(Bloomberg) -- Arohan Financial Services Ltd. is delaying an initial public offering after Indian regulators ordered a group of shadow lenders including microfinance firms to stop sanctioning new loans, according to people familiar with the matter.
Arohan, which provides loans primarily to financially underserved women, had planned to file a proposal with the regulator last week for an IPO to raise about $200 million, the people said, asking not to be identified discussing private information.
A representative for Kolkata-based Arohan declined to comment.
The Reserve Bank of India earlier this month instructed Arohan and three other shadow banks to stop new loans because of the high interest rates they charge customers. The lenders also violated rules for microfinance loans relating to assessment of household income and borrowers’ ability to make monthly repayments, the RBI said.
Arohan’s flagship loan is aimed at groups of three to five women and has a rate of 24.25%, according to the lender’s website. The loan ranges between 25,000 rupees ($297) and 100,000 rupees and is for a tenure of 24-30 months.
The other three shadow lenders named by the RBI were Asirvad Micro Finance Ltd., DMI Finance Pvt. and Navi Finserv Ltd., which also canceled a proposed 1 billion rupee bond sale following the RBI’s order. Navi Finserv is backed by Sachin Bansal, co-founder of Walmart-owned e-commerce company Flipkart Pvt.
Arohan’s investors include Teachers Insurance and Annuity Association of America and Danish asset manager Maj Invest. It had considered selling shares previously but put that plan on hold too.
Arohan’s net profit was about $37 million for the financial year ended March.
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