Indian microfinance institution Bhartiya Samruddhi Finance Limited (BSFL) reportedly has requested permission from its creditors to convert loans amounting to INR 2 billion (USD 40.6 million) into preference shares to secure an immediate line of credit. Half of the amount is owed to Small Industries Development Bank of India (SIDBI), with the remainder held by multiple unnamed lenders. The loans would be converted over a period of four to five years into preference shares, a form of quasi-debt that would hold precedence over common equity holders in the event of liquidation.
BSFL is also seeking additional funding of INR 7 billion (USD 142 million) to cover its obligations to banks and other financial institutions for the remainder of the fiscal year.
By Kristha Abores, Research Associate
About Bhartiya Samruddhi Finance Limited (BSFL):
Bhartiya Samruddhi Finance Limited (BSFL) is a regulated non-banking finance company (NBFC) that was founded in 1997 and is based in Hyderabad, India. It is part of the BASIX Group, which provides microfinance, agricultural and business development services to poor, rural households. As of March 31, 2011, BSFL reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 352 million, a gross loan portfolio of USD 281 million, return on assets (ROA) of 0.66 percent, return on equity (ROE) of 4.73 percent and 1.72 million active borrowers.
About 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 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 September 30, 2010, SIDBI reported total assets of INR 480 billion (USD 9.75 billion).
Sources and Additional Resources:
[1] Economic Times: “Bhartiya Samruddhi Finance wants to convert loans into preference shares”, http://articles.economictimes.indiatimes.com/2011-09-27/news/30208316_1_mumbai-bhartiya-samruddhi-finance-bsfl-term-loan
MicroCapital.org article, September 5, 2011, “MICROCAPITAL BRIEF: Vijay Mahajan of Microfinance Firm BASIX Says Firm to Explore Foreign Investors if Domestic Banks Refuse to Lend”, https://www.microcapital.org/microcapital-brief-vijay-mahajan-of-microfinance-firm-basix-says-firm-to-explore-foreign-investors-if-domestic-banks-refuse-to-lend/
MicroCapital.org article, 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 article, July 28, 2011, “MICROCAPITAL BRIEF: Indian Microfinance Institution BSFL Threatened by Deterioration in Portfolio Quality, Urgently Seeks New Funding to Stave Off Potential Collapse”, https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-bsfl-threatened-by-deterioration-in-portfolio-quality-urgently-seeks-new-funding-to-stave-off-potential-collapse/
MicroCapital.org article, June 17, 2011, “MICROCAPITAL BRIEF: Wholesale Lenders Agree to Restructure $1b in Debt for Indian Microfinance Institutions (MFIs) Spandana Sphoorty, Asmitha, Future, Share, Trident”, https://www.microcapital.org/microcapital-brief-wholesale-lenders-agree-to-restructure-1b-in-debt-for-indian-microfinance-institutions-mfis-spandana-sphoorty-asmitha-future-share-trident/
MicroCapital Universe Profile: Bhartiya Samruddhi Finance Limited (BSFL), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bhartiya+Samruddhi+Finance+Ltd+%28BSFL%29
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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