MICROCAPITAL.ORG STORY: Bandhan India receives $32m loan from PNB

Bandhan, a microfinance institution (MFI) in Kolkata, India, received a Rs 1.5 billion loan (USD 32 million) loan from Punjab National Bank (PNB). Bandhan plans to add a minimum of 100,000 new borrowers over the next five months. PNB has linked the rate of the loan to its benchmark prime lending rate (BPLR), so the movement in BPLR will affect Bandhan’s cost of funds. Currently the BPLR is at 11 percent. The cost of the loan including a processing fee and operational cost is estimated to be 11.75 percent. The loan will be offered for a three-year period. Bandhan will use the funds to offer micro loans to poor women at 12.5 percent per year. [1]

Bandhan previously received a loan of USD 51.9 million from the Small Industries Development Bank of India (SIDBI). This loan had a 12 percent rate and had a term of five years. According to managing director Chandra Sekhar Gosh, approximately Rs 700 million (USD 15 million) of the sanctioned amount has been utilized. Read more about this previous transaction on Microcapital.org here.

Bandhan was established in 2002, and currently has 1.5 million active borrowers and 1008 branches. Bandhan has total assets of USD 171 million and a return on assets of 8.66 percent.[4]

PNB is an Indian bank founded in 1895 with over 38 million customers and 4668 offices. It has total assets of USD 54 billion and a return on assets of 1.39 percent as of June 2009. [3] See bibliography sections [5]-[8] for more Microcapital.org stories about PNB and Bandhan.

By Kenny Kline, Research Associate

Additional Resources:

[1] The Economic Times, “Bandhan gets Rs 150 cr loan from PNB”

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance-/finance/Bandhan-gets-Rs-150-cr-loan-from-PNB/articleshow/5163312.cms

[2] Bandhan

http://www.bandhanmf.com/

[3] Punjab National Bank

http://pnbindia.in/financial_results_june_2009.pdf

[4] The Mix Market

http://www.mixmarket.org/mfi/bandhan

[5] MICROCAPITAL STORY: Indian Microfinance Institution Bandhan Sells Agricultural Loans Worth USD 35.4 Million to Punjab National Bank and Other Commercial Banks

[6] MICROCAPITAL STORY: Microfinance Institutions SKS, Ujjivan and Bandhan Report Growth as Indian Inflation Rises to All Time Highs