Mumbai: Indian micro lender Bandhan Financial Services may raise up to Rs 5 billion via securitization of loans in the Jan-Mar quarter of the current fiscal year 2012-13, the Press Trust of India reported citing the company's Chairman and Managing Director Chandra Shekhar Ghosh.
"We may securitize Rs 400-500 crore (Rs 4-5 billion) of loans in the current financial year to support our loan growth, which is likely to happen in the fourth quarter (Jan-Mar) of FY13," Ghosh told the news agency.
Earlier, the micro-finance institution (MFI) had securitized farm loans worth Rs 5 billion with state-run lender IDBI Bank and Rs 2.5 million each with private sector lenders Axis Bank and Development Credit Bank.
Bandhan Financial Services' further plan to securitize loans comes amid the entire MFI industry's struggle to achieve financial soundness after the sector was hit by a stringent state legislation.
In October 2010, the government of Andhra Pradesh -- the largest MFI market in the country -- passed a law, preventing coercive recovery of loans from the industry's largely poor borrowers, leading to massive cases of defaults and dwindling of banks' financing to the sector.
However, Ghosh said that he hopes banks' funding to the sector to pick up in this fiscal.
"We hope things will be better in the current financial year with banks getting the confidence to lend to the sector," Ghosh said.