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Sidbi lines up 350 cr for Bandhans women…..Atmadip Ray
Microfin Co To Use Funds To Lend To New Borrowers SMALL Industries Development Bank of India,or Sidbi,has extended a 350-crore line of credit to Bandhan Financial Services to on-lend to poor women.Bandhan said it will use the fund to lend to 3.5 lakh new borrowers this fiscal.
Sidbi has also committed to offer another 50 crore to Bandhan in the form of subscription to the latters proposed non-convertible debentures (NCD).
Bandhan,the countrys fourth-largest microfinance institution (MFI) by portfolio size,has received 150 crore from Sidbi earlier this week as part of the first tranche of the 350-crore credit facility.The MFI said it will draw the balance amount preferably in the fourth quarter of 2010-11.
Both Sidbi and Bandhan have confirmed the development.Sidbi is the lone institutional investor in the Kolkata-based MFI.This is the largest funding support from Sidbi to us,Bandhan founder chairman and managing director Chandra Shekhar Ghosh told ET.In 2009 and 2008,Sidbi had lent 250 crore and 100 crore,respectively,to Bandhan.
Of late,the state-run development bank has stepped up its funding support to MFIs as part of its endeavour towards the countrys mirco-credit development.
Mr Ghosh said Sidbi has pegged the rate of interest for the loan at 10.5% a year,which is a very competitive rate in a rising interest rate market.The loan is offered for 3-5 years.In comparison,Sidbi had offered 250 crore to Bandhan in 2009 at 12% per year for five years.Sidbi chief general manager Ram Nath said Sidbi follows a rating based model to fix its lending rate.
Regarding the 50-crore NCD,the Bandhan chief said they will raise the refund once regulatory issues concerning the use of such instruments by an NBFC-turned MFI get resolved by the Reserve Bank of India.It is learnt that the banking regulator has in-principle allowed Bandhan to consider the resource as Tier-II capital.
Bandhan has 32-lakh borrowers at present and it plans to increase the tally to 40 lakh by March 2011.It has an outstanding exposure of 2,000 crore and it aims to grow it to 3,200 crore by the end of 2010-11.
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