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14th Nov. '22 - 17th Nov. '22

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CreditAccess Grameen Limited

CreditAccess Grameen Limited (CA Grameen) is India’s largest microfinance institution, headquartered in Bengaluru, Karnataka. The company is popularly known as “Grameen Koota” amongst its customers, translating to “rural group” in Kannada. 

As of March 31, 2022, had a borrower base of over 3.82 million, predominantly in rural areas in 14 states and 1 union territory with a strong network of 1,635 branches and a highly efficient workforce of 15,667, contributing to achieving our mission of financial inclusion.

  • AUM: Rs. 15,615 Cr
  • PAT: Rs. 357 Cr.
  • ROA: 2.19%, ROE: 9.13%
  • Number of active borrowers: 38.2 Lacs

Key Strengths

  • 1

    Strong market position in the Indian microfinance sector with long track record

    • With a 3 year CAGR of 32.4% through fiscal 2022, itremains to be the largest standalone microfinance institution in the country
    • Has been able to scale the business at a robust rate in terms of size as well as operational presence, and all this while maintaining the operational parameters and infrastructure at comfortable levels. 
  • 2

    Sound ground level practices

    • Risk management practices have remained sound and evolved over the years – to suit the increasing scale of business.
    • 90% of the field employees are hired as freshers and, from neighbouring livelihoods so as to have a strong connect with the borrowers.
    • Over 90% of which are in cashless mode and most of the collections happen weekly which result in small EMIs. 
  • 3

    Stable operating profitability with gradually correcting credit costs

    • Sustained its operating profitability across business cycles, anchored by lower than industry average operating expenses.
    • The company’s pre-provisioning profitability has remained above 5% for the last six fiscals. Even in the aftermath of demonetisation while credit losses rose to 3.5%, its RoMA still remained far better than most micro financers at 2.4% for fiscal 2017. 

Key weaknesses

  • 1

    High regional concentration in operations

    • Regional concentration in loan portfolio remains high – with top 3 states accounting for almost 77.9% (consolidated) of the AUM as on June 30, 2022.
    • From 70% in March 2015, the share of Karnataka, which is the largest state in terms of concentration – reduced to 51.5% of the loan book - by the end of March 2019.
    • As of June 30, 2022, networth coverage on AUM exposure to top 10 districts was almost 0.8 times and the highest exposure to AUM for any single district was 3%.
  • 2

    Inherently modest credit profile of the borrowers

    • A significant portion of the portfolio comprises microfinance loans to clients with below-average credit risk profiles and lack of access to formal credit. Typical borrowers are cattle owners, vegetable vendors, tailors, tea shop owners, provision store owners, and small fabrication units.
    • The income flow of these households could be volatile and dependent on the local economy.
    • However, since more than 80% of the company’s borrower base is in rural areas wherein the impact of the pandemic and lockdown has been lower, the restoration in their occupational activities has been encouraging.

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