The Grameen Foundation USA is joining hands with the ICICI Bank and the ITCOT Consulting to set up a company in India for micro credit activities.
The Grameen Foundation USA sprang from the Grameen Bank of Bangladesh. It was launched in 1997 by Grameen Bank founder Muhammad Yunus.
The two are strong strategic partners, but independent organisations with separate management, staff, funding sources, and governing boards.
According to an application to Foreign Investment Promotion Board, Grameen Foundation will hold 50.5 per cent equity in the proposed company, IndCo. ICICI will hold 19 per cent and ITCOT 30.5 per cent.
IndCo will provide financial and advisory assistance to micro finance institutions in India. It will be registered as a non-banking finance company with the Reserve Bank of India.
The current foreign direct investment policy allows up to 100 per cent foreign investment in non-banking finance companies. Grameen Foundation's 50.5 per cent in IndCo will subject it to the minimum capitalisation norm of $0.5 million, to be brought in upfront.
Grameen Foundation's mission is "to empower the world's poorest people to lift themselves out of poverty with dignity through access to financial services and information".
Initially, IndCo will provide microfinance portfolio purchase and sell down to capital market entities and banks; credit wraps to MFIs to enable them to access mainstream domestic capital and debt markets; quasi-equity in the nature of long-term debt and preferred capital; and financial advisory services to help more MFIs leverage domestic and international debt and capital.
Grameen Foundation USA now holds 8.1 per cent in Cashpor Financial and Technical Services Pvt Ltd, a company incorporated under the Companies Act, 1957, and engaged in the field of microfinance. Grameen Foundation seeks a firm presence in India and therefore wants to set up IndCo.