The Hindu Business Line : Arman Financial ventures into micro financing

Due to a zero default ratio and easy recovery, the two and three-wheeler financier has decided to venture into micro financing, said Mr Jayendra Patel, Vice-Chairman and Managing Director.

“The RBI says that there is a 99.5 per cent recovery ratio in micro financing and our experience says that low income groups of people are more bankable; the smaller the man, greater is his credit worthiness,” he said.

40 branches in Gujarat

The company plans to set up 40 branches in Gujarat in the next two years and build a receivable including interest of Rs 248 crore by 2012 from 1,90,000 members.

Initially the loan sizes would be Rs 5,000, Rs 8,000 and Rs 10,000 to each woman in a group of five.

The loan would be payable in a 50-week period at an interest rate of 15 per cent per annum.

Based on the credibility of the group, bigger loan sizes would be extended later on, he said.

The company has an NOF of Rs 7.47 crore and Rs 11 crore in bank borrowings with banks such as SIDBI, IndusInd and Co-operative Bank.

Micro financing is popular in parts of South India but in States such as Punjab, Gujarat, Rajasthan and Maharashtra, it is just beginning to pick up pace, he said. Microfinance Institutes had close to 11 million customers and a cumulative outstanding portfolio of Rs 8,000 crore as on March 31, 2008. But micro finance in India is still miniscule compared to the demand, which is estimated to be Rs 500,000 crore, he said.

More Stories on : NBFCs | Entrepreneurship | Gender | Gujarat

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page