Utkarsh Micro Finance raises Rs 30 crore short term funds from Ratnakar Bank

KOLKATA: Utkarsh Micro Finance, which received license to set up small finance bank, has raised Rs 30 crore in commercial paper, the company said.

Ratnakar Bank has invested in the CP issue which will mature in 180 days. The coupon was 10.15%.

“This transaction is significant as it is our first CP transaction. It has opened another avenue for raising resources. This will help in reducing the overall cost of fund,” said Govind Singh, managing director and chief executive at Utkarsh.

Microfinance companies mostly depend on bank loans taken at 13-13.5% a year for onlending.

Raising funds through commercial parer issues has been much cheaper than bank loans since the short term money market has reacted in sync with Reserve Bank of India's rate cuts while banks were reluctant to pass on the full benefit.

RBI has lowered the benchmark repo by 150 basis points or 1.5 percentage points since January.

Utkarsh, the Varanashi-headquartered MFI is one of the 10 entities that received in principle approval from the RBI to start a small finance bank. It has a portfolio of more than Rs 950 crore and about 7 lakh customer base.