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AU Financiers II

India

Transportation Transportation

The small entrepreneurs supported by AU play an important role in the provision of transportation services in rural and semi urban India, but are unable to get financing from banks due to their lack of credit history and small loan sizes.

Financing partners
FMO

GuarantCo guarantee
INR 885 million (USD 13.75 million)

Total transaction amount
INR 1.7 billion (USD 42.4 million)

Transaction benefits

AU Small Finance Bank (AU), formally known as AUF (AU Financiers), converted into a small finance bank having received Reserve Bank of India approval to convert in December 2016. The conversion to a bank is supported by the additional facility extended by FMO/GuartantCo, as the funds will be channelled to the self-employed for acquiring commercial vehicles to generate income and to the micro, small and medium enterprises (MSMEs) and small and medium enterprises (SMEs) sector for business expansion, working capital and equipment purchase to earn their livelihood. AU has seen its core commercial transport asset financing portfolio grow profitably without compromising asset quality and as at the end of 2016 AU had INR 97.5 million total assets under management on its balance sheet.

Development benefits

The small entrepreneurs supported by AU play an important role in the provision of transportation services in rural and semi urban India, but are unable to get financing from banks due to their lack of credit history and small loan sizes. Such small entrepreneurs are usually lowly paid workers involved in the transportation sector, and AU’s financing provides them with an opportunity for social and economic mobility by owning their own vehicles or other productive assets.

The growth and profitability of Non Banking Finance Companies like AuF encourages other financial institutions to offer credit to such under-banked small entrepreneurs, encouraging the availability of formal credit to such persons.

The number of people that will indirectly benefit from the services of the small entrepreneurs (funded by AU as a consequence of this facility) will have a significant expansion effect.