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Equity Investments by the
Venture Capital Funds
11 These were 7-year loans at 1 per cent interest which gave SFMC the option to convert the loan
into equity.
12 On account primarily of the risk/return expectations of its promoters, although the bulk of funding
came from the investment arms of the IFIs.
13 Lok Capital being fully, and Bellwether partly, the exceptions.
14 Most MFIs are extremely small and listings may not be possible in the near future. ICICI has made an
interesting offer to enter into agreements with the VCFs to provide long term subordinated loans to the
MFI to provide liquidity for buying back the stake of the VC with pre-agreed returns, automatically, on
the MFI securing a minimal CRISIL or M-CRIL rating.
15 Until 1999, entry capital requirements were Rs 25 lakh.
16 An interesting question is whether the standard norm capital adequacy of 12 per cent which has been
formulated for banking institutions which accept deposits, is applicable to Indian MFIs which do not.
This consideration may somewhat dilute the concern often expressed about the high leverage of Indian
MFIs.
17 For example, in November 2005, Vinod Khosla and Grameen Foundation-USA each invested $250,000
in Cashpor Financial and Technical Services. This coordinated investment combined to meet exactly the
$500,000 minimum capital requirement for equity stakes between 0-51 per cent.
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