Financial Information Network & Operations Pvt. Ltd.

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	25309
Company name	Financial Information Network & Operations Pvt. Ltd.
Country	India
Sector	Finance & Insurance
Environmental category	C
Department	Global Inform. & Comm. Tech.
Status	Active

Date SPI disclosed	September 7, 2006
Projected board date	October 9, 2006
Previous Events	Invested: June 6, 2007 Signed: March 13, 2007 Approved: March 5, 2007

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Financial Information Network & Operations Ltd. (FINO) is a technology company that provides core banking solutions to agencies including micro-financial institutions, co-operative banks and banks (together, Micro Agencies) catering to the low income households. It also provides automated banking, government transfer services and other financial services for the vast un-banked and under-banked population in rural India through a biometrics based authenticated personal card solution. Having recognized that relying on traditional branch banking to cover rural India would be cost prohibitive, ICICI, India’s largest private sector bank, has incubated FINO and completed pilot testing with some Micro Agencies and their customers. IFC proposes to make an equity investment in FINO for expansion capital as the company seeks to scale operations. IFC is also seeking technical assistance grants to support this innovative rural banking service company.

Anticipated development impact of the project

- Promote growth of Indian Micro Agencies:

With a robust technology solution, FINO will help Micro Agencies reach a larger population by making the data and credit management process reliable, simpler and cost-effective. Growth of this sector will improve the viability of the Micro Agencies, which in many cases currently lack economies of scale.

- Augment financial services across India:

Most Micro Agencies currently focus on provision of credit to their target market. FINO’s presence would enable provision of services such as insurance, savings, remittances, and government payments. The Reserve Bank of India has recently allowed Micro Agencies to serve as business correspondents through which remittances and other financial services may be offered.

- Increase credit to underserved segments in rural and urban India:

The absence of a reliable information, efficient distribution mechanism, and effective financial controls has constrained credit flows across India. FINO offers an efficient, scaleable solution to improve cost effectiveness and reliability of customer data for Micro Agencies, enabling them to attract capital for lending across underserved segments in India.

IFC's expected development contribution

- Market adoption:

To expand its scope of services and clients, FINO seeks to establish an arms-length relationship with ICICI. Management believes that IFC’s role as a trusted intermediary would help FINO establish the independence necessary to encourage the banking community in India to more broadly adopt FINO’s product.

- Technical assistance and capability building:

The services offered by FINO are unique to the Indian market. Many Micro Agencies and their customers require training to use the technology solution offered by FINO. Management believes that IFC support through its technical assistance program would accelerate adoption of the FINO solution and thus provision of banking services in underserved markets.

- Early stage financing:

Limited financing is available for start-up technology related companies like FINO. NASSCOM, India’s software association, has asked IFC to help promote growth in the software industry by investing in early stage technology companies. An investment by IFC would fill a gap in the market and enable FINO to reach a stage where funding options are more plentiful and, if successful, improve the prospects of similar companies in search of early stage financing.

Environmental and social issues - Category C

IFC's early review of this investment has identified the following environmental, social, health and safety issues: fair, healthy and safe working conditions and fire and life safety which will be reviewed during appraisal.

Performance standards that are expected to be applicable for this project may therefore include:

- PS2: Labor and Working Conditions;
- PS4: Community Health, Safety and Security.

Based on this early review, the project has been provisionally categorized as C.

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