Ujjivan Financial Services, a Bangalore-based microfinance institution, plans to raise Rs 900 crore through debt and equity deals to meet its business requirements in the current financial year.
The company had, last month, raised Rs 125 crore of loans from Small Industries Development Bank of India (Sidbi), Axis Bank, Corporation Bank and State Bank of Travancore. It had also raised Rs 55 crore earlier this year by issuing non-convertible debentures.
“We need more funds to service our existing debts and offer fresh loans to borrowers. We have raised Rs 180 crore so far this year, and would raise another Rs 620 crore in the coming months. We also plan to raise around Rs 100 crore of equity capital by October,” Samit Ghosh, founder and managing director, told Business Standard. Ghosh said banks had been cautious in lending to Indian microfinance firms since October 2010, after the Andhra Pradesh state government passed a legislation curbing micro-lending in the state. However, banks are once again lending selectively to microfinance institutions that have weathered the crisis, he added.
“Till August, we were not confident about whether we would be able to raise the capital required for our businesses. But the situation is improving now, and we have secured funding from Sidbi and other banks,” he said.
Ujjivan currently has bank loans of Rs 450 crore, while its own loan portfolio is estimated at around Rs 650 crore. According to Ghosh, though the company operates across 20 states in India, it did not have any exposure in Andhra Pradesh. This helped it tide over the recent crisis in the microfinance sector. "We did not opt for any debt restructuring. We have been able to maintain our earnings and profitability. The repayment rate in our portfolio is still 98 per cent. Hence, banks are confident in offering fresh loans to us," he said.
