IFC Grants HDFC Bank USD 500 Mn to Ramp Up Microloans for Women Borrowers The HDFC bank will use IFC's financing for on-lending as microloans to self-help groups (SHGs) and joint liability groups (JLGs) enrolled in the sustainable livelihoods initiative (SLI).
You're reading BIZ Experiences India, an international franchise of BIZ Experiences Media.
The International Finance Corporation, a member of the World Bank that supports private sector initiatives, announced that it has extended a credit line worth USD 500 million to HDFC Bank in order to enable the bank to offer microloans to women in rural regions.
The bank will use IFC's financing for on-lending as microloans to self-help groups (SHGs) and joint liability groups (JLGs) enrolled in the sustainable livelihoods initiative (SLI).
According to the official release, IFC's loan will enable the beneficiaries to graduate to individual lending schemes.
By supporting loans with the goal of generating income, the financing will promote financial inclusion and the nation's socio economic growth.
Arup Rakshit, Group Head, Treasury, HDFC Bank, said, "As a bank, we have been committed to empowering women, especially by targeting lending to self-help groups (SHGs) and joint liability groups (JLGs), which further helps take banking to the underbanked and unbanked. This longer duration credit facility from IFC will further boost these efforts."
Non-banking financial institutions, such as small finance banks and microfinance institutions (MFIs), are the main providers of loans to women looking to generate income. As of December 31, 2023, these institutions accounted for nearly 65.7% of all microfinance lending in India, reaching about 47 million clients with a gross loan portfolio valued at USD 31.6 billion.
MFIs, however, have a smaller capacity, are more fragmented, and require more investment. According to a statement from HDFC Bank, in this context, the extensive distribution network of banks and lower funding costs,among others, can be leveraged to increase access to microloans for women, promoting self-employment. Although banks provide 40% of the country's microlending, microloans constitute a small proportion of their total lending portfolios.
Imad Fakhoury, IFC's Regional Director for South Asia, said, "Access to financial services is key to empowering women and strengthening the economy. IFC aims to promote greater inclusiveness of underserved women borrowers by showing the viability of scaling up microlending to this segment."
