The government-owned United Bank of India (UBI), recently sanctioned a loan of INR 100 crore (USD 22.5 million) to Bandhan Financial Services, a microfinance institution (MFI) in India [1]. This is reportedly the largest loan to an MFI in the country since multiple suicides by borrowers in the Indian state of Andhra Pradesh were blamed on pressure to repay microloans in 2010. This “crisis” led to interest rate, lending and margin caps and other recommendations from the Malegam Committee that were then adopted by the Reserve Bank of India, India’s central banking authority. UBI Chairman and Managing Director Mr Bhaskar Sen said, “We will extend loans to MFIs that follow Malegam committee recommendations diligently.” According to Mr Ramesh Ramanathan, founder of Janalakshmi Financial Services, an urban MFI that has been able to raise multiple bank loans recently, “The worst is over. There is a definite opening up of bank credit.”
By Nisha Koul, Research Associate
About Bandhan Financial Services Private Limited: Bandhan Financial Services Private Limited is a microfinance institution (MFI) based in Kolkata, India, that was founded in 2002. As of 2011, it operates approximately 1,550 branches in 18 states in India. It offers microenterprise loans as well as loans for individuals to pay for health emergencies. As of 2010, Bandhan Financial Services reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 614 million, a gross loan portfolio of USD 565 million, approximately 3.2 million borrowers, return on assets (ROA) of 5.32 percent and return on equity (ROE) of 41.1 percent.
About Janalakshmi Financial Services: Janalakshmi Financial Services (JFS) is a microfinance institution (MFI) located in India. It is focused primarily on offering loans, savings and microinsurance in urban areas. As of March 31, 2010, JFS reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 25.5 million, a gross loan portfolio of USD 14.9 million, 82,000 active borrowers, return on assets (ROA) of -3.05 percent and return on equity (ROE) of -8.74 percent.
Sources and Additional Resources:
[1] The Economic Times, “Banks turn more receptive to MFIs; UBI sanctions Rs 100 crore loan to Bandhan Financial Services,” http://articles.economictimes.indiatimes.com/2011-07-29/news/29829470_1_mfi-loans-spandana-sphoorty-financial-trident-microfin
MicroCapital.org story, July 8, 2011, “MICROCAPITAL BRIEF: Microfinance Institutions in India Continue to Struggle for Funding After Loan Recast, Adoption of Malegam Proposals,” https://www.microcapital.org/microcapital-brief-microfinance-institutions-in-india-continue-to-struggle-for-funding-after-loan-recast-adoption-of-malegam-proposals/
MicroCapital.org story, June 11, 2011, “MICROCAPITAL BRIEF: New Draft Bill From Ministry of Finance Would Expand Role of Reserve Bank of India (RBI) to Regulate Entire Indian Microfinance Sector, Cutting Roles of NABARD, State Governments,” https://www.microcapital.org/microcapital-brief-new-draft-bill-from-ministry-of-finance-would-expand-role-of-reserve-bank-of-india-rbi-to-regulate-entire-indian-microfinance-sector-cutting-roles-of-nabard-state-governments/
MicroCapital.org story, May 23, 2011, “MICROCAPITAL BRIEF: To Counter Liquidity Crunch in India, Grameen Koota, Bandhan, SKS Securitize Loans Disbursed to Women,” https://www.microcapital.org/microcapital-brief-to-counter-liquidity-crunch-in-india-grameen-koota-bandhan-sks-securitize-loans-disbursed-to-women/
MicroCapital.org story, January 27, 2011, “MICROCAPITAL BRIEF: International Finance Corporation (IFC) Invests $35m in Equity of Indian Microfinance Institution (MFI) Bandhan Financial Services,” https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-invests-35m-in-equity-of-indian-microfinance-institution-mfi-bandhan-financial-services/
MicroCapital.org story, June 25, 2011, “MICROCAPITAL BRIEF: Indian Microfinance Institution (MFI) Janalakshmi Raises $14m in Equity Led by Citi Venture Capital International (CVCI),” https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-mfi-janalakshmi-raises-14m-in-equity-led-by-citi-venture-capital-international-cvci/
MicroCapital.org story, November 15, 2010, “MICROCAPITAL BRIEF: India’s Microfinance Industry on Brink of “Collapse” Due to Credit Freeze in State of Andhra Pradesh,” https://www.microcapital.org/microcapital-brief-indias-microfinance-industry-on-brink-of-collapse-due-to-credit-freeze-in-state-of-andhra-pradesh/
MicroCapital Universe Profile: Bandhan Financial Services Private Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bandhan+Financial+Services+Private+Limited
MicroCapital Universe Profile: Janalakshmi Financial Services, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Janalakshmi+Financial+Services+%28JFS%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
Similar Posts:
- MICROCAPITAL BRIEF: Abler Nordic Sells Equity Stake in Satin Creditcare, Provider of Microfinance to Low-income Women in India
- MICROCAPITAL BRIEF: Agents for Impact Disburses $8m from Invest in Visions (IIV) to Microfinance Institutions Digamber of India, Imon of Tajikistan
- MICROCAPITAL BRIEF: ADB Issues Local-currency Bond in Mongolia to Finance Invescore Lending to Women-led MSMEs
- MICROCAPITAL BRIEF: Light Microfinance, IppoPay Partner to Offer Digital Lending to MSMEs in Rural India
- MICROCAPITAL BRIEF: Abler Nordic Leads $10m Equity, Debt Investment Round for Ergos, Agtech Offering Crop Storage in India
