The Small Industries Development Bank of India (SIDBI) has provided credit facilities worth Rs 350 crore to one of India’s largest microfinance institution (MFI) Bandhan Microfinance.
Bandhan Microfinance which is among the country’s top five microfinance institutions by portfolio size, has already received Rs 150 crore from SIDBI early this month as part of the first tranche of this Rs 350 Crore credit facility.
SIDBI has also committed to offer another Rs 50 crore to Bandhan in the form of subscription to the latter’s proposed non convertible debentures (NCD). In 2009 and 2008, SIDBI had lent Rs 250 crore and Rs 100 crore to Bandhan Microfinance.
The rate of interest for the loan has been fixed at 10.5% a year, which many analysts feel is a very competitive rate in a rising interest rate market. The loan has been offered for a period of 3-5 years. In 2009, SIDBI had offered Rs 250 crore to Bandhan at 12% per year for a period of five years.
In December 2009, Bandhan Financial Services Pvt. Ltd, had raised Rs 50 Crore by selling a 10.92% stake to government owned Small Industries Development Bank of India. SIDBI bought the stake by paying a premium of at least Rs 50 per share in a deal which valued Bandhan Microfinance in excess of Rs 450 crore.