Dvara Kshetriya Gramin Financial Services Private Limited
Status: Investment in contracting phaseWhy disclosure?
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Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our prospective customer?
Dvara KGFS Ltd (''Dvara'') is a non-deposit-taking NBFC (non-bank financial institution) that has been operating in India since 2013. It targets underserved microentrepreneurs mainly through Joint Liability Group (JLG) lending and unsecured MSME (micro, small, and medium-sized enterprise) lending. Dvara is an existing client in FMO's portfolio.
What is our funding objective?
Dvara has requested additional funding for its capital planning and growth ambitions. FMO aims to provide a USD 5m subordinated debt facility combined with a USD 7m senior secured debt facility.
Why do we want to fund this investment?
Dvara’s business model is considered highly impactful and distinctive from the other NBFCs/MFIs in FMO’s portfolio. This impact comes from their focus on the underserved entrepreneurs in mainly rural areas, with a high portion of the portfolio being in the agricultural sector in rural locations relative to the more semi-urban focus of other NBFC/MFI players. Further, their strategy extends beyond providing credit, focusing on the financial health and resilience of the household by giving microinsurance and a planned savings and wealth management product to be launched soon. The transaction will be labeled 100% RI (Reducing Inequalities).
What is the Environmental and Social categorization rationale?
This investment has E&S risk category C, which is appropriate given that Dvara primarily provides joint group loans and enterprise loans to small-scale MSMEs. The majority of Dvara's loans outstanding are micro-loans with an average size of ~USD400. There is no exposure to IFC PS-triggered transactions or high-risk sectors. Dvara has an exclusion list per the IFC standards and has embedded human rights and environmental safeguards in its lending policies in line with local regulations. FMO analyses risks from different perspectives and assessments. In the case of microfinance investments, the E&S classification is typically low because the exposure generally is limited to retail and micro-entrepreneurs. The risks that might come with microfinance investments, such as, among others, over-indebtedness, transparency of interest rates, and responsible pricing, are covered by FMO in other assessments such as the Client Protection Principles (CPPs).
More investments
| Date | Total FMO financing |
|---|---|
| 12/15/2023 | USD 13.00 MLN |
| 12/15/2023 | USD 7.00 MLN |
| 3/30/2025 | USD 5.00 MLN |
- Website customer/investment
- https://www.dvarakgfs.com/
- Region
- Asia
- Country
- India
- Sector
- Financial Institutions
- Publication date
- 2/28/2025
- Deadline for feedback
- 3/30/2025
- Total FMO financing
- USD 7.00 MLN
- Funding
- FMO NV
-
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - C