Janalakshmi Financial Services, the Bangalore-based micro finance institution (MFI) promoted by social entrepreneur Ramesh Ramanathan, has raised Rs 65 crore from Citi Venture Capital International (CVCI).
The money was raised as part of an ongoing round (‘Series C)’ and more is expected to be raised in the coming weeks. Earlier, it had raised Rs 100 crore as part of its Series A and Series B funding.
“CVCI has taken significant minority stake in Janalakshmi after this round of funding. However, the promoters are the single largest shareholder in the company,” said Ramanathan, the chairman of Janalakshmi, without divulging details.
The non-banking fiannce company, with an aimed focus on financial inclusion of the urban poor, had got investment from Bellwether, Lok Capital, the Michael and Susan Dell Foundation, and Treeline Investors, among others, in the earlier funding rounds. These investors have further invested in the Series C funding, along with CVCI.
Ramanathan, who has worked with Citibank earlier in the US, said Janalakshmi would focus on executing current business models, along with consolidating present operations. The MFI has 62 branches in 12 states.
It draws 85 per cent of revenue from micro-credit to the urban poor and the rest comes from providing other services such as loans for affordable housing, gold loans and enterprise financial services. Janalakshmi is also a business correspondent for Axis Bank, to facilitate financial inclusion of the urban poor.
MFIs are facing a severe cash crunch, as banks are reluctant to lend after repayment difficulties faced by some players after the restrictions introduced in Andhra Pradesh. The subsequent Malegam committee recommendations and subsequent policy action by the Reserve Bank of India has not changed the situation. Some MFI loans had been recently restructured by banks to ease repayment pressure.
“Corporate debt restructuring gives a systemic relief to the micro finance industry and indicates the importance of MFIs in financial inclusion. We hope fund flow to the industry from commercial banks will normalise in the near future,” Ramanathan said.
Despite an inflationary environment, MFIs had to devise innovative ways to protect their operating margin, he said.
Janalakshmi disbursed around Rs 250 crore of loan in 2011-12 and has dues of Rs 200 crore. The MFI's default rate was below one per cent during this period.