India: Temasek plans big on small loans

Print
 
Jun 2007
Mumbai, India, June, 05 2007 - Small loans are big business and international investors are cashing in. Temasek, the Singapore government's investment arm is betting big on India's under banked segments through its NBFC arm "Fullerton India".

Small loans are big business and international investors are cashing in. Temasek, the Singapore government's investment arm is betting big on India's under banked segments through its NBFC arm "Fullerton India".

Though, technically Temasek doesn't want to call its new initiative as micro finance, it will target small towns and cities by offering collateral free loans to merchants and entrepreneurs with a turnover of less than Rs 2 crore.

Temasek has already invested a $150 million in Fullerton India and plans to pump in another $50 - 100 million in the current financial year.

Temasek follows a string of other prominent global investors looking to get into the small loans market in India. Banks like Citigroup and Barclays are reportedly in talks to buy out micro finance institutions.

At the same time, private equity investors like Sequoia have also picked up equity in companies like SKS Microfinance to cash in on the huge untapped market.

Lucrative segment

As the competition in this lucrative segment heats up, Temasek and Fullerton India are trying to ensure they don't get left behind.

Fullerton plans to expand rapidly and open 500 branches in 250 cities by the middle of 2008. Over the next three years, it will expand the network to 400 towns across 12 – 14 states.

While Temasek doesn't want to officially comment, NDTV has learnt that Fullerton India has also got RBI clearance for taking and holding deposits.

But in the first phase of its plans, the company will focus on lending activities and building its loan book.

However, over the next three – five years, Temasek's NBFC arm does plan to start taking deposits as well. A precursor perhaps to an entry into the Indian banking sector.



Source : NDTV Profit
 

Research Analysis Tools

The fund indexes, institution benchmarks and other market information displayed here are all Symbiotics designed analysis tools, created in-house by our analysts and experts. Symbiotics has one of the oldest track records in microfinance investment analysis dating back to the late 1990s; its indexes and benchmarks have been regularly used as markers by investors, asset managers, financial institutions and practitioners. These, as well as several other research products, are available through the Research Account. Click on the link below to find out more.

Learn More