India has seen strong economic growth in recent years, and it now faces the challenge of using this growth to address widespread poverty. IFC is using a combination of investments and advisory services to support private sector development in the country, with an emphasis on making growth more inclusive.
On a visit to India this week, IFC Executive Vice President and CEO Lars Thunell was struck by the country's stark economic contrasts. "While India has made impressive progress, IFC seeks to help the country reach more of its neediest people and regions with the benefits of growth," Thunell said.
A Strategic Approach
IFC's work in India focuses in several key areas:
Improving rural productivity though agribusiness and supply-chain linkage programs
Facilitating access to finance in underserved rural and urban markets
Promoting private investment in infrastructure, including through advice on specific public-private partnerships
Supporting private sector solutions for climate change
Our focus on agribusiness has led to recent investments in small companies, like ABC Coffee and Suguna Poultry, that are leaders in their field.
IFC Advisory Services works closely with the World Bank to assess India's investment climate and advise government agencies on competition policy. Our advisory portfolio includes about 40 projects in such areas as micro, small, and medium enterprises; grassroots and rural businesses; infrastructure; the environment; access to finance; and the investment climate.
With IFC's support, the Self Employed Women's Association in Gujarat has been able to extend its services to women in rural areas. These include a managers' school, which has trained 80,000 people in technical and management skills, and the SEWA Trade Facilitation Centre, which has provided market access and secure livelihoods for its 15,000 members. IFC is also helping SEWA restructure its financial and accounting systems.
IFC has also provided more than 3,000 small farmers in Jharkhand with capacity-building services and better income opportunities through a project with Usha Martin, an IFC portfolio client. Another major initiative is the Cairn linkages program in Rajasthan, which focuses on local supplier development, child and maternal health care, and a dairy development project.
Reaching Needy Markets
IFC considers microfinance a key part of including more people and needy regions in India's growth. We have reinforced this focus by supporting important market players with a variety of financial instruments.
Through collective investment vehicles, such as Lok Capital, IFC has supported the emergence and growth of microfinance institutions. Similarly, IFC's investment in Aavishkaar Goodwell will facilitate
the launch of up to 60 new microfinance organizations across India and the expansion of up to 10 fast-growing microfinance institutions across the country.
Last year, we also invested in Financial Information Network & Operations Private Ltd, a startup provider of technology services. Known as FINO, the company offers end-to-end IT solutions that can help banks address a large unmet demand for financial services.
FINO's technology will enable India's microfinance institutions to automate government payments, banking, and other financial services for customers in rural areas. It will help also microinsurance providers process claims at lower cost and improve the flow of information to the insurer from the field. FINO's "smart card"–based platform will help make social security and pension payments more efficient, reducing the cost of transactions and ensuring that end-users receive payments on time.
"Unique partnerships and innovation are giving India an opportunity to bridge the gap between large financial services providers and many underserved people. FINO is an important example of what can be done, and IFC is pleased to work with clients who support our objective of making development as inclusive as possible," Thunell said.
IFC and FINO will run pilot projects with leading microfinance institutions, banks, and government organizations to develop, customize, test, and expand the adoption of IT technologies in India's underserved markets. The two organizations will set up training, conferences, and workshops for microfinance institutions. Training in local dialects will emphasize the benefits of banking in rural areas and for people not currently being reached by financial services.
For more information contact:
Minakshi Seth
Communications Officer
E-mail: mseth@ifc.org
