Hyderabad: Mudra Bank, a refinance bank for microfinance and non-banking financial companies, has invested 50 crore in Janalakshmi Financial Services Pvt. Ltd through a securitization deal facilitated by IFMR Capital. This is Mudra Bank’s first capital market transaction.

Mudra, or the Micro Units Development & Refinance Agency, is a government initiative to provide cheap loans to companies that finance micro and small companies. IFMR Capital, in a statement on Wednesday, said it had exclusively structured and arranged a securitization transaction where MUDRA would invest 50 crore in the A (-) rated senior tranche of securitized loan portfolio of Janalakshmi.

Securitization allows companies to provide part of their loan books and its receivables as a guarantee to financial institutions. In this short-term transaction, the tenure is 1.5 years. IFMR Capital also participated as an investor through its investment in the subordinated j tranche, it said. The Economic Times reported that IFMR has put in 1.63 crore.

“Structured financing has a greater impact in enabling financial institutions to access funds from capital market at a lesser cost, without a charge on their limited capital. We hope to participate in more such transactions," said Jiji Mammen, chief executive, Mudra Bank.

IFMR has structured 18 securitization and assignment transactions so far for Janalakshmi to raise around 2,000 crore. “With this transaction, Mudra plays a facilitating role in ensuring that NBFCs providing microfinance and small business finance are able to access domestic capital in an efficient manner," said Kshama Fernandes, CEO of IFMR Capital.

Small finance bank licensee Janalakshmi Financial said on Monday it has raised $150 million (around 1,000 crore) in a round of primary funding led by global private equity firm TPG.

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