A group of lenders, led by Indian commercial bank ICICI Bank, has approved a debt restructuring plan for Spandana Sphoorty Financial Limited, an Indian microfinance institution (MFI). The agreement paves the way for Spandana to refinance its debt at a 12-percent annual interest rate and extend the tenure of the wholesale loans from three years to six years. Spandana’s promoters will inject new funds into the MFI, while the banks will provide additional credit, allowing Spandana to resume lending to its microcredit clients [1].
Spandana reportedly has total debt of INR 3,325 crores (USD 743 million), of which approximately INR 2,000 crores (USD 447 million) will be restructured through this agreement. Of 35 creditors involved in the agreement, two major banks account for almost 30 percent of the MFI’s total debt: ICICI Bank with exposure of INR 600 crores (USD 134 million) and Small Industries Development Bank of India (SIDBI) with exposure of about INR 350 crores (USD 78 million) [2].
According to 2010 data reported to US-based nonprofit Microfinance Information Exchange (MIX), Spandana had a gross loan portfolio of USD 787 million, 3.7 million borrowers, return on assets (ROA) of 8.99 percent and return on equity (ROE) of 55.7 percent.
By Rohan Trivedi, Research Associate
About Spandana Sphoorty Financial Limited:
Spandana Sphoorty Financial Limited provides microcredit and “credit-plus” services to low-income households in India. The company was founded by Padmaja Reddy in 1998 and receives its funding from development finance institutions and banks. As of March 31, 2010, Spandana had a gross loan portfolio of USD 787 million, 3.7 million borrowers, return on assets (ROA) of 8.99 percent and return on equity (ROE) of 55.7 percent.
Sources and Additional Information:
[1] Economic Times, “Spandana’s debt recast cleared” by Anita Bhoir, May 2, 2011, http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/spandanas-debt-recast-cleared/articleshow/8139384.cms
[2] Money Control, “Lenders kick off debt restructuring process of Spandana”, http://www.moneycontrol.com/news/cnbc-tv18-comments/lenders-kick-off-debt-restructuring-processspandana_536476.html
MicroCapital Universe Profile: Spandana Sphoorty Financial Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Spandana+Sphoorty+Financial+Ltd
MicroCapital Universe Profile: ICICI Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ICICI+Bank
MicroCapital Universe Profile: Small Industries Development Bank of India (SIDBI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Small+Industries+Development+Bank+of+India+%28SIDBI%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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