Bangalore: IFMR Rural Channels and Services has raised $5 million from Lok Capital, a venture firm and one of its limited partners, Proparco, the private sector investment arm of the French development agency AFD. The funds will be used to help the company grow in existing geographies while expanding inothers, as well as diversify its portfolio of services and products.

S.G. Anilkumar, CEO, IMFR Rural Channels and Services, said, “Lok and Proparco’s investment in our company indicates their alignment with our mission of delivering high quality financial services in a way that has a profound impact on rural households. This investment also validates the sustainability of the KGFS Model that believes in the core philosophy of adding value to the customer and thereby becoming valuable as a business. With this infusion, we envisage further expansion of the model to other remote rural locations across the country in a phased manner.”

IFMR Rural Channels and Services, the company which operates KGFS (Kshetriya Gramin Financial Services) model of providing a suite of financial services in remote rural locations, is a leader in rural financial services. The company has already set up operations in Uttrakhand, Orissa and Tamil Nadu.

Venky Natarajan, Managing Partner, Lok Advisory Services, said, “Financial inclusion continues to be right on top of our agenda, given its considerable potential to effect social change. We are happy to back KGFS for their unique customer centric approach, the robustness of their business model and the relevant product offerings that they have put together. Operating entirely from branches and with very strong understanding of the customers, we believe that KGFS model has the potential to mitigate many of the risks that we have seen in the different models of Micorcredit.”

Founded in 2000 by Rajiv B. Lall with a seed grant from the Rockefeller Foundation, Lok Capital is a venture capital fund that invests in high potential financial inclusion and broader inclusion enterprises, serving the bottom of pyramid segment. It has two funds with a corpus of over $85 million under management.

Etienne Viard, CEO, Proparco, said, “We support initiatives that provide access to financial services to the people not being served by the formal financial sector. Proparco has been closely watching the rural financial services landscape in India and we feel that the KGFS model, executed by IFMR Rural Channels and Services, is robust and sustainable.”

Proparco is a development finance institution jointly held by Agence Francaise de Development and public and private shareholders. Its mission is to catalyze private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals.