Janakalyan Financial aims to grow loan book by 50% in FY22

NBFC-MFI Janakalyan Financial Services, which has been witnessing an improvement in collection efficiency and disbursals since July-August last year, is looking to grow its loan book by around 50 per cent in 2021-22.

According to Alok Biswas, MD and CEO of Janakalyan, the collection efficiency, which currently stands at around 90 per cent, is likely to improve to 92 per cent by March this year and further improve to 98-99 per cent by June 2021.

“ The lockdown initially impacted collections and disbursals, but we have been witnessing some growth in disbursements since July-August 2020 onwards. We had also received funding support from our lenders. However, post the episode of Sambandh Finserve in Odisha in October, we had to face some problems in raising funds,” Biswas told BusinessLine .

The Odisha-based microlender Sambandh Finserve was recently at the centre of a controversy after some of its key officials alerted the company’s board members about a purported fraud by the executive management. The company was also said to have defaulted payment to lenders.

This incident had impacted other smaller MFIs and their ability to raise funds due to lack of confidence among lenders. The company’s total loan outstanding, which stood at ₹239 crore as on March 2020, came down to around ₹198 crore as on January 2021. This was because of the drop in disbursements in the wake of the pandemic, and also the Sambandh incident shaking the confidence of investors and lenders.

Fund-raise plans

The Kolkata-based Janakalyan, however, managed to receive support from Sun Tech City Private Ltd through equity infusion. The company has picked up 12 per cent stake in the NBFC-MFI.

The company is also looking to raise close to ₹50 crore by Q1 of next fiscal to support our growth.

“It is a moment of great pride for Janakalyan, specially at this critical juncture when debt capital is not flowing much in mid-size MFIs since the pandemic. Having received this sort of fresh capital infusion validates the business model of MFI, which will boost and re-foster investors’ confidence in the sector,” he said.

Janakalyan was supported by SIDBI Venture Capital Limited with equity support in 2019, and this is the second round of investment other than the promoters.

The much-needed equity capital raised would be used to expand the company’s operations in new geographies.

Janakalyan, which currently has a presence in West Bengal, Bihar and Jharkhand, is looking to expand operations in lower Assam, Tripura and Chattisgarh in the next one to two years.

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