Janalakshmi Financial Services Private Limited

March 04, 2014
Mumbai

CRISIL assigns ’CRISIL A+ (SO)’ rating to Janalakshmi Financial Services Pvt Ltd’s securitisation transaction

Trust Details Structure Yield Terms Principal (Rs. Million) Tenure (fortnights)^# Cash collateral (Rs. Million) Rating^&
Orchid JFSIBL February 2014 Series A PTCs Par with turbo amortisation Fixed 434.0 39 35.8^* CRISIL A+ (SO)

^#Actual tenure will depend on the level of prepayments in the pool, and on the exercise of the clean-up call option.
^& Series A PTC holders are entitled to receive interest and principal on fortnightly basis. There is an indicative schedule for principal repayments for Series A PTCs; however, the structure allows for principal payments to be made by the maturity date of PTCs (timely interest and ultimate principal payment structure).
^*Additional credit support includes Rs.53.6 million in the form of scheduled cash flow subordination (assuming zero prepayments) –includes over-collateralisation of Rs.9953.

CRISIL has assigned its ‘CRISIL A+ (SO)’ rating to the Series-A pass-through certificates (PTCs) to be issued by Orchid JFSIBL February 2014, a trust settled by IDBI Trusteeship Services India Ltd (ITSL). The PTCs are backed by microfinance loan receivables originated by Janalakshmi Financial Services Pvt Ltd (JFSPL; rated ‘CRISIL BBB+/Stable/CRISIL A2+’).

The rating is based on the credit quality of the pool cash flows, the origination and servicing capabilities of JFSPL, the credit support available to the PTCs, the payment mechanism for the transaction, and the soundness of the transaction’s legal structure.

The transaction has a par with turbo amortisation structure, wherein the trust will issue the Series A PTCs in exchange of a purchase. The PTCs are senior in nature, and will have the first priority right on the trust property. Series A PTCs are entitled to fortnightly interest. As per the transaction structure, excess collections each fortnight, if any, will be used to amortise the principal outstanding on Series A PTCs; however, the structure allows for principal payments to be made by the maturity date (ultimate payment structure). On redemption of Series A PTCs, the fortnightly collections will flow back to the originator in its capacity as a residual beneficiary. ITSL will be appointed as the trustee to monitor the overall transactions on behalf of the PTC holders. JFSPL will continue to service the pool contracts as the servicing agent.

The pool cash flows are securitised, and comprise receivables from microfinance loans originated by JFSPL. The pool has a weighted average net seasoning of seven months, with the top state (Maharashtra) accounting for 25.9 per cent of the pool principal outstanding. The average ticket size of the pool is Rs.20,834. All contracts in the pool are current.

CRISIL had earlier rated 11 securitisation transactions backed by microfinance loans originated by JFSPL. These transactions recorded strong collection performance and negligible delinquencies.

About the Originator
JFSPL, a non-banking financial company, was established in April 2008 in Bengaluru (Karnataka) by Mr. Ramesh Ramanathan, a former banker. The company started urban microfinance operations in April 2008 by taking over the portfolio of Janalakshmi Social Services. JFSPL offers various loan products under the individual and mutual guarantee group methodologies. As of December 2013, the company had 140 branches across 16 states. JFSPL had an outstanding loan portfolio of Rs.16,481 million as on December 31, 2013.

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Last updated: May, 2013

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