International Finance Corporation, an arm of the World Bank, will infuse Rs 160 crore into micro finance institution (MFI) Bandhan, which is to be transformed later into a full-fledged bank.
"IFC will shortly infuse Rs 160 crore as Tier II capital in Bandhan", chairman of the MFI Chandra Sekhar Ghosh told PTI.
Ghosh was recently at the IFC headquarters in Washington to hold discussions with the World Bank arm which had shown interest in greater participation in the MFI's transition into a bank.
"IFC already holds 11 per cent stake in Bandhan. They are interested in further financial participation", he said.
Bandhan's Tier I capital (core capital) at present stood at Rs 1,200 crore, while Tier II would be Rs 160 crore after the infusion.
As an MFI, Bandhan's capital adequacy was at 21 per cent, Ghosh said, adding that for the bank this would be required to be at 13 per cent as per Basel III norms.
IFC would give the money as long term debt for a period of seven years, Ghosh said.
Besides IFC, the World Bank itself was also showing interest in Bandhan, Ghosh said.
"The India country director of World Bank Onno Ruhl will come to city on July 10 and hold discussions with the borrowers and the Bandhan management", he said, adding that World Bank was more interested in the aspect of financial inclusion.
Bandhan got the in-principle license from Reserve Bank of India in April to start banking activity within 18 months.
"We will be able to commence our banking operations before the Pujas next year", Ghosh said.
Bandhan had appointed consultancy firm Deloitte for recommendations on a seamless transition from an MFI to bank.
Bandhan had also started the recruitment drive for hiring specialist officers in the fields of IT, risk management and treasury operations among others.