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Monday, April 4, 2011

Bandhan Securitises sells loans worth Rs 410 cr

KOLKATA: Bandhan Financial Services , the country's fourth-largest MFI by assets, has sold loan receivables worth Rs 410 crore in four separate securitisation deals with private banks just before the end of the fiscal. This will free up resources for Bandhan for future lending and will help banks meet their priority sector lending commitments.

Bandhan, with an outstanding portfolio of 2,500 crore, wanted to sell loans worth 550-600 crore, but had to contend with a lesser amount as most banks were reluctant to strike securitisation deals with MFIs to avoid risks post the Andhra Pradesh MFI Act. Andhra Pradesh put a lending rate cap of 24% and barred MFIs from collecting their dues weekly, raising doubts over the quality of MFI loans. This has had a spillover effect on the entire MFI sector.

"The overall sentiment is still negative for the MFI sector. Although some banks belied the trend and came forward to strike deals with MFIs, the securitisation volume has dropped considerably this year," Bandhan chairman and managing director Chandra Shekhar Ghosh said.

The Kolkata-based MFI securitised loans worth 350 crore with IDBI Bank and another 60 crore with Axis Bank , Development Credit Bank and HDFC Bank collectively. "We will use the funds to lend to our existing customers. This will take care of the loan demand for the next couple of months," Mr Ghosh said.

The country's largest micro lender, SKS Microfinance , too, struck securitisation deals worth 610 crore in March to improve its liquidity.

An official with Sa-Dhan, the umbrella organisation for MFIs, said MFIs don't have money to lend and most banks are waiting for Reserve Bank of India's decision on the Malegam Committee report on MFIs before they start normal lending to the country's micro lenders.

Source: EconomicTimes


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