RBL Bank plans to raise $150 mn debt from IFC

MUMBAI: International Finance Corporation (IFC), the private sector investment arm of World Bank, said it is in talks to lend $150 million to RBL Bank Ltd .

The debt financing will be in the form of a five-year dollar denominated senior loan, IFC said in a disclosure on its website. Of the total, about $100 million would be used to support RBL’s expansion of micro, small and medium enterprises (MSME) and individual business loans portfolio up to a maximum ticket size of $100,000 in low-income states of India.

The remaining $50 million would be earmarked for “climate smart projects", IFC said.

“The funding will enable greater financial inclusion in these states which are the poorest states in the country with significantly low penetration of financial services. In addition, by supporting climate smart financing, the project will encourage sustainability," IFC said.

IFC will work with RBL to support the bank in building in-house capacity to develop its climate financing business, it added. RBL will also give 1.5 times the amount IFC is investing in MSMEs, joint liability groups (JLG), individual business loans up to a maximum ticket size of $100,000 as well as climate smart projects across the country. RBL currently services more than 5.82 million customers through a network of 324 branches, 993 business correspondent branches, of which 226 are banking outlets, and 341 ATMs across 21 states and union territories in India, according to its website. The bank went public in 2016 in a public offering that was subscribed 69.57 times its issue size of ₹ 1,211 crore, marking it the highest overall subscription among IPOs of private sector banks.

The talks with RBL, follow IFC’s recent debt financing deals in the Indian non-bank lending sector, which have come at a time when the sector is facing a severe liquidity crunch.

In July, L&T Finance Holdings Ltd said one of its units is raising $550 million in an investment round led by IFC, along with other foreign banks such as BNP Paribas, Citibank and DBS Bank Ltd. Similarly, in May, Cholamandalam Investment and Finance Co. Ltd raised $222 million worth of debt funds in an IFC-led investment round.

Last year, IFC provided debt funding worth ₹ 640 crore ($100 million) to Mahindra and Mahindra Financial Services Ltd (Mahindra Finance) and ₹ 130 crore ($20 million) to Jaipur-based affordable housing lender, Aavas Financiers Ltd.