Mr Vijay Mahajan, chairman of BASIX Group, an Indian company whose holdings include two microfinance institutions (MFIs), has reportedly announced that if the company does not get a capital infusion of INR 450 crores (USD 98 million) by end of September from domestic sources, it will have to explore partnering with foreign investors [1]. Mr Mahajan was quoted as saying, “Right now my single goal is to save BASIX. I am not worried about who owns it. If banks are ready to own it I have no problem. But if the domestic banks don’t lend to us, I will be forced to go abroad and find foreign investors. But it will be a shame if that happens.” The company is also negotiating with an undisclosed number of banks to borrow INR 800 crores (USD 175 million).
BASIX Group’s microfinance activities are carried out by two MFIs: Bhartiya Samruddhi Finance Limited (BSFL), a non-banking finance company (NBFC) and Krishna Bhima Samruddhi Local Area Bank Limited (KBSLAB), a rural bank. According to the Microfinance Information Exchange (MIX), BSFL reported total assets of USD 406 million, a gross loan portfolio of USD 362 million and 1.72 million active borrowers as of December 31, 2010. As of the same date, KBSLAB reported to MIX total assets of USD 26.8 million, a gross loan portfolio of USD 17.3 million, return on assets (ROA) of 1.12 percent, return on equity (ROE) of 10.4 percent and 61,467 active borrowers.
The new cash being sought is in addition to funding equivalent to USD 150 million that was raised by BSFL, as was reported by MicroCapital in August.
By Nisha Koul, Research Associate
About BASIX: BASIX Group is an Indian institution whose members provide poor people various services including microfinance, health insurance and agricultural and business development services. The BASIX Group operates through a holding company, Bhartiya Samruddhi Investments and Consulting Services Limited (BASICS). BASIX Group’s microfinance activities are carried out by two microfinance institutions (MFIs): Bhartiya Samruddhi Finance Limited (BSFL), a non-banking finance company (NBFC) and Krishna Bhima Samruddhi Local Area Bank Limited (KBSLAB), a rural bank. As of September 30, 2010, BASIX reported a gross loan portfolio of USD 402 million with approximately 3 million clients and operations in 16 Indian states and 6 other countries.
Sources and Additional Resources:
[1] The Economic Times, “To look for overseas investors if banks don’t lend soon: Leading microfinance firm Basix,” http://articles.economictimes.indiatimes.com/2011-09-01/news/29953745_1_preferential-shares-domestic-banks-fresh-debt
MicroCapital.org story, August 9, 2011, “MICROCAPITAL BRIEF: Indian Microfinance Institution Bhartiya Samruddhi Finance Limited (BSFL) Raises $150m from Institutional Investors, Commercial Banks,” https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-bhartiya-samruddhi-finance-limited-bsfl-raises-150m-from-institutional-investors-commercial-banks/
MicroCapital.org story, March 14, 2011, “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),” https://www.microcapital.org/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/
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 Universe Profile: BASIX, http://microcapital.org/microfinanceuniverse/tiki-index.php?page=BASIX+Group
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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