by Diana Yang - South Asia, East Asia and Pacific -

PRESS RELEASE: IndusInd Bank, Grameen Capital and SKS partner in $28.9m Microfinance Transaction

Source: Grameen Capital India.

Original press release available here.

MUMBAI, August 20 – IndusInd Bank, Grameen Capital India, and SKS confirmed today having recently completed a USD 28.9 million (Rs. 100 crore) assignment of microfinance receivables.

This transaction was structured and arranged by Grameen Capital India and comprised a pool of advances to the agricultural and allied sectors. This assignment to IndusInd Bank was to be executed in two transactions, totalling to around USD 34.3 million (Rs 150 crore). The first transaction of USD 28.9 million (Rs 100 crore) has been closed on July 29, 2008 and the second transaction is slated to be concluded in February 2009.

Mr Suhail Chander, Head of Corporate & Investment Banking, IndusInd Bank, said, “This is an excellent opportunity for us , not only to build up our Agri Portfolio but also to be involved in the fast growing microfinance field .The transaction allows us to diversify our asset base by partnering with globally recognised microfinance players.”

SKS offered a pool of assets amounting to USD 28.9 million (Rs 100 crore) for assignment to IndusInd Bank under this transaction, as per the Bank’s selection criteria. Credit enhancement was provided by way of an over-collateralisation structure of SKS’ microfinance assets. SKS Microfinance has also signed a management and collection agreement with the bank and would continue to administer these loans and channel the collections to the bank.

Speaking on this transaction, Dilliraj S, Chief Financial Officer of SKS Microfinance said, “Normally the Agri Portfolio assignment picks up in the 4th quarter only. We are glad that we are able to warm up the market right in July itself. The structure is a win-win, in the sense, SKS gets to access low cost money in July itself and the Assignee Bank is also assured of peak outstanding in March 2009 with a top-up at pre-negotiated rate.”

Royston Braganza, CEO, Grameen Capital India added, “At a time when the growth of agricultural credit from the banking sector has fallen by 19%, this transaction is indeed good news for the poor borrowers in rural India. It validates the tremendous value embedded in the portfolio created by MFIs. Grammen Capital will continue to enable MFIs to benefit from this value, through innovative structured solutions and strategic portfolio placement.”

Post a successful closure of this transaction, SKS Microfinance has also mandated Grameen Capital to provide suitable structured finance solutions, given the ambitious growth plans to accelerate financial inclusion.

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