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 per cent.
“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.
Micro finance companies mostly depend on bank loans taken at 13-13.5 per cent 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 RBI´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.