By IANS,
Mumbai : Bangalore-based Ujjivan Financial Services Wednesday said it is now among the first microfinance institutions to raise money from the international markets after the clampdown on such companies by the Andhra Pradesh government last October.
The institution, which claims to serve 970,000 urban and semi-urban poor customers in 20 states, has raised nearly $1 million from DMW-Cyprus, a member of the Connecticut-based Developing World Markets with interests in asset management and investment banking.
“We expect banks and financial institutions in India to resume lending to microcredit institutions outside Andhra Pradesh, post the Reserve Bank of India directions of Dec 22,” said Ujjivan managing director Samit Ghosh.
The Andhra Pradesh government had clamped down on microcredit institutions last October after public outrage over suicides allegedly linked to the methods adopted by them to forcebly recover loans from borrowers.
Following that, the central bank had issued a master circular — or comprehensive norms — Dec 22, asking bankers to continue lending money to microfinance institutions in the light of the role they play in the economy, especially in rural areas.
“Given the current status of the sector, banks are wary of lending to such microcredit financial institutions,” said Gautam Verma, director of Unitus Capital, which arranges capital for companies at the bottom of the economic pyramid.
“As such, it has become even more critical for microcredit institutionsto diversify the funding sources,” added Verma, whose firm was financial advisor to the Ujjivan issue.
The issue has been raised by way of non-convertible debentures, listed on the Bombay Stock Exchange.