Jagaran Microfin sells loans worth Rs 17 crore to Ratnakar Bank to release capital

One-year old Jagaran Microfin has sold 50% of its assets to Ratnakar Bank in a rated pool transaction to release capital and push business growth. The deal will help Ratnakar Bank in meeting its priority sector lending commitment.

The Kolkata-based microfinance company has sold a pool of small loans worth Rs 16.91 crore to the private commercial bank last week. Unitus Capital has arranged the deal.

""This transaction will not only boost the confidence of investors but also go a long way to facilitate funding for the relatively new MFI working in underserved geographies,"" said Abhijit Ray, a director at Unitus Capital.

Before the deal, Jagaran had an outstanding loan portfolio of around Rs 35 crore. The sold loans will now be shown in the bank's balancesheet and the attached credit risk will be transferred to the buyer. Crisil has rated the pool of loans as ""A3(SO)"", reflecting moderate degree of safety in regard to timely payment.

As the current fiscal draws to an end, banks with shortfall in priority sector lending are rushing to buy loans from MFIs. Commercial banks are stipulated to fulfil an 18% agriculture lending target of last year's adjusted net credit with an overall 40% target for priority sector advances.

Jagaran is a wholly-owned subsidiary of GTFS Multiservices Pvt Ltd, a financial distribution company with 275 branches and 10 lakh distribution partners.

Source: EconomicTimes