World Bank financing arm IFC said it is investing Rs 1.6 billion ($25 million) in Mahindra Rural Housing Finance, one of the largest finance companies, focused on rural housing. The company will use the proceeds to give loans to low-income borrowers in villages. It has 85% of its portfolio in the rural areas with an average loan size of only $1200 and demonstrates its ability to serve economically weak segments in a commercially sustainable way. Its customers include farmers, micro-entrepreneurs, and salaried workers in the unorganized sector, who often do not have documentary evidence of income and lack a proven credit history. Ramesh Iyer, vice chairman and MD of Mahindra Finance, the parent company, said the rural housing finance company is a pioneer in rural housing finance and it extends finance in rural areas for incremental construction or completion of homes. He said the company built an innovative business model around it and the association with IFC will help the company capitalize on these opportunities, while making a huge social impact. Anuj Mehra, MD of Mahindra Rural Housing Finance. said the company has extended loans to more than 700,000 households in rural India and the company assists its customers by providing advisory services and financial literacy campaigns.
