Punjab national Bank has granted a loan of 150 crore to Kolkata-based Bandhan, one of the fastest growing micro finance institution in India. Bandhan has been given this loan to help it expand its business. The institution plans to add one lakh new borrowers in coming five months.
PNB and Bandhan have entered an agreement according to which Bandhan would be charged an interest rate that would vary with the bank's Benchmark Prime Lending Rate (BPLR). PNB's current BPLR is 11 percent. A senior PNB official said that the loan would be offered for a period of three years.
Bandhan Chairman and Managing Director, Chandra Shekhar Ghosh said that the institution would use the fund in next few months and the overall cost of the fund, including the processing fee and operational costs work out to be 11.75 percent.
Bandhan was established seven years back with aim of poverty alleviation and women empowerment. The microfinance activities are carried on by Bandhan Financial Services Pvt. Ltd. (BFSPL), incorporated under the Companies Act, 1956. Bandhan will use the loan to offer micro loans to poor women at an interest rate of 12.5 percent per annum.
Bandhan had also availed a loan worth Rs. 250 crore from Small Industries Development Bank of India (SIDBI) at a dearer rate of 12 percent but tenure of the loan is higher (5 years) than that of PNB. Mr. Ghosh revealed that Bandhan has used 70 percent of the loan sanctioned by SIDBI.
As a part of its socio-economic development initiatives, state-run PNB has opened its first micro-finance branch in Bihar. The bank disbursed loans worth Rs 10 lakh and over a hundred rickshaws to the weaker sections of the society. The benchmark lending rates of the bank are currently pegged at 11 percent which the lowest in the country.