Ujjivan Financial Services, an Indian microfinance institution (MFI), reportedly plans to raise up to INR 6.2 billion (USD 138 million) from the Small Industries Development Bank of India (SIDBI), a government-owned financial institution, along with other unspecified private and public-sector banks. Fundraising in the Indian microfinance sector has been notoriously slow since loan portfolios began to deteriorate in November 2010, but Ujjivan has still managed to raise INR 1.8 billion (USD 40 million) over the last two months.
In July, Ujjivan issued non-convertible debentures worth INR 550 million (USD 12 million), which were privately placed by Standard Chartered Bank, a British financial services company. And in August, Ujjivan raised INR 1.25 billion (USD 28 million) from SIDBI and three commercial banks: Axis Bank, Corporation Bank and the State Bank of Travancore.
According to Samit Ghosh, founder and managing director of Ujjivan, “we were not confident about whether we would be able to raise the capital required for our business. But the situation is improving now, and we have secured funding from SIDBI and other banks.”
As of March 31, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 159 million, a gross loan portfolio of USD 133 million, return on assets (ROA) of 2.01 percent, return on equity (ROE) of 10.1 percent and 847,000 active borrowers.
By Rohan Trivedi, Research Associate
About Ujjivan Financial Services:
Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance products. It was founded in 2004 and focuses on low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of March 31, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 159 million, a gross loan portfolio of USD 133 million, return on assets (ROA) of 2.01 percent, return on equity (ROE) of 10.1 percent and 847,000 active borrowers.
About the Small Industries Development Bank of India (SIDBI):
The Small Industries Development Bank of India (SIDBI) was established by the Indian Parliament in 1990. SIDBI offers products and services in a number of different areas, including direct finance, international finance, government subsidy and fixed deposits. Its clients include institutions, investors and entrepreneurs. SIDBI is an active participant in the Indian microfinance sector, where it provides credit and capacity building grants to large- and medium-scale microfinance institutions (MFIs). As of March 31, 2010, SIDBI reported total assets of INR 418 billion (USD 90 million).
Sources and Additional Resources:
[1] The Business Standard: “Ujjivan plans to raise Rs 900 crore via debt, equity”, http://www.business-standard.com/india/news/ujjivan-plans-to-raise-rs-900-crore-via-debt-equity/449058/
[2] Ujjivan Press Release: “Ujjivan Raises Rs. 32 Crores through Non-Convertible Debentures”, http://www.ujjivan.com/news_ujjivan_raises_rs32cores_through_non_convertible_debentures.htm
MicroCapital.org story, August 15, 2011: “MICROCAPITAL BRIEF: Commercial Banks, Private Equity Investors Reevaluate India’s Microfinance Sector in Light of Draft Microfinance Bill”, https://www.microcapital.org/indian-government-publishes-draft-of-microfinance-institutions-bill-would-make-reserve-bank-of-india-rbi-sole-regulator-establish-microfinance-development-council-microfinance-development-fund/
MicroCapital.org story, June 23, 2011: “MICROCAPITAL BRIEF: Spurned by Commercial Banks, Indian Microfinance Institutions (MFIs) Raise Funds from Social Investors IFC, ACCION, MicroVest, ShoreCap, Aavishkaar, Blue Orchard”, https://www.microcapital.org/microcapital-brief-spurned-by-commercial-banks-indian-microfinance-institutions-mfis-raise-funds-from-social-investors-ifc-accion-microvest-shorecap-aavishkaar-blueorchard/
MicroCapital.org story, May 24, 2011: “MICROCAPITAL BRIEF: IFMR Capital Structures $3.8m Securitization of Microfinance Loans Originated by Ujjivan Financial Services”, https://www.microcapital.org/microcapital-brief-ifmr-capital-structures-3-8m-securitization-of-microfinance-loans-originated-by-ujjivan-financial-services-of-india/
MicroCapital Universe Profile: Ujjivan Financial Services, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ujjivan+Financial+Services
MicroCapital Universe Profile: Small Industries Development Bank of India (SIDBI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Small+Industries+Development+Bank+of+India+%28SIDBI%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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