Hyderabad, India, November 10, 2000--
The International Finance Corporation is helping to support very small businesses in rural India through investment in the micro-finance sector. IFC will invest about US$1 million for 20.8 percent of the equity of Bhartiya Samruddhi Finance Limited (BASIX), one of the first private companies to address the credit needs of India's rural poor.
The investment agreement was signed by World Bank Group President James D. Wolfensohn for IFC, and Mr. Vijay Mahajan, Managing Director and founder of BASIX.
Micro-finance in India is under-developed and dominated by government institutions. Private sector firms that provide micro-financing are generally multi-purpose non-governmental organizations which have yet to establish sustainable business models. IFC’s investment, alongside reputable domestic and international investors, is designed to demonstrate that privately-run micro-finance institutions can operate successfully and profitably. This could spawn further BASIX institutions in other parts of India which would, in turn, attract more private investment in micro-financing for rural households.
BASIX provides financial services and technical assistance to farmers and non-agricultural households, especially women, targeting both farming enterprises and small-scale industries.
Mr. Wolfensohn said the project would ultimately reduce poverty by improving access to borrowing in rural areas, which will fuel the smallest businesses that generate economic growth in developing countries. This initiative will also address the pressing need to establish sustainable financial institutions to meet the credit requirements of India’s rural households.
The mission of the IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
