Five Indian microfinance institutions (MFIs) are reportedly looking to raise between INR 800 crores (USD 175 million) and INR 1,000 crores (USD 218 million) in new loans even as they wait for word on proposed debt restructuring plans. According to The Business Standard, an Indian newspaper, Spandana Sphoorty Financial Limited, Asmitha Microfin Limited, Future Financial Services Limited, Share Microfin Limited and Trident Microfin are seeking new working capital loans under the same terms as the restructured debt which is proposed to carry an interest rate of 12 percent, a repayment moratorium of one year and an extension of the term to six years [1]. The MFIs are attempting to refinance INR 6,473 crores (USD 1.42 billion), as was reported by MicroCapital on April 21, 2011 [2].
Although commercial banks and financial institutions may be responsive to restructuring the debt of MFIs, their stance on providing new loans is unclear. According to an unnamed senior official of an MFI based in the Indian state of Andhra Pradesh, banks are “reluctant” and new funds “are not assured” [1].
By Rohan Trivedi, Research Associate
About Spandana Sphoorty Financial Limited:
Spandana Sphoorty Financial Limited provides microcredit and “credit-plus” services to low-income households in India. The company was founded by Padmaja Reddy in 1998 and receives its funding from development finance institutions and banks. As of March 31, 2010, Spandana had a gross loan portfolio of USD 787 million, 3.7 million borrowers, return on assets (ROA) of 8.99 percent and return on equity (ROE) of 55.7 percent.
About Asmitha Microfin Limited:
Asmitha Microfin Limited is a microfinance institution (MFI) based in Hyderabad, India. It offers collateral-free group and individual loans to women. Registered as a “Public Limited Company, Asmitha was founded in 2002 and operates primarily in rural areas. According to the Microfinance Information Exchange (MIX), a US-based nonprofit, the MFI reported total assets of USD 389 million, a gross loan portfolio of USD 315 million, return on assets (ROA) of 4.3 percent, return on equity (ROE) of 40.1 percent and 1.3 million active borrowers as of March 31, 2010.
About Future Financial Services Limited:
Future Financial Services Limited (FFSL) is a microfinance institution (MFI) based in India. FFSL was established in 1996 and is currently incorporated as a non-banking financial institution (NBFI). FFSL offers a range of loan products that are aimed at low-income women and men in the Indian states of Andhra Pradesh, Karnataka and Tamil Nadu. As of March 31, 2010, FFSL had total assets of USD 63 million, a gross loan portfolio of USD 54 million, return on assets (ROA) of 7.04 percent, return on equity (ROE) of 45.77 percent and 257,000 active borrowers.
About Share Microfin Limited:
Share Microfin Limited is a microfinance institution (MFI) based in Hyderabad, India. After beginning operations in 1989 as a nonprofit, Share was converted into a non-bank financial institution (NBFI) in 2000. It offers loans—primarily to women—as well as training and consulting to microentrepreneurs. As of March 31, 2010, it has USD 577 million in assets, a gross loan portfolio of USD 490 million, 990 branches, 2.3 million active borrowers, a return on assets of 5.50 percent and return on equity of 45.2 percent.
About Trident Microfin Private Limited:
Trident Microfin Private Limited (formerly Annapurna Financial Services Private Limited) is a microfinance institution established in 2007 and headquartered in Hyderabad, Andhra Pradesh, India. The goal of the company is to provide comprehensive financial and business solutions to enterprises and low-income individuals, particularly women and microenterprises, in a socially, economically and environmentally sustainable manner. Trident reported total assets of INR 1.5 billion (USD 33 million) as of June 30, 2010.
Sources and Additional Resources:
[1] Business Standard: “MFIs seek Rs 800-1,000 cr loans” by Somasroy Chakraborty, May 13, 2011, http://www.business-standard.com/india/news/mfis-seek-rs-800-1000-cr-loans/435437/
[2] MicroCapital.org story, April 21, 2011: “MICROCAPITAL BRIEF: India’s Business Standard Reports a Third of Indian Banks’ Loans to Microfinance Institutions (MFIs) in Restructuring, Which Analysts Argue is Inadequate to Solve Sector Issues”, https://www.microcapital.org/microcapital-brief-india’s-business-standard-reports-a-third-of-indian-banks’-loans-to-microfinance-institutions-mfis-in-restructuring-which-analysts-argue-is-inadequate-to-solve-s/
MicroCapital.org story, May 4, 2011: “MICROCAPITAL BRIEF: Wholesale Lenders Agree to Restructure Debt of Indian Microfinance Institution (MFI) Spandana Sphoorty Financial Limited”, https://www.microcapital.org/microcapital-brief-wholesale-lenders-agree-to-restructure-debt-of-indian-microfinance-institution-mfi-spandana-sphoorty-financial-limited/
MicroCapital Universe Profile: Spandana Sphoorty Financial Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Spandana+Sphoorty+Financial+Ltd
MicroCapital Universe Profile: Asmitha Microfin Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Asmitha+Microfin+Limited
MicroCapital Universe Profile: Future Financial Services Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Future+Financial+Services+Limited
MicroCapital Universe Profile: SHARE Microfin Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SHARE+Microfin+Limited
MicroCapital Universe Profile: Trident Microfin Private Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Trident+Microfin+Private+Limited
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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