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| Karnataka Bank |
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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 | 25089 |
| Company name | Karnataka Bank Limited |
| Country | India |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Dropped |
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| Date SPI disclosed | October 1, 2007 |
| Projected board date | November 1, 2007 |
| Previous Events | Approved: November 1, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The project involves providing financial support to Karnataka Bank Ltd (or the Bank) to help meet its expansion plans and asset growth. As at March 31, 2007 Karnataka Bank had a branch network of 410 branches and 106 ATMs and total assets of approximately $4 billion. This project is part of IFC’s strategy of supporting professionally run, mid-sized private sector banks to emerge as strong players in the Indian financial sector. |
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| Project sponsor and major shareholders of project company |
| The Bank’s shareholding is well-diversified with a large proportion of individual investor holding and FII holding. There is no single identifiable Sponsor/ Promoter. As at June 30, 2007 the single largest shareholder is Oppenheimer Funds Inc, with 4.94%. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment involves providing financial support to help the Bank meet its expansion plans and asset growth targets. |
| Location of project and description of site |
| Karnataka Bank is headquartered in Mangalore, Karnataka state and has a network of 410 branches across India. |
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| Anticipated development impact of the project |
| IFC’s investment will enable the Bank to leverage up based on this funds infusion, significantly increase its branches in the coming years to achieve a pan India presence and support its asset growth. The Bank has a large branch network in the rural and semi-urban areas. Lending to the Small and Medium Enterprises sector is a key focus area of the Bank. IFC’s investment will, therefore, help increase access to finance for the underserved segments, thereby generating additional employment in the country. |
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| IFC's expected development contribution |
IFC’s expected development contribution is to:
- provide funding support to help the Bank meet its expansion plans and asset growth; and
- to assist the Bank with appropriate advisory services in areas like risk management, corporate governance and business strategy and support its growth plans. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:
- The IFC FI Exclusion List and/or
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards
IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.
Based on the review, the project will be required to:
- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements
- 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: |
Mr. Ananthakrishna
Chairman and Managing Director
Address: Karnataka Bank Ltd,
Mahaveera Circle,
Kankanady, Mangalore –575002,
India
Tel: 91-824-2225282
Fax: 91-824-2225588 |
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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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