MICROCAPITAL BRIEF: For-profit Microfinance Institution (MFI) BASIX Group Negotiating $166m Loan from Consortium of Banks Led by Small Industries Development Bank of India (SIDBI)

BASIX Group, a for-profit microfinance institution (MFI) based in India, is currently involved in negotiations with a consortium of banks led by Small Industries Development Bank of India (SIDBI), an Indian government-owned bank providing credit to medium and large-scale MFIs, to receive a INR 7.5 billion (USD 166 million) loan largely intended to restructure the existing debt of BASIX.

The consortium of banks reportedly comprises four privately-owned banks including Housing Development Finance Corporation (HDFC), a mortgage lender; ICICI Bank Limited, a banking and financial services company; Axis Bank, a financial services firm; IndusInd Bank, a banking and insurance outfit; and Reserve Bank of India (RBI), India’s government-owned central banking authority.

Vijay Mahajan, chairman of BASIX, reportedly expects to receive the loan by the third week of March. Mr Mahajan, who is currently on a 75-day journey to obtain feedback from poor people on the effect of microfinance on their lives, also reportedly stated that INR 3 billion (USD 66.3) of the loan would be fresh funds while INR 4.5 billion (USD 99.5 million) would be used to restructure existing debt [1].

By John Howard-Smith, Research Associate

About BASIX Group: Established in 1996, BASIX Group consists of several companies based in India that work in 17 states in the country as of 2009 and have also extended technical services to other countries in Asia and Africa. Companies in the group provide various services to the poor including financial services, agricultural/business development services, and institutional development services. Its holding company is Bhartiya Samruddhi Investments and Consulting Services (BASICS Ltd.). In 2009, BASIX reported to the US nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 302 million, a gross loan portfolio of USD 172.5 million, approximately 1.1 million borrowers, return on assets (ROA) of 3.1 percent and return on equity (ROE) of 23.2 percent.

About Small Industries Development Bank of India (SIDBI): The Small Industries Development Bank of India (SIDBI) was established by the Indian Parliament in 1990. It provides credit to medium and large-scale microfinance institutions. SIDBI reports disbursements equivalent to USD 7.2 billion during the fiscal year ending March 2010. This amount has gone toward various ventures such as term loans, equity support and capacity building grants. SIDBI is listed on, but does not report data to, the US-based nonprofit Microfinance Information Exchange.

[1] Business Standard: “Basix eyeing Rs 750 cr loan from Sidbi-led consortium”, http://www.business-standard.com/india/news/basix-eyeing-rs-750-cr-loansidbi-led-consortium/128592/on

MicroCapital.org story, November 2, 2010: “MICROCAPITAL BRIEF: CEO of Indian Microfinance Institution BASIX Denies Charging Interest Rates of More than 24%”, https://www.microcapital.org/microcapital-brief-ceo-of-indian-microfinance-institution-basix-denies-charging-interest-rates-of-more-than-24/

MicroCapital.org story, March 7, 2011: “MICROCAPITAL BRIEF: Vijay Mahajan of Indian Microfinance Institution (MFI) BASIX Undertakes 75-Day Journey Across 12 Indian States to Gain Feedback From Poor People”, https://www.microcapital.org/microcapital-brief-vijay-mahajan-of-indian-microfinance-institution-mfi-basix-undertakes-75-day-journey-across-12-indian-states-to-gain-feedback-from-poor-people/

MicroCapital’s Microfinance Universe Profile: BASIX Group, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=BASIX+Group

MicroCapital Universe: Small Industries Development Bank of India (SIDBI): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Sma…

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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