BackIFC invests $100 million in Mahindra Finance
The investment will enable Mahindra Finance to boost growth, by extending loans to individuals, including farmers, to buy tractors, vehicles and other equipment
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Mumbai: International Finance Corp. (IFC), a member of the World Bank Group, on Tuesday said it has invested ₹ 640 crore ($100 million) in Mahindra and Mahindra Financial Services Ltd (Mahindra Finance).
The investment will enable Mahindra Finance to boost growth, by extending loans to individuals, including farmers, to buy tractors, vehicles and other equipment, along with financing small and medium enterprises.
“The investment in Mahindra Finance, the country’s leading rural finance company and India’s largest tractor financier that reaches more than half of India’s 600,000 inhabited villages, will be through secured non-convertible debentures," the statement said.
Mahindra Finance is a non-banking financial company, focused on the rural and semi-urban sector. The company has over 5.3 million customers and has assets under management of over $8.49 billion. The company’s business lines include vehicle and tractor financing and offering fixed deposits and loans to SMEs. It has 1,284 offices across the country.
In May 2017, IFC had said that it was evaluating an investment of $100 million in Mahindra Finance.
“Mechanized farming can cut costs by 25% and raise productivity by 20%. That will help meet the government’s target of doubling farmers’ incomes by 2022. At present, less than 30% of India’s farmers use modern equipment. To compound matters, 80% of farms in India are classified as “small and marginal", and require financing for smaller mechanization solutions," IFC said in the statement.
The new loan will help the company expand further and cater to the needs of small landholders, it added.
“Since its inception in 1991, Mahindra Finance has been working in the rural and semi-urban areas of India, catalyzing financial inclusion of the unbanked and under-served communities and also partnering with them in their difficult times. Our focus has been on enabling these customers with innovative financial solutions, tailor made to their evolving needs, fueling entrepreneurial aspirations, promoting self-reliance and transforming lives," said Ramesh Iyer, vice-chairman and managing director of Mahindra Finance.
Parent Mahindra & Mahindra Ltd has been IFC’s partner for several decades.
“To make a significant impact in the agriculture sector, we need to provide patient capital and deliver climate-smart solutions. Mahindra Finance brings the scale and expertise, and we aim to develop agribusiness solutions focused on women," said Arun Kumar Sharma, chief investment officer, IFC.
IFC invests across the agribusiness supply chain, from farm to retail, to help boost production, increase liquidity, improve logistics, and expand access to credit for small farmers. IFC also runs large advisory programmes aimed at developing farmers’ knowledge and adoption of modern agricultural practices to help them raise productivity, improve incomes, and learn new skills. IFC is the world’s largest development finance institution focused on the private sector. Since 1956, it has invested in more than 400 companies in India, providing $17 billion in financing to the private sector.
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