Damodhar Joshi, CEO of RSDC Laghubitta Bittiya Sanstha Ltd, has a MBA and Bachelor of Laws Degree (L.L.B) from Tribhuvan University. He has served as a program coordinator and program officer in Rural Self-Reliance Development Center and NESAC respectively.
- Please tell us about RSDC Laghubitta Bittiya Sanstha Ltd (RSDC).
RSDC,has a corporate office in Butwal, Rupandehi, started its operation from Bhadra 26, 2072 as a licensed national level class D financial institution. We are wholesale lender for community level cooperatives with presence in 26 districts. We have been providing loans to 137 organizations.
- What are the capital and promoter structure of RSDC Laghubitta Bittiya Sanstha Ltd. ?
It has Authorized capital of Rs 20 crore, Issued capital of Rs 10 crore and paid up capital of Rs 6 crore. We are planning for an Initial Public offering (IPO) of Rs 4 crore to reach paid up capital of Rs 10 crore. The promoters of this microfinance are Rural Self-Reliance Development Center (24.54%), Lumbini Bank ltd (12%) and 172 individual promoters representing 40 districts (23.46%).
- What kind of net profit and loan portfolio does your organization have?
In the fiscal year 2070/71, first year of operation, we made net profit of Rs 8.63 lakh. In the second year of operation, last fiscal year, we were able to make net profit of Rs 84.40 Lakh. We have made profit of Rs 32 lakhs in Q1 of this fiscal year as compared to the Rs 14.90 Lakh in the corresponding quarter of last fiscal year.
We have disbursed loan amounting to Rs 86 crore. Our outstanding loan stands at Rs 55 crore. We have borrowed Rs 57 crore from 11 commercial and development bank. We do not have Non Performing Loan.
- What are your plans for IPO?
Recently, we have appointed NIBL Capital Markets Ltd. as our issue manager for the IPO. We will be issuing IPO worth Rs 4 crore (4 lakh units) to the general public. As per regulations, 5% of the IPO will be allocated to the mutual funds and 2% of the IPO will be allocated to the employees of our organization. Remaining 93% of IPO, 3.72 lakhs units, has been allocated for the general public.
- Do you have a time line for your IPO issue?
We have to get a grading from ICRA Nepal and apply for approval from SEBON. If there are no situations which are out of our control, we should be able to bring this IPO to general public by Baisakh 2073. We are determined to offer this IPO by the end of this fiscal year even if things do not go as planned.
- We have heard the rumors on increment in paid up capital of class D financial institutions from the Nepal Rastra Bank (NRB). Paid up capital will reach Rs 10 crore after IPO, why hasn’t your organization considered bringing IPO of higher amount?
As of now the national level microfinance should have paid up capital of Rs 10 crore. It is imminent that the NRB will direct the Microfinance to raise its capital in near future. However, as the directive has not come yet, we have decided to bring an IPO to reach paid up capital of Rs 10 crore.
- Recently we have seen trend from Microfinace that the microfinance are unable to give any dividend immediately after they issue IPO. What will be the case with RSDC?
We do have some fund in our reserve. If the financial condition of the country does not worsen and we do not have to provision huge amount for the unforeseen loss, we will provide some kind of dividend to our shareholder after IPO. However, it is too early for me to forecast the dividend we may provide.
- If the NRB were to bring directive to hike paid up capital for microfinance, what would be your position?
If such directive were to come, we would make a plan through our BoD meeting to reach the required paid up capital stipulated by the NRB.
If we look at the commercial and development banks, the NRB had stopped issuing new license for those institutions for few years before they required them to increase their paid up capital. However, the central bank is still issuing license for the microfinance. So, it would not be fair for central bank to direct all microfinance to increase the paid up capital by same ratio. The NRB should consider the date of establishment of microfinance while requiring us to raise the paid capital. It is obvious that the microfinance that have been operational for decades will reach the requirement easily while the newly established microfinance(s) may perish if same requirement is set for the increment of paid up capital.