continued with its support and launched the Responsible Finance program to introduce better client protection practices such as national code of conduct and setting up credit bureaus catering to microfinance and help the institutions become responsible lenders. To make a wider offering and increase the client base, IFC advised the microfinance institutions to develop new services such as insurance, pensions, microhousing and micro-agrifinance etc. The program received the Skoch Financial Inclusion Award 2012 for its work in advocacy. Low-income Housing Finance Government to Person Payments IFC financed HDFC when it was being set With funding from the Gates Foundation, IFC is up in India in the 1970s. Today it is not just implementing Government to Person (G2P) Payments a household name but the harbinger of a Project in Bihar, India to streamline health payments vibrant mortgage market in housing finance. to beneficiaries and health workers by developing a IFC continues to innovate and build on these web-enabled platform called the Health Operations efforts both through investment and advisory Payments Engine that IFC will design, develop and businesses. In 2010, IFC entered into a joint implement in all 38 districts in Bihar. Using this web venture with investee client Dewan Housing platform and through partner banks and post offices, to setup Aadhar Housing Finance, a company the payments will be transferred electronically to the focused on servicing low-income households in recipient's bank accounts, even in the remotest parts low-income states of India. of Bihar. 2 Microfinance | Nepal Helping Women Become Small Business Owners Today Sita owns a thriving small grocery store, financed with a series of Nirdhan loans. Its earnings allow her to pay the private school fees that give her children a good education. Her husband has stopped drinking. Before, nobody trusted me with even one rupee,” Sita says. “But then Nirdhan came and told me I could build a successful business. Now I have told 30 other women that if I can do it, they can do it, and they all go to Nirdhan too. Nirdhan is Nepal’s largest microfinance institution — yet has just 130,000 borrowers in a country with 15 million poor. To help it grow, IFC invested Life was a struggle for Sita Kanu. $188,000 and is advising it on institutional risk management mechanisms, new product First she lost her home in a property dispute. After development, scaling up, and developing moving to smaller quarters, she became pregnant alternative delivery channels. with her second child and had to give up her factory job, losing a key source of family income. Then her husband developed a drinking problem, and her mother-in-law contracted lung cancer. When her mother-in-law died, Sita was scared and alone. She had children to support, but no income and few job prospects. To survive, she began selling food on the street. Then she heard about other local women who had built successful businesses with support from Nirdhan Utthan Bank. The bank saw potential in her. It gave her basic financial training, put her in touch with a group of women borrowers, and gave her an initial loan of Nepalese rupee 12,000 ($200) to expand. 3 4 Microfinance | Sri Lanka Group Lending Improves Lives in Post Conflict Sri Lanka Sri Lanka’s nearly three-decade long armed conflict Using this funding, she has become a small farmer affected many lives. Many living in the country’s — growing essential food crops, including onions, North and East — regions at the centre of the carrots and beetroot. Subsequently, Rasan was conflict — were most affected. Thousands were left able to repay the original loan, and has qualified homeless; many more had their livelihoods destroyed. for another loan — this time, twice that of the As the conflict ended in May 2009, resettlement original amount. began in these regions. Many displaced people were finally able to return to their homes, to restart their The group lending scheme has given me lives. a way of rebuilding my home and earning a However, for many like Rasan Puwaneswary, starting living. I want to now expand my fields more, anew was not an easy task! so I can grow other crops as well. Like many from her region, Rasan lost everything Through this farming business, Rasan and her during the conflict, including her home. This meant husband are building a stable life for their that her family of four children were displaced. children, working to rebuild their home, and have Subsequently, on her return at the end of the war, also contributed to generating employment within Rasan had no home of her own, and no assets which their village. could be used as collateral to obtain any financial LOMC’s advisory partnership with IFC has helped assistance. benefit more than 140,000 micro and small “I could not get any assistance; no one would give entrepreneurs across the country. The company me a loan since I had nothing they could hold as is now scaling up its activities in the post-conflict security. It was difficult to live day-to-day,” she says. North and East, to bring affordable and accessible financing options to those who need it most. In late 2010, Rasan found new hope when she heard of a new type of loan — one being made available by Lanka ORIX Micro Credit Private Limited Company (LOMC), an advisory client of IFC. With the goal of making financial assistance more accessible to those who need it most in post-conflict Sri Lanka, LOMC introduced a mechanism of group lending through IFC’s assistance — a concept that offered loans without the requirement of collateral. As a result of this new system, she formed a group with two other women from her neighborhood, applied for, and received a group loan — amounting to $250 per person. 5 6 Microfinance | India India’s Women Entrepreneurs Get a Boost For 12 years Bishaka Bairagi worked in a small hand- That would never have been possible printing shop, earning just Indian rupees 400 (less than $7) a month. But she knew she could do more. before,” she says. “I always used to be concerned about how to save for my children’s future. But now that our earnings are better, that tension is gone. Bandhan works for the least served segment and has 3 million borrowers, almost all in the low-income states. Supplementing its commercial lending with social development arm providing health care, education, and business training, it tailors lending to four categories of clients: • The poorest of the poor • Early-stage low-income entrepreneurs • More successful clients ready for larger loans • Those who have reached commercial viability and can borrow up to Indian rupees 300,000 “I always dreamed of starting my own business,” ($6,500) at a time, creating significant numbers she says, “but I didn’t dare take loans from the local of jobs informal money lenders. They treat us very badly.” Many, like Bishaka, start small, then work their way up. Bandhan Financial Services was different. It gave her a straightforward Indian rupees 4,000 ($66) loan to IFC is working through both investments and advisory buy fabric, then watched her business grow, raising to help build a sound, responsible, and sustainable the loan amounts as she built her sales. Today she commercial microfinance industry. has 25 employees, producing handmade saris sold in Our record Indian rupees 1,350 million ($30.5 million) Kolkata. Her income is Indian rupees 25,000 ($400) equity invested in Bandhan sends a signal to other a month. She lives in a comfortable home and sends investors: excellent opportunities remain that are good her eldest son to university. for business, and good for development. 7 8 Microfinance | India Of Small Loans and Big Dreams IFC came in as an early anchor investor, taking a 15.63 percent equity stake and advising Utkarsh on ways to meet its goal of having 500,000 clients in five years. In addition to providing advisory services to strengthen their existing microfinance business, IFC is also supporting Utkarsh with expanding their business in the micro-enterprise segment through a comprehensive capacity building program. Utkarsh is expecting to reach out to nearly 20,000 micro-enterprises by 2015. This sign of strong international support has proved helpful, enabling local banks to keep lending to Utkarsh in the past year despite the challenging conditions in the sector. The fast-growing institution now has 110 branches in Uttar Pradesh and other low- Govind Singh is a classic entrepreneur. He sees the income states such as Bihar, Madhya Pradesh, future and makes it happen. Uttarakhand and, Delhi, targeting groups of In 2009, he left a senior position with India’s largest poor women in rural and semi-urban areas private bank, ICICI Bank, moving from cosmopolitan with no previous credit history. As of January Mumbai to Varanasi in the low-income state of 2013, Utkarsh had 217,296 active women Uttar Pradesh, where only about three percent borrowers with an outstanding loan portfolio of the 240 million people currently have access of $32 million. All loans come with “credit to microfinance. Attracting a top-caliber board plus” services provided through the NGO arm and management team, he set up Utkarsh Micro such as training in financial literacy, self-help Finance, a commercial institution with a related non- group formation, and vocational education. government organization committed from the outset The microfinance institution is providing its to measuring its success in two simultaneous ways: clients with the full range of financial and non- financial services they need to work their way • Social impact especially on the poor women out of poverty. who would comprise 100 percent of its clients Utkarsh was awarded the Microfinance • Financial sustainability allowing it to work Organization of the Year Award in the Medium continually without fundraising, and at and Small category in 2012 by Access significant scale Development Services and HSBC India. 9 10 Microfinance | India Inspiring a Generation of Women Entrepreneurs IFC is supporting women’s access to financial services through a partnership with the Self- In meeting the needs of the poorest Employed Women’s Association (SEWA) of India. of the poor and the weakest among the With a total membership of over one million weak, the Ahmedabad-based SEWA Bank women, SEWA works in the states of Gujarat, Bihar, Delhi, Rajasthan, Madhya Pradesh, Uttar has earned a reputation unmatched by Pradesh, Kerala, and Uttarakhand. any other microfinance institution in the IFC is supporting Shree Mahila SEWA Sahakari country - Business India wrote in 2009 Bank, an all-women’s cooperative bank founded in 1974 with the specific goal of providing financial products to the 1.3 million women who comprise SEWA’s membership. IFC’s advisory is helping them increase access to savings, pensions, insurance, and credit. The parent organization, SEWA, is a diversified family of more than 120 organizations. These have various legal forms including companies, cooperatives, trusts, and societies. The activities of the group include savings mobilization, lending, training and capacity building, and production, marketing, rural distribution of products like textiles, agro commodities, and construction materials. In another project, IFC is advising VimoSEWA, the retail insurance arm, to design and roll-out a life insurance and savings product for self help groups that will first be piloted with select financial institutions. With IFC’s advisory support, SEWA is providing a comprehensive suite of financial services including savings, credit, pensions and insurance. 11 12 Payments | India Bringing Banking to the Unbanked Shyamkesh, a 36-year-old migrant worker from FINO’s solutions enable provision of financial Uttar Pradesh in India, is a taxi driver living in services in remote areas with minimum Mumbai. He supports a family of six members connectivity and infrastructure. The trained in his village by sending money home. Earlier, banking correspondents use biometric smart cards, because he did not have a permanent address in hand-held devices and mobile phones to perform Mumbai and therefore no bank account, he used field operations and biometric authentication. to send money to his family using money orders or relied on friends, which took several days, and at To support FINO in its early stages of development, times his family did not receive the full amount. IFC provided $7.3 million equity investment and helped them find new investors for next rounds of The scenario has now changed. Shyamkesh, now fund-raising. Scale is everything in India. With over has a FINO smart card linked to a bank account. 45,000 transaction points in 460 districts across All he needed to open one were his fingerprints. He 26 states in India, IFC through its investment and now transfers money to his family twice or thrice a advisory services to FINO is ensuring financial month, with complete discretion and security. He inclusion for millions of Indians and is exploring uses FINO services for remittances and deposits. opportunity to take this model to parts of Africa and Asia. Over 60 million people in India’s rural and semi-urban areas now have access to banking services which they didn’t have before, thanks to a partnership between IFC and technology firm Financial Information Network & Operations (FINO). FINO’s smart card program makes it possible for people to deposit cash by visiting a banking correspondent who has a FINO smart card reader. To make a withdrawal, all they have to do is return to the agent and have the funds debited from the card. FINO's target market is the urban and rural low income population in India, which is underserved by the current financial system. 13 14 Housing Finance | India Arriving Home – Turning Dreams into Reality Rais and Shabano had one wish — to build a house setting up 23 branches in six low-income states to offer and provide a permanent home for their three young home loans to customers in India’s low-income segment. children. For ten years they saved small amounts The project demonstrates that this demographic can be from their modest incomes but realized that in order a profitable target segment for housing loans and this to own their dream home, they will require a housing business can reach scale sustainably. loan. After many unsuccessful attempts of applying for loans from commercial banks, almost on the verge We approached many commercial of losing hope, Rais heard about a housing finance banks, but were repeatedly turned company for low income households at a local down. In addition, their processes were customer outreach event. cumbersome for us and their customer Aadhar Housing Finance Private Limited, a joint service was poor. The Aadhar team was venture between IFC and Dewan Housing Finance helpful, interacted personally with my Corporation, is helping low-income borrowers entire family before granting us the loan avail home loans. In 2010, IFC made an equity investment of $4.5 million in Aadhar that operates and disbursed it in a timely manner. For all in six low-income states in India with a mandate to those families like mine who have nowhere serve households earning in the range of $1,200 to else to go, Aadhar is there to serve you, $4,800 annually. In addition, IFC has been providing advisory support to Aadhar since 2011 in the area of said Rais Mohammad, a gardener with Indian Army responsible lending and risk management. who constructed his own house in Meerut at the cost of $17,000 with a $10,000 loan from Aadhar. Earlier, Aadhar has extended over 5,379 home loans till Rais and family lived in a rented accommodation date and has been profitable for over one year. within a slum. Today he is made to understand that The company has also achieved its objective of his property is already worth around $24,000. IFC’s investment, back in 2003, helped mobilize Aadhar’s parent company — Dewan Housing, a major private sector mortgage lender in India, to expand into this important segment. IFC invested about $12.6 million in Dewan and also advised them in improving corporate governance, reporting standards, and compliance. In November 2013, IFC and the government of Canada, announced a $85 million loan to Dewan, to expand finance for affordable and energy-efficient housing in India. 15 16 SME Finance | Bangladesh Customized Financing for Small and Medium Enterprises Many banks consider small and medium enterprises disruptions in foreign exchange availability in the too risky. But others embrace them, customizing country. It enables small and medium enterprises, financing for them as part of a larger business especially those that are export-oriented, to have strategy. continued access to critical funding for timely issuance and discounting of letters of credit. Eastern Bank, BRAC Bank, City Bank, and Southeast Bank are the initial participants, with others likely to join in the future. In addition to loans, growth capital from outside investors is also often critical for high-potential small and mid-size companies, which often need investments of up to $500,000 and related business advice to reach the next level. But since it is hard to find investors in countries with no venture capital industry, IFC is helping fill the void with a new global family of funds, Small and Medium Enterprise Ventures. The first one, SEAF Bangladesh Ventures, aims to invest in 300 local small and medium firms till 2020. Launched in 2010 with $10 million from IFC, it is spearheaded by SEAF, an American emerging market specialist active in 22 countries. The first investment from SEAF Bangladesh Ventures is in Dhaka-based software developer Systems Solutions and Development Technologies (SSD), a solution provider targeting local financial and telecom sector clients.It also has clients in Malaysia, Bhutan, and Nepal. SSD President Mahbubul Matin says, The relationship brings not only investment capital, but also global This is why IFC has developed a $80 million short- experience, international network, and term liquidity facility for SME-focused banks in market linkages that can enable SSD to Bangladesh. It provides them with working capital become a leading software developer in and trade financing solutions following market the region. 17 18 SME Finance | Sri Lanka Building Management Skills of Small and Medium Entrepreneurs IFC is using SME toolkit and Business Edge™ to build skills of small business owners. Apart from this, IFC is also working with banks to provide non-financial services such as accessing business advice, skill building, networking and market opportunities for these business owners. IFC’s SME Toolkit uses computers and mobile devices to bridge the knowledge gap. Offered in Sri Lanka in partnership with the country’s leading mobile phone provider, Dialog Axiata PLC, it offers free management information and training in accounting and finance, business planning, human resources, marketing and sales, operations, and information technology. Dialog makes the Toolkit a key part of its relationship with the thousands of small-scale independent retailers who sell its products in local build a 12-employee business, Amila Food villages. Most are grocery store owners like Mahinda Products. The business now has formal financial Malgoda, who credits the marketing and business statements and is well on its way, selling attractively strategy skills he learned from the Toolkit with more packaged spices in the local market. than doubling his sales since 2006. Before, I was mainly just a trader, now I In addition to making him a more effective Dialog am really getting into the business side of agent, it has helped him strengthen his store and things, says Mahinda. Since 2006, IBM has provided global support for the SME Toolkit, which is also supported in Sri Lanka by Norway and the Netherlands. Another innovation of IFC, Business Edge, provides high-quality classroom-based management training classes for small and medium enterprises. Provided for a small fee in 28 countries worldwide, in Sri Lanka it is specifically training women entrepreneurs, in 19 conjunction with local chambers of commerce. 20 SME Finance | India Creating Opportunity for Promising Entrepreneurs India’s 14 low-income states are home to more than 300 million poor, many of whom have promising entrepreneurial skills and just need someone to give them a chance. Au Financiers makes a business of finding them. Banks turned down Rajasthan farmer Suvalal Palsania when he sought loans to buy his first tractor, worried that he did not have sole title to the small plot of land he shared with his brothers. But that was no issue for Au, a fast and flexible non-bank financial corporation with a proven credit risk methodology. Seeing that Suvalal’s cash flows and reputation were strong, it lent him Indian rupees 346,000 ($5,750) for the tractor and an attached cart that he now uses not just to banks and a nomination at the prestigious 2011 get his own vegetables to market faster, but also Financial Times/IFC Sustainable Finance Awards in those of others who pay him a hauling fee. “It was London. “We value IFC’s support,” says Au’s CEO a breakthrough,” he says. Sanjay Agarwal. Au serves more than 260,000 clients, primarily Currently, IFC is supporting Au to better understand unbanked people in rural Rajasthan who are ready its target market and expand its reach to micro, small, to do something with their lives but are blocked by and medium enterprises and agri-allied businesses in difficulty in obtaining credit. Its financing helps its existing and new geographies. This effort will also them earn new income and lead a better life. First- be supported by training and skill building to ensure time vehicle purchasers are its core market, but it that the growth achieved is sustainable. also provides low-income housing finance, health, life, vehicle insurance, micro, small and medium Among its many business lines, Au has also enterprise finance, and other products – often to financed more than 300 low-cost private educational the same clients, as their needs grow. institutions. In the distant outskirts of state capital Jaipur, its $5,000 loan led to new science labs at IFC’s $5.5 million (Indian rupees 330.5 million) JBN Senior Secondary School, where annual school equity investment and advisory package in fees range between $40 and $150 and enrollment is 2010 and again in 2012 put an important almost equally split between girls and boys. Most of stamp of approval on Au. It helped them its graduates go on to university, something almost attract additional financing from other leading none of their parents had done before them. 21 22 SME Finance | India Investing in the Smallest Dream B.D. Mundhra employs 300 people at his bottling IFC’s Indian rupees 2 billion ($45 million) equity plant, Orient Beverages. investment is the beginning of a long-term relationship His business is booming. Sales are 12 times higher with Magma, coming at a key stage in its growth. IFC’s than they were five years ago and ready to grow advisory is supporting Magma’s small and medium further as its clients’ healthy, low-cost bottled water enterprise team with development of a strategic plan catches on with consumers. But when he needs to expand their reach to this segment. In particular, financing, Mundhra does not go to banks—applying there has been a strong focus on developing a plan for their loans would take six months or more, he for downscaling to microenterprise finance in new knows, and might not lead to anything. underserved geographies. This will help fuel job creation and growth in remote corners of India that banks rarely reach, but innovators like Magma know best. But when I walk into Magma I am treated like a priority, he says. It gave him the medium-term loan he needed to keep growing and creating jobs. Magma is a West Bengal-based large non-bank financial company serving small entrepreneurs and farmers in 21 Indian states with plans for a major expansion of its successful operations in the low-income states. Its motto is “Investing in the Smallest Dream.” India’s small and medium enterprises need financing to reach their potential as sources of jobs and economic growth. But while their lack of credit history and security are obstacles to many banks, they are opportunity to those like Magma that specialize in appraising first-time borrowers with no financial statements, bank accounts, or proof of income. 23 24 SME Finance | India Scaling Up Models that Work Through Impact Investing Ramesh Behera is from a small village in Odisha, record in building rural small and medium enterprises. one of the low-income states that is IFC’s focus in India. Minimally educated, owning little, and Aavishkaar’s seed capital helped Milk Mantra raise the having no significant job opportunities, his future full $5 million it needed to start operations, coming was grim. Then a start-up dairy firm arrived on the with valuable advice from CEO Vineet Rai and his team scene, helping him maximize his one productive on keys to success like strategy, financial reporting, asset — a cow. and corporate governance. Now Milk Mantra agents buy his milk almost every Before the Milk Mantra deal, investments by day, transferring it into sophisticated cold storage Aavishkaar helped create 7,400 rural jobs. Post the equipment and processing it with state-of-the art investment in Milk Mantra, the number of jobs created Tetra Pak equipment for sale in half-liter packages is even higher. for Indian rupees 13 (30 US cents). Ramesh is one Recognizing the potential for this segment, IFC of its 5,000 initial suppliers, whose income has risen invested $15 million in Aavishkaar’s $93.8 million by 30 percent through the company’s purchases. micro, small, and medium enterprise fund in 2011. Aavishkaar’s model for impact investing was recognized We’re a small company with some big at the global level and IFC helped link Aaviskhaar to ideas, the G20 Global SME Finance Challenge Competition, which it won and was awarded a $1.5 million grant to says Milk Mantra CEO Srikumar Misra. be managed by IFC advisory services. The grant helped Not afraid of risk, in 2009 Misra left a secure job in Aavishkaar’s partner advisory company – Intellecap - London with the biggest name in Indian business, scale up its model of supporting the growth of many Tata Group, wanting to make his mark at home other impact enterprises by connecting them with the with both financial and social impacts. Taking on investment community. a state dairy monopoly not used to competition, he launched Milky Moo, a new brand that is catching on fast, en route to $6 million in sales in the first year. In addition to the 5,000 farmers, this supports 150 processing plant jobs—numbers that will rise as its sales rise and related cheese and yogurt products hit the market. But without early investors who shared its vision, Milk Mantra would not exist. In large part, it does thanks to IFC client Aavishkaar, a cutting- edge Mumbai venture capital house, with a proven track 25 26 Financial Infrastructure To expand formal finance to underserved segments, there is a need to have in place a comprehensive financial infrastructure and legislative framework conducive to sharing of credit information by financial institutions. There is also a need to encourage greater symmetry in the data and information available for microfinance institutions, banks and financial institutions to make credit decisions. Efficient behind-the-scenes systems play a key role in helping local financial institutions serve the base of the pyramid market. Building on strong global experience, IFC investment and advisory services help build this infrastructure across South Asia, helping clients process payments, check potential borrowers' credit history, and evaluate the suitability of proposed loan collateral. Two core areas of our work in building financial infrastructure are: i. Development of Credit Bureaus and ii. Secured Transactions Collateral Registries India Credit Information Bureau, India IFC is working with two credit information bureaus to broaden their microfinance member base and introduce value added products in the microfinance sector. IFC has also partnered with Microfinance Institutes Network (MFIN) to design and develop a credit bureau awareness toolkit for microfinance borrowers. Through its member base, MFIN would help in disseminating the toolkit across the country. Collateral Registry, India IFC is advising India’s government-owned Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) to help it design a business plan and revenue model while expanding the database to cover all types of movable assets— Sri Lanka including stocks, inventory, and accounts receivable. This will facilitate access to finance of nearly $3.5 billion for more than 16000 micro, small and medium enterprises by 2015. Maldives 27 Credit Information Bureau, Nepal IFC is providing advisory support to modernize the credit bureaus in Nepal and widen the coverage of the credit bureau to bring licensed microfinance institutions in its fold. Nepal Bhutan Bangladesh Credit Information Bureau, Bangladesh IFC is conducting a study to assess the feasibility of establishing a credit bureau for microfinance institutions in Bangladesh. In collaboration with a working group consisting of three of the largest microfinance institutions, regulators and microfinance networking association, IFC’s scoping study will develop a business model and business plan. These will form part of the recommendations that will be sent to the Microcredit Regulatory Authority for adoption and implementation. Secured Transactions Registry, Bangladesh IFC is working with the Registrar of Joint Stock Companies (RJSC) in Bangladesh to build additional functionality into the Secured Transactions Registry so that it is better able to document charges on the movable assets of small and medium enterprises. It will also provide credible information to banks on the borrower’s credibility. Small and Mozambicans owners do not have much else to offer as collateral for loans, the ability to use movable assets of their business will open up new avenues to access much required financial services. Secured Transactions Registry, Sri Lanka IFC is working with the Credit Information Bureau of Sri Lanka to facilitate a positive legal environment for the functioning of the Secured Transaction Registry. IFC is assisting the government in drafting the amendments to the Secured Transaction Act of Sri Lanka which is expected to improve lending practices in the country. 28 About IFC IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines our policies. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. IFC leverages the power of the private sector to create jobs and tackle the world’s most pressing development challenges. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives. Contact Information Stay Connected International Finance Corporation www.ifc.org/southasia Maruti Suzuki Building www.facebook.com/IFCsouthasia 3rd Floor, 1 Nelson Mandela Road, www.twitter.com/IFC_SouthAsia Vasant Kunj, New Delhi - 110070 www.ifc.org/facebook India www.twitter.com/IFC_org T: +91 11 4111-1000 www.youtube.com/ifcvideocasts F: +91 11 4111-1001 www.ifc.org/SocialMediaIndex www.ifc.org