Manappuram Finance, an Indian firm that provides loans against gold assets, has raised $35m from World Bank member IFC, reported Press Trust of India (PTI).
The three-year secured loan marks IFC’s debut investment in a gold loan company, which targets small businesses and low-income customers.
Manappuram managing director and CEO V P Nandakumar was quoted as saying: “We see this as an endorsement of our role as an agent of financial inclusion in India.”
IFC said that the investment aligns with its plan of driving financial inclusion and boosting financial industry’s resilience.
According to media reports, IFC also intends to offer advisory service to Manappuram to enhance the latter’s risk management systems and MSME lending capabilities.
Commenting on the funding, IFC country head Jun Zhang said: “We are making our first investment in a gold-loan finance company to create opportunities for the rural and poor households to transition from informal to formal forms of credit.”
World Gold Council estimates India’s gold at 23,000 tonnes, which has a market value of $1 trillion.
The latest investment is said to be a significant one considering the present size of the formal gold loan market, which stands at $19.6bn.
This makes the financially-excluded fall prey to pawn brokers.