MFI Bandhan hives off Rs500cr loans to IDBI Bank
27 Feb 2012
Microfinance company Bandhan Financial Services, now the largest MFI by assets as well as loans given, has raised Rs500 crore by selling farm loans to IDBI Bank Ltd in the biggest securitisation deals this financial year.
Selling loans releases capital for MFIs and helps them deploy fresh loans to the poor without borrowing directly from banks.
Bandhan, which concluded the IDBI deal last week, had raised another Rs50 crore from Axis Bank Ltd and Development Credit Bank Ltd in two separate deals early this month, according to chairman and managing director Chandra Shekhar Ghosh.
"We are committed to strike a Rs 500-crore securitisation deal with IDBI Bank. The transaction will be through within a week," Ghosh said.
Ghosh said the parties will execute the deal once ratings agency ICRA provides a rating for the pool of 4.5 lakh small farm loans.
In the securitisation process, loans are pooled and turned into securities that can be sold to investors, primarily commercial banks.