Spandana, one of the largest microfinance companies in India, has scaled up its Agri-family loans (titled Dharani, these loans are given to small, marginal and tenant farmers for agriculture purpose). It has disbursed over Rs.500 crore to small and marginal farmers till September 30, 2010, after successfully completing a three-year pilot run in Andhra Pradesh.
In the last one-year, the company has reduced the interest rates charged on these loans in tranches by 300 basis points to 21 per cent from 24 per cent in the previous year, thereby making them one of the lowest priced micro-loans in the industry. Spandana’s MD Mrs. Padmaja Reddy says: “We are leveraging our existing network and passing on the benefits to our borrowers”. The Agri-family loan product has reached out to over 1.4 lakh households so far.
Spandana has been working on diversifying its product portfolio to service the varying credit requirements of different customer sub-segments within the low-income mass market. Traditionally, over the years MFIs have been reaching out to agricultural labourers and self employed individuals with group loans maturing in fifty weeks, repayable on a weekly basis. These loans do not find favour with small, marginal and tenant farmers as they did not suit their requirements. Realising the existing gap in this category, Spandana designed agri-family loans, thereby significantly meeting the requirements of agricultural families in the region.
Mrs. Padmaja Reddy, Managing Director of Spandana says: “Instead of lending more to similar group loan customers, we are working towards providing tailor-made niche products to customers. This will help us expand the overall pie of the microfinance industry. We are reaching out to new customer sub-segments from our existing branch network”.
Agri-Family loan product was launched on pilot basis in 2006 in two different locations namely Adilabad and Nizamabad region in Telangana district of Andhra Pradesh. Under this loan, small and marginal farmers are offered flexible repayments based on their cash-flows. During the pilot run, Spandana witnessed cent per cent on-time recovery, thereby showcasing its deep rooted understanding of customer economics and its robust recovery mechanism. Spandana is planning to expand the reach of its agri-family loan product to other states.
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Established in 1998, Spandana Sphoorty Financial Ltd (Spandana) is registered as a non-banking finance company (NBFC) and regulated by the Reserve Bank of India. Spandana offers micro-credit and credit plus services close to customer doorstep across 12 states in India through over 1,800 branches. Spandana has disbursed over Rs 15,000 crore to over 50 lakh borrowers, predominantly women and has Asset Under Management (AUM) of about Rs.4,500 crore. It is supported by over 40 banks and financial institutions. Spandana has been awarded the highest credit rating in micro finance industry by Crisil.