MICROCAPITAL BRIEF: India’s Arman Financial Services Decreases Interest Rates on Two-wheel Vehicle, Microfinance Loans

Arman Financial Services Limited, a non-banking finance company based in the Indian state of Gujarat, recently announced it is reducing interest rates on its two-wheel vehicle and microfinance loans. While the rates on the microfinance loans provided through its subsidiary Namra Finance Limited are being reduced by 1.1 percentage points, the rates on the two-wheel loans are being cut by 1.5 percentage points. The actual rates charged have not been published. Jayendra Patel, the Vice Chairman and Managing Director of Arman, stated that the organization is able to reduce the rates because of strong financial performance, lower borrowing costs and the organization’s ability to raise longer term loans [1].

As of June 2016, Arman managed assets worth INR 770 million (USD 11 million) in its microfinance business and INR 500 million (USD 7 million) in its two-wheel vehicle business. The firm disbursed loans totaling INR 400 million (USD 6 million) during the quarter under its microfinance business and INR 120 million (USD 2 million) under its two-wheel vehicle business.

By Sharanya Madhavan, Research Associate

About Arman Financial Services

Arman Financial Services Limited was originally incorporated in November 1992 under the name Arman Lease & Finance Limited. In December 1993, it converted into a public limited company under Indian law, and in August 1995 it held an initial public offering of INR 28 million (USD 570,000) on the Mumbai Stock Exchange. The firm is licensed by the Reserve Bank of India to accept deposits. Arman operates primarily in the Indian states of Gujarat and Madhya Pradesh, and it recently started operations in Uttar Pradesh and Maharashtra. It offers loans for purchase of two-wheel vehicles and three-wheel vehicles while the microfinance loans are handled by its subsidiary Namra. As of June 2016, Arman managed assets worth INR 770 million (USD 11 million) in its microfinance business and INR 500 million (USD 7 million) in its two-wheel vehicle business. The firm disbursed loans totaling INR 400 million (USD 6 million) during the quarter under its microfinance business and INR 120 million (USD 2 million) under its two-wheel vehicle business.

Sources and Additional Resources

[1] Arman: Arman Financial Services reduces interest rates between 110 and 150 bps with effect from Oct 1, 2016

MicroCapital Universe: Arman Financial Services

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/