Kotak Mahindra Bank on Friday said it would acquire Bengaluru-based BSS Microfinance Pvt Ltd. The bank is paying ₹139.2 crore for the 99.49-per cent equity stake.
The acquisition of BSS is Kotak’s second. It acquired ING Vysya Bank in November 2014 in an all-stock deal. The BSS deal is Kotak’s first move into the rapidly growing micro-lending sector.
BSS lends primarily to women in the small- and medium-sized farming segments in Karnataka and Maharashtra, and has a smaller presence in Madhya Pradesh. As of June 30, 2016, the microfinance company’s loan book stood at ₹483 crore, with a customer base of 2,17,000 borrowers and a network of 78 branches.
Narayan SA, President – Commercial Banking, Kotak Mahindra Bank, said, “The acquisition gives us a platform to get into a new space, that is microfinance.”
Loan quality BSS reported a net profit of ₹14 crore in FY16 and net interest income of ₹50 crore. “The size of the loan book was reasonable, the quality was good and there is a good team in place,” Narayan said.
He added that bad loans for BSS stood at ₹1,50,000 for the same period, representing 0.003 per cent of the book. Kotak’s hopes to finalise the deal in three months.
Kotak is the second bank to buy out a microfinance company in recent times. In July, IDFC Bank bought microlending institution Grama Vidiyal.
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