Spandana Sphoorty Financial Limited is a microfinance lender (NBFC-MFI) and non-banking financial company with a focus on rural areas, located in India. The business lines of the company comprise loans against property (LAP) and microfinance based on joint liability groups (JLGs). Primarily targeting women from low-income rural households, the company provides income-generating loans through the joint liability group (JLG) model, also known as Chetana. Its Chetana product has an interest rate of 25% annually, a loan term of 12 to 30 months, and flexible repayment options (weekly or monthly with no prepayment penalty). It offers its LAP via Criss Financial Ltd., a subsidiary. Its LAP is made to meet the various needs of small business owners, such as purchasing machinery, remodeling or adding to existing office space, or using it for working capital. LAP of the company has a loan tenure of one to ten years.
On Monday, Spandana Sphoorty Financial Ltd., a microfinance company, announced that it had authorized the sale of a portfolio of stressed loans, comprising written-off loans with an outstanding value of Rs. 304.41 crore.
“The Management Committee of the Board of Directors of the Company has authorized the sale of a stressed loan portfolio under its resolution dated September 23, 2024. This comprises a loan pool that was written off and had a value of Rs. 304.41 crore as of June 30, 2024. According to a stock exchange filing, the sale to an Asset Reconstruction Company (ARC) was completed through the Open Bid Method and settled for a consideration of Rs. 16.74 crore, based on security receipts.
The management committee of the company passed a resolution authorizing the sale to an asset reconstruction company (ARC) through an open bid procedure for a consideration of Rs. 16.74 crore. Security Receipts (SR) will be used as the basis for conducting the transaction. Spandana Sphoorty will hold 8.50% of the security receipts, or Rs. 1.42 crore, while the ARC will subscribe for 91.50% of the security receipts, or Rs. 15.32 crore. In contrast to the company, which has subscribed to 8.50% of security receipts totaling Rs. 1.42 crore, the ARC has subscribed to 91.50% of security receipts totaling Rs. 15.32 crore.
Spandana Sphoorty Financial Ltd stock is right now trading at Rs. 603.05 per share, which is almost 2% up in intraday today.
The non-banking financial company saw an increase in net non-performing assets to 0.53% in the quarter that concluded in June 2024. It was 0.3% the previous quarter and 0.49% the same time last year. The NBFC has seen a decline in its stock of 22.1% over the past 12 months, with a more severe decline of 47.5% already this year.
Conclusion: The company Spandana Sphoorty Financial Ltd. is selling the loan to ensure that the stressed loans will not have a significant impact on the business.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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