Two MFIs to get debt fund of Rs 630 cr by Sept 2014

Share will get a funding of nearly Rs 112 cr, while Asmita will get Rs 140 cr by end of this month

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Two-Andhra Pradesh-based Share and Asmita microfinance, a part of corporate debt restructuring (CDR) cell, are expecting a debt infusion of nearly Rs 630 crore by September 2014.

Share, will get a funding of nearly Rs 112 crore by the end of this month, while the second installment of nearly Rs 248 crore will come by September 2014. For Asmita too, banks would release Rs 140 crore by the end of this month, and the remaining Rs 130 crore would be disbursed by September 2014, said spokesperson of the MFI.

Both the MFIs will repay the debt over a time frame of 18 months. Meanwhile, another MFI, Spandana, is expected to get a funding of Rs 1,150 crore, payable over a 24 months time period.

The three MFIs have also been able to get two years' additional time from RBI for meeting regulatory capital requirements for qualifying as non-banking finance company (NBFC)-MFIs.

In April-2014, the three MFIs got RBI nod for forbearance on capitalisation requirements of net owned funds and capital to risk asset ratio (CRAR) till financial year 2016. According to RBI norms, an NBFC-MFI is required to maintain minimum net owned funds of Rs 5 crore, except for those based in the North East, and a CRAR of 15%. For most of the MFIs in Andhra Pradesh, the net owned funds is negative, at present.

Since 2011, Share had been able to increase its portfolio by Rs 450 outside Andhra Pradesh to Rs 1,450 crore at present. However, for Asmitha the portfolio outside Andhra Pradesh has reduced from Rs 660 crore in 2011 to Rs 450 crore at present. The reduction has been on account of debt settlement with banks, which eroded the growth, according to a spokesperson of Asmitha.

This apart, all the three MFIs have also been able to reduce their debt to banks through regular repayments since September 2011, when the debt restructuring was done. Since 2011, Share and Asmitha together repaid close to Rs 400 crore, with their present loan outstanding with banks together summed at Rs 2600 crore.

However, at least one MFI, Trident Microfinance is expected to start winding process after paying off nearly Rs 15 crore to two banks. Trident is the only MFI in the corporate debt restructuring cell of the Reserve Bank of India (RBI) that will be forced to close down as a result of the crisis in the sector after regulatory clampdown in 2010. The MFI has more than Rs 100 crore stuck in Andhra Pradesh as bad loans. The MFI had been able to pay almost all of its debt to bankers, with nearly Rs 15 crore outstanding with two banks at present.

"We expect to repay the remaining Rs 15 crore to two banks-State Bank of Travancore and Lakshmi Vilas Bank over the next few days, and then start the winding process. The process of closure is long drawn and involves a lot of cost," said P Kishore Kumar, managing director, Trident Microfin. The MFI had earlier sold assets worth Rs 18 crore to pay off its debt.