Microfinance firm Grama Vidiyal plans to recruit 700 peopleMarch 5th, 2009 - 9:09 pm ICT by IANS
Chennai, March 5 (IANS) Tamil Nadu-based Grama Vidiyal Microfinance Ltd (GVM) is in talks with private equity funds to raise Rs.500 million (Rs.50 crore) to fund is proposed expansion that includes setting up branches in neighbouring states and recruiting around 700 people, a top official said.
“We will be expanding into neighbouring states like Karnataka and Kerala setting up branches there. We will finalise the investor in two months,” Arjun Muralidharan, chief executive of the microfinance company, told reporters here Thursday.
He said the fund will also be used to meet the proposed capital adequacy norms laid down by the central bank.
With the Reserve Bank of India (RBI) increasing the capital adequacy ratio (CAR) by 2 percent to 12 percent for non-banking finance companies (NBFC), fresh equity is needed, Muralidharan said.
Elaborating on the expansion plan, GVM chief operating officer Shirley D. said: “By the end of next fiscal, we will increase our branch network by 125 offices to 275 and the number of employees by 700 to 2,200.”
The company hopes to increase its loan book size to Rs.5 billion (Rs.500 crore) from Rs.1.7 billion (Rs.170 crore) and the client base from 370,000 to 750,000 in the same period.
In the first round, GVM raised $3.7 million from Unitus Equity Fund LP and Vinod Khosla, a venture capitalist.
According to Muralidharan, the delinquency rate of the firm is just 0.5 percent. He said the company raises funds from banks for onward lending. “Our average cost of funds is in the region of 10-12 percent which is on a diminishing balance while we lend at 12 percent flat rate,” he added.