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The Bangalore-based Ujjivan Financial Services, a microfinance institution (MFI) focusing on the urban poor, on Monday said it raised Rs 23 crore through a private placement.
“The placement of non-convertible debentures reiterates the faith of banks and financial investors in Ujjivan. During the past fiscal, Ujjivan has shown consistent performance and growth amidst crisis,” Ujjivan Managing Director Mr Samit Ghosh claimed in a statement issued here.
Standard Chartered Bank was the book-runner and lead-arranger of the issue, and the non-convertible debenture is listed on the Bombay Stock Exchange, it said.
“This is transaction comes at a crucial juncture and reaffirms the faith of lenders and investors in the micro-finance sector. We would continue to engage with the sector as an enabler to help achieve the larger goals of financial inclusion,” StanChart regional head-development organisations for South and Southeast Asia Mr Joseph Silvanus said in the statement.
Ujjivan commenced its operations in 2005 and is a partner of Grameen Bank, Bangladesh. In the last six years, it has disbursed loans of over Rs 2,100 crore, with a repayment rate around 99 per cent, the company claimed.
The Rs 20,0000-crore microfinance sector was thrown into a tizzy last October when Andhra Pradesh issued an Ordinance that sought stringent regulation of the industry, following reports of a spate of suicides by harried borrowers.
Andhra Pradesh is the largest MFI market in the country, with over 60 per cent of total business taking place there. The Ordinance saw loan recovery slowing to a trickle, besides banks also refusing to offer fresh funds to MFIs.
As the crisis deepened, a worried RBI set up a committee headed by noted chartered accountant YH Malegam, who submitted his report early this year. The report called for capping MFI interest rates at 24 per cent, and banned MFIs from lending to individuals who have already borrowed from others and besides banning coercive recovery by agents, among other things.
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