India: Bandhan Raises Rs. 500 million of Equity Capital from Small Industries De...
India, December, 23 2009 -
Bandhan Financial Services Private Limited (Bandhan), a pan-India microfinance institution headquartered in Kolkata, is pleased to announce the successful completion of its first major round of equity infusion of INR 500,000,000 (Rupees five hundred million – US$ 10.7mn approx), from Small Industries Development Bank of India (SIDBI), the principal financial institution for promotion, development and financing of the Micro, small and medium enterprises in India.
Bandhan (meaning togetherness) was born in 2001 under the leadership of Mr. Chandra Shekhar Ghosh, a Senior Ashoka Fellow. The main thrust of Bandhan is to work with women who are socially and economically disadvantaged, for their social up-liftment and economic emancipation. Bandhan commenced group-based microfinance operations in West Bengal in July 2002.
As on November 30, 2009, Bandhan had Rs. 10,800 million of portfolio outstanding to a client base of 2.1 million spread across 15 states of India and managed through a network of 1,008 branches. Bandhan?s primary focus has historically been on Eastern and North-Eastern India, which comprise some of the most economically disadvantaged states in the country. It has a hard working and committed work force of over 6,000 employees – 80% of whom hail from poor families. What is striking is its repayment rate which is recorded at 99.91%, breaking the myth that „poor are not bankable?.
Over the years, Bandhan and its promoters/ promoting entities have been felicitated by numerous awards and honours, in recognition of their impressive efforts in eradicating poverty and empowering women through the process of financial inclusion. In December 2007, Forbes magazine ranked Bandhan as the best performing MFI in India and the second best in the world. Bandhan was the only Indian MFI and one of the two Asian MFIs featuring in the top 10 MFIs globally. Bandhan has also been honored with the Skoch Challenger Award for financial inclusion in 2008 and the Pro Poor Innovation Challenge (PPIC) Award by the Consultative Group to Assist the Poor (CGAP), an affiliate of the World Bank in 2006. Very recently, Bandhan won the 'Microfinance India Award 2009' in the category 'Institution of the Year'.
The newly infused equity will provide Bandhan with the impetus needed to consolidate operations in the states in which it is present and to expand to other states within the country. By March 2014, Bandhan projects to have a portfolio of over Rs. 60,000 million outstanding to more than eight million borrowers spread across all states within India.
Mr. Chandra Shekhar Ghosh, the Founder, Chairman & Managing Director of Bandhan says “SIDBI has been a pillar of support for us since the very beginning and has stood by us through thick and thin. It is a tribute to the hard work of each and every employee of Bandhan that a national institution like SIDBI has invested in us. The continuous debt funding from SIDBI, which has steadily grown over time, and the intensely effective capacity building support and valuable advice extended in the earlier years have immensely contributed to the success of Bandhan. SIDBI, with its immense market knowledge, strong development focus and active policy advocacy participation will be extremely beneficial to Bandhan to reach millions of poor clients across India. Bandhan team is proud to have an apex national institute of repute like SIDBI as its long term investor.”
Under the dynamic leadership of Mr. Ghosh, Bandhan has provided financial services to poor women in an efficient, timely and cost effective manner. BFSPL has emerged as a leader in the field of microfinance with SIDBI as its partner in the phenomenal growth achieved over the years. Infusion of equity of Rs.50 crore would empower Bandhan to raise substantial loans from lenders and enhance its reach, opined Mr. K S Singhwan, CGM heading the Eastern Zone of SIDBI. He added that SIDBI has supported Bandhan right from its nascent stage and has extended multiple loans, capacity building grant and Transformation loan aggregating about Rs.4900 million up to November 2009. While the term loan has helped Bandhan to start up and upscale its micro finance operations, CB grant has contributed significantly to institution development processes of the MFI. Transformation loan, an almost no cost equity type support, contributed to the MFI?s leveraging of debt in its formative years.
“Unitus Capital is privileged to work with Bandhan, which is one of the top MFIs in the world. This partnership with SIDBI is a testimony to the success of Bandhan in providing financial services to the underprivileged with great efficiency, which is changing the lives of millions of families at the bottom of the pyramid. This funding will allow Bandhan to expand its operations throughout India and beyond” says Mr. Abhijit Ray, Director of Unitus Capital, which acted as the sole financial advisor for the transaction.