Promoting growth through microfinance

We are happy to announce a DFCD contribution of $7 million to an overall $20 million FMO loan to Dvara KGFS in India.

Who is our (prospective) client?  
 
Established in 2008, Dvara KGFS is a non-deposit taking systemically important NBFC (regulatory category NBFC-ND-SI) headquartered in Chennai, India. The company’s mission is to maximise the financial wellbeing of individuals and small enterprises in India by providing access to financial services. Dvara KGFS uses a customer-centric, technology-enabled business strategy to provide financial products to women and microenterprises in rural /semi-rural areas. It has a network of 378 branches in 107 districts spanning across 10 states in India and targets low-income and underserved rural/semi-rural populations. 

 
What is the intended funding objective (type of activity)?  

FMO’s proposed funding of USD 20mln, of which USD 7mln will come from the DFCD, will be used for the growth of Dvara’s microfinance portfolio towards female or young microentrepreneurs, women-owned micro enterprises, supporting the themes of gender and inclusive finance, and climate resilient agriculture. The investment will support Dvara KGFS to grow and optimize its performance, while also making available customized technical assistance in strategic areas.  

Why do we fund this project?  
 

FMO focuses on reducing inequalities and promoting sustainable economic growth in emerging markets. Through Dvara KGFS, FMO can contribute to reducing inequalities, climate resilience and women empowerment in underserved regions in India. By offering longer term funding FMO has additionality and can provide stability and diversity to the company’s funding profile. 

 
Environmental and social rationale 

Dvara KGFS is categorized as an E&S C-risk client. FMO analyses risks from different perspectives and assessments. In the case of microfinance investments, the E&S classification is typically low because the exposure generally is limited to retail and micro-entrepreneurs. The risks that might come with microfinance investments, such as over-indebtedness, transparency of interest rates, responsible pricing, is covered by FMO in other assessments such as Client Protection Principles (CPPs). Dvara does not have exposure to activities on FMO’s exclusion list or IFC-PS triggered transactions. It also has a complaint mechanism in place for both staff and clients and reports transparently on E&S related issues. 

FMO Staff meet with Dvara team.