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Publish Date : 05-Apr-2017

The Asian Development Bank (ADB) is lending $75 million to Au Financiers (India) Limited (AUF), a Rajasthan-based financial institution to help expand access to finance for smaller businesses, spurring economic growth and job creation towards financial inclusion.

AUF is one of the ten nonbank financial companies awarded an in-principle license by the Reserve Bank of India to become a small finance bank. On 20 December 2016, AUF received final approval to transition to a small finance bank and will commence its banking operations soon.

"This investment will help support Indias financial sector and demonstrate the importance of financial services for the bottom of the pyramid," said Christine Engstrom, ADBs Director of Private Sector Financial Institutions Division. "ADBs support to AUF will also give smaller businesses and microenterprises better access to capital, allowing them to unlock their potential and create much-needed jobs.

At least 50% of ADBs funding will be deployed in less-developed states in India, with an additional 10% used to increase lending to women customers. ADBs financing will support AUFs growth as it transitions to a small finance bank and diversifies its funding sources. The loan will provide scarce medium-term funds to AUF needed to diversify its product portfolio toward longer-term loans to clients.

AUF has operated in the market since 1996, becoming a significant provider of asset finance and credit to micro, small, and medium-sized enterprises (MSMEs) with a network of 300 branches across 10 states in India. Through its robust customer-centered business model, AUF caters to the needs of the unbanked and underbanked segments of society that have limited or no access to formal banking and finance channels. AUF believes that transitioning to a small finance bank will provide the company with significant growth potential as it aims to be a retail-focused, preferred, and trusted small finance bank, offering integrated and tailored solutions to its customers in keeping with the Government of Indias objective of increasing financial inclusion.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members48 from the region.

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