DCM Chola Masala (IFC-40278)

Regions
  • South Asia
Geographic location where the impacts of the investment may be experienced.
Countries
  • India
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Proposed
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
FI
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Jan 10, 2018
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
Cholamandalam Investment and Finance Company Limited
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Ring Fence
  • Small & Medium Enterprises
A financial intermediary is a commercial bank or financial institution that receives funds from a development bank, sometimes for a specific lending purpose. A "ring fence" is another name for this specific purpose. These funds are then used for lending by the financial intermediary to client companies or individuals.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 75.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Project Cost (USD)
$ 75.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Aug 5, 2018

Disclosed by Bank Nov 28, 2017


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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

IFC proposes to invest up to INR4.8bn (approx. US$75mn equiv.) in Cholamandalam Investment and Finance Company Limited’s (“CIFCL” or the “Company”) first rupee denominated offshore bond (“Masala Bond”). IFC would play a catalytic anchor role in the proposed US$125 to US$200mn bond placement by the Company. CIFCL is a leading non-banking finance company headquartered in Chennai, Tamil Nadu and is primarily focused in the rural and semi-urban space in India with approximately 90% of its INR375bn (US$6bn equiv.) portfolio being present across Tier III and Tier IV towns, emphasizing its strong reach and presence in the underserved and frontier markets of India. CIFCL has branch presence largely in to all low-income states (“LIS”) of India. The core business segments include vehicle finance, home equity loans, corporate finance, stock broking and distribution of financial products. The shares are listed in the Bombay (BSE) and National (NSE) Stock Exchanges.The proceeds of this investment will be used to extend loans to small road transport operators, most of whom are first time borrowers or driver-turned-owners and to small and medium enterprises in LIS.

People Affected By This Project
People Affected By This Project refers to the communities of people likely to be affected positively or negatively by a project.

Additional Reach: The Company is expected to increase its customer base by 500,000 customers over the next 5 years; as a result, it is estimated that 1 million jobs would be created in this period.Capital Market Development: IFC's support would enable CIFCL to launch its first off-shore local currency bond to international investors and open the platform for further such solid, highly reputable but below international investment grade issuers to access the market. Growth in low income states (LIS): Currently, Chola has ~ 50% of its pan-India footprint in low income states. It is expected that more than 60% of CIFCL's portfolio will be in low income states going forward.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.
Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actor Relationship
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

There is often limited information publicly available about what development banks are funding through financial intermediaries. In 2021, the Early Warning System partnered with Oxfam International to incorporate information on high-risk projects being funded by financial intermediaries receiving funding from the International Finance Corporation (IFC) and the Dutch Development Bank (FMO).

The information listed below describes the relationship between the different private actors linked to high-risk sectors and subprojects of IFC and FMO's financial intermediary investments and/or the financial intermediary's parent companies made from 2017 through 2020, including any associated ring fences.

The database, however, does not explicitly or implicitly imply that IFC or FMO have material exposure to or are contractually or legally accountable to the sub-projects financed by their financial intermediaries or the financial intermediary's parent companies. It only shows a seemingly financial relationship among the different private actors, the financial intermediaries, and IFC or FMO.

Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

CIFCL is a leading non-banking finance company headquartered in Chennai, Tamil Nadu and  is primarily focused in the rural and semi-urban space in India with approximately 90% of its INR375bn portfolio being present across Tier III and Tier IV towns, emphasizing its strong reach and presence in the underserved and frontier markets of India.

It was incorporated and promoted as the financial services arm of the Murugappa Group (the “Group”). Founded in 1900, the Group is a prominent business conglomerate with 28 businesses including 11 listed companies and workforce of 40,000 employees. 

 

Private Actor 1 Private Actor 1 Role Private Actor 1 Sector Relation Private Actor 2 Private Actor 2 Role Private Actor 2 Sector
- - - - Murugappa Group Parent Company -

Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

ACCOUNTABILITY MECHANISM OF IFC

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/

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How it works