BSFL Manages 350Cr Debt To Pref Conversion; Mitigates Andhra Losses

Bhartiya Samruddhi Finance has managed to remind banks their loan book,and is reported to have got a Rs350 Cr funding tied in Preference Capital, a little as fresh capital and mostly conversion of existing debt. This should mitigate its Rs 450Cr Andhra losses.

There’s additional PE capital waiting for this bank commitment.

The uber-fast empowerment of the masses (MFI) scheme collapsed with the Andhra MFI Ordinance effectively shutting down the usury.

In the banks versus MFIs, banks are unrelenting on personal guarantee while promoters just can (I suppose the right word is) afford to give when the Malegam Report caps return at 24%, basically converting a lucrative pillage into a risk based spreads business.

One more point would be,I’m not clear on the law here, but ‘Personal Guarantee’ on Preference Shares? How does that work?

Malegam Report indicated a total exposure for banks of 13800 Cr in loans and 4200 Cr in securitized paper.

The CDR cell has admitted loans worth Rs 6,473 crore, involving five microfinance companies — Asmitha Microfin, Future Financial Services, Share Microfin, Spandana Sphoorthy Financial and Trident Microfin. Currently, the total debt of these companies is estimated at Rs 7,411 crore.


BSFL is a subsidiary of BASIX. Basix earlier owned nearly 100% of Samruddhi when it was set up in 1997. Samruddhi expanded its equity base from 4.5 crore to 20.6 crore in 2001, with the additional equity coming from IFC, Washington, Shorebank, Chicago; Hivos-Triodos Fund, Netherlands; ICICI Bank and HDFC.

The government has RBI as the single regulator for the sector though the Andhra government insists that it’s legislation remains in force.

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