Dutch development bank FMO pitches USD 11-mn investment in microfinance firm Arohan

Dutch development bank FMO has proposed investing USD 11.1 million in Indian non-banking financial company Arohan Financial Services, Nikkei Asia reported on Monday.

The proposed investment will be used to finance Arohan's post-Covid growth, FMO said. The homegrown microfinance company also plans to complement its branch network with more technology-driven services, according to a disclosure accessed by Nikkei Asia.

Founded in 2006, Arohan aims to provide financial services to underprivileged and low-income households in rural and semi-urban areas of India.

Arohan offers a range of financial services such as microfinance, affordable housing finance and small business loans. The company also provides loans to individuals and microenterprises who cannot access traditional banking services.

The company's microfinance loans are typically given to women who are self-employed or run small businesses.

"The investment contributes to FMO's goals in reduced inequalities and gender equality," FMO said.

In addition to providing financial services, Arohan also offers financial literacy and capacity-building programmes to customers. It is mostly active in less developed regions of eastern and northern India, where it serves around 2 million low-income female borrowers, reported Nikkei Asia.

The Aavishkaar Group, with which FMO has a standing relationship, is the promoter of Arohan, according to the disclosure.

Founded in 1970, FMO is a public-private partnership, with 51 per cent of its shares held by the Dutch state and 49 per cent by commercial banks, trade unions and other members of the private sector, according to Nikkei Asia. It works with local partners to build sustainable economies and promote social and environmental responsibility. FMO has invested in over 80 countries across Latin America, Africa and Asia.

According to Nikkei Asia, FMO earlier proposed investing USD 25 million in Delhi-based microfinance company SATYA MicroCapital Listed and another USD 30 million in the third climate-focused fund of Indian private equity investor GEF Capital Partners.

( With inputs from ANI )

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