MUMBAI: International Finance Corporation(IFC), a member company of the World Bankgroup, will invest $35 million in Manappuram Finance in a bid to tap the Indian gold loanmarket in their first such foray.
“We are making our first investment in a gold-loan finance company to create opportunities for the rural and poor households to transition from informal to formal forms of credit,” said Jun Zhang, IFC Country Head for India.
“Through this investment, we are supporting one of the priorities of the Indian government to unlock the value of idle gold and bring a large part of India’s unofficial savings into the formal financial system.”
This three-year, senior, secured loan from IFC to MFL is an endorsement of the critical role gold-loan NBFCs play in bringing first-time customers into the formal economy. IFC may also provide advisory services to bring global best practices to MFL’s risk management systems and help it build capacity in MSME lending.
“IFC’s investment will help us deepen our reach in rural and semi-urban areas to offer people a viable alternative to informal credit,” said V.P. Nandakumar, MD & CEO of Manappuram Finance.
According to the World Gold Council, India has 23,000 tons of gold with an estimated market value of $1 trillion. However, banks and NBFCs have a gold loan market size of just $19.6 billion, which leaves the field open to pawn-brokers and usurious money lenders in rural areas.
[“source=economictimes.indiatimes.”]
