Guwahati, Oct. 9: The International Finance Corporation (IFC), a World Bank subsidiary, has provided a loan of Rs 97 crore to Rashtriya Gramin Vikas Nidhi (RGVN) (NE) Microfinance Limited (MFL) to provide finance to those who have no access to formal sources of financing.

This is the first time that a World Bank affiliate has given loan to a microfinance institution in the Northeast.

Microfinance was initiated in the region through the Rashtriya Gramin Vikas Nidhi-Credit & Savings Programme (RGVN-CSP) with revolving funds assistance from Small Industries Development Bank of India in 1995. RGVN (NE) MFL was incorporated as a public limited firm in 2008. It got registered as a non-banking finance company with the Reserve Bank of India (RBI) in 2010. The company had applied to the RBI to set up a bank which is operational now.

'The money that has been raised will be used in expanding the outreach of access to microfinance to the borrowers who have little or no access to formal sources of financing, including those in the Northeast,' an official of the North East Small Finance Bank, the bank promoted by the company, said.

'The money will be transferred to the bank. The loan has been taken for five years at an interest of 10.51 per cent. The bank has started working and four of its branches will soon start functioning,' he added. All formalities were cleared in September last week.

The IFC said the loan facilitywill provide long-term support to the company while it starts building its retail savings base and boost its efforts towards financial inclusion. 'The proceeds of the loan will be utilised to extend microfinance and microenterprise loans in the Northeast.'

'RGVN is exclusively focused on the Northeast where financial inclusion is lowest in India and this places the company in a unique position to spread banking. The company's long-term support to this sector will help strengthen investors' confidence for capital market/foreign investors who are gradually opening up to the region but are adopting a conservative view,' it added.

The IFC said the loan will also benefit the company to support growth and manage liability and diversify its products.

The North East Small Finance Bank aims to have a business of Rs 2,000 crore in two years and will open 164 branches within a year, including eight states of the Northeast and Bengal.