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| Belstar |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 28816 |
| Company name | Belstar Investment & Finance Pvt. Ltd. |
| Country | India |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Disbursement |
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| Date SPI disclosed | October 2, 2009 |
| Projected board date | November 5, 2009 |
| Date revised SPI disclosed | October 9, 2009 |
| Previous Events | Signed: November 12, 2009
Approved: November 11, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Belstar Investment and Finance Pvt. Ltd. (‘Belstar’ or ‘the Company’), is the microfinance delivery arm of the Hand in Hand (HIH) group in India, was acquired in 2008. The Company’s product varies from the typical microfinance group loan which is mostly for consumption and focuses more on creating microenterprises – trying to bridge the ‘missing middle’, by providing enterprise loans which are normally not provided by commercial banks. Apart from microfinance, HIH provides technical support, training and advisory support and also helps customers to link up with larger organizations to ensure that these family or group based enterprises are sustainable.
Belstar plans to raise equity capital of INR 175 mn (USD 3.6 mn) in FY 2010 to enable it to kick start the transformation of the NGO and fund its growth. |
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| Project sponsor and major shareholders of project company |
Ms. Kalpana Sankar, who has an experience of more than 12 years, with the women’s self help movement and has been a consultant with UNOPS, UNDP, Christian Aid, and Wetlands International on gender and microfinance issues is in charge of running the day to day business of Belstar.
The key shareholders in the company include Ms. Kalpana Sankar and her associates, Sarvam Mutual Benefit Trust,
and KPM Private Mutual Benefit Trust. |
| Total project cost and amount and nature of IFC's investment |
| Belstar plans to raise equity capital of INR 175 mn (USD 3.6 mn) in FY 2010 to enable it to kick start the transformation of the NGO fund its growth. IFC is considering an investment along with other investors in the Project to support the growth plan of the Company. |
| Location of project and description of site |
Belstar is headquartered in Bangalore (Karnataka) and will be the vehicle by which the microfinance pillar of HIH plans to transform itself from an NGO to a ‘for profit’ microfinance company. The process of transformation is to be done in stages. In the first stage, Belstar would take over financial intermediation activity in 9 districts of the Indian states of Tamil Nadu, Karnataka and Pondicherry. Belstar plans to expand operations to Madhya Pradesh (a low income state) in the next two years. The borrowers are mainly the poor in rural and semi-urban areas.
IFC investment would enable the company to establish a sustainable microfinance operation. |
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| Anticipated development impact of the project |
The project is expected to provide access to finance to more than 300,000 women, engaged in micro enterprises. Belstar will primarily focus on providing microfinance for creation of sustainable micro enterprise in the ‘missing middle’ segment.
Belstar will operate primarily in the rural areas and support to the Self Help Groups and the women entrepreneurs to enable them to build sustainable enterprise along with HIH. |
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| IFC's expected development contribution |
Financial inclusion is one of the three pillars of the IFC’s regional strategy (the other two being Climate Change and Regional Integration). An increased focus on investments targeted at the microfinance sector would increase financial inclusion for SMEs/MSMEs and low-income population.
This project, by addressing the financial service needs of underserved clients, forms an important tool for poverty reduction, private sector development and inclusive growth.
IFC will enable the MFI to have sustainable micro finance operations help and provide comfort to sponsors to raise additional funds needed for future expansion. |
| Environmental and social issues - Category FI |
This project involves IFC’s support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Belstar will be required to:
- Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the IFC Microfinance exclusion list
- Identify qualified persons to manage and implement the procedure
- Demonstrate commitment and resources to implementing the procedure
- Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions
- Submit a periodic report to IFC as per a format to be provided by IFC |
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| For inquiries about the project, contact: |
Ms. Kalpana Sankar
Belstar Investment and Finance Pvt. Ltd.
Mahbubani Tower
No. 48, 2nd Floor, North Boag Road, T. Nagar
Chennai 600 017
Telephone +91 44 45544024 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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