IFMR Capital, an affiliate of the Chennai-based nonprofit Institute of Financial Management and Research (IFMR), recently structured the first capital market transaction for the Micro Units Development & Refinance Agency (MUDRA) Bank, an Indian public-sector financial institution that provides subsidized loans and other services to microfinance institutions (MFIs) and non-banking financial institutions (NBFCs).
The 1.5-year securitization transaction, called Mjolnir, enabled MUDRA to invest INR 500 million (USD 7.5 million) in the A-rated senior tranche of a securitized portfolio of microloans issued by Janalakshmi Financial Services (JFS), a Bangalore-based microfinance institution (MFI) that offers lending and insurance services to low-income Indian households primarily in urban areas. Furthermore, IFMR Capital invested INR 16.3 million (USD 240,000) in the subordinated junior tranche.
Kshama Fernandes, Managing Director & CEO of IFMR Capital, said “Going forward, with the benefit of MUDRA’s rating and support in capital market structures, these NBFCs’ ability to provide last mile support to small borrowers / [micro-, small and medium-sized enterprises] through sustainable financing structures will receive further impetus.”
As of May 2016, IFMR Capital has completed 18 securitization transactions with JFS worth a total of INR 20 billion (USD 300 million). As of 2015, IFMR Capital reported INR 11.8 billion (USD 177 million) in total assets. As of the same date, it reported return on assets of 4.9 percent and return on equity of 22.1 percent. As of 2015, JFS reported total assets of USD 796 million, a gross loan portfolio of USD 605 million outstanding to 2.3 million borrowers, return on assets of 2.3 percent and return on equity of 10.7 percent. The MFI does not accept deposits.
By Kevin van den Brink, Research Associate
About Micro Units Development and Refinance Agency (MUDRA) Bank
The Micro Units Development and Refinance Agency Bank (MUDRA) is a public-sector financial institution in India that places investments such as subsidized loans in microfinance institutions (MFI) and non-banking financial institutions in the country. As of April 2015, the bank was functioning as a non-banking financial subsidiary of the Small Industries Development Bank of India (SIDBI), a development finance institution based in Lucknow, India, that focuses on lending to MFIs in the country. MUDRA was launched with initial capital of INR 230 billion (approximately USD 3.46 billion).
About Janalakshmi Financial Services
Janalakshmi Financial Services is a microfinance institution (MFI) located in Bangalore, India. It is focused primarily on offering loans and microinsurance to low-income populations in urban areas of India. As of 2015, Janalakshmi reported total assets of USD 796 million, a gross loan portfolio of USD 605 million outstanding to 2.3 million borrowers, return on assets of 2.3 percent and return on equity of 10.7 percent. The MFI does not accept deposits.
About IFMR Capital
IFMR Capital, a subsidiary of IFMR Trust, is an Indian non-banking financial company that aims to provide liquidity and debt capital to the microfinance industry and other sectors that serve low-income households. IFMR Trust is an affiliate of the Institute for Financial Management and Research (IFMR), a nonprofit research and educational institution in India. As of 2015, IFMR Capital reported INR 11.8 (USD 177 million) billion in total assets. As of the same date it reported return on assets of 4.9 percent and return on equity of 22.1 percent.
Sources and Additional Resources
[1] Business Standard, News, “IFMR Capital Initiates First Capital Market Transaction for MUDRA”
MicroCapital Universe Profile: Micro Units Development and Refinance Agency (MUDRA) Bank
MicroCapital Universe Profile: Janalakshmi Financial Services
MicroCapital Universe Profile: Institute of Financial Management and Research Capital
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