In the run-up to completing one year as a bank (on March 10), Trichur-headquartered ESAF Small Finance Bank on Thursday expanded its footprint by setting up its first branch in Karnataka in Bengaluru. On the occasion, it also rolled out two new offerings – agent banking and Atal Pension Yojana.

ESAF is also celebrating its 25th anniversary as an organisation on March 11.

Speaking to BusinessLine , K Paul Thomas, MD & CEO of the bank, said it plans to open five branches in Bengaluru in the first year. It plans to spend ₹40-50 lakh in capex for each of these branches.

“Over the last one year, ESAF SFB has been focussing on rolling out retail branches. We had 310 micro-finance branches. We have opened 82 new format branches. These are like any other bank branches that offer a number of products,” he said.

On the target audience, Thomas said ESAF SFB would be targeting the lower middle-class and small businesses.

Agent banking

Explaining agent banking, Thomas said: “As a micro-finance institution, we followed the doorstep banking model. As a bank, we will be using this route to serve our customers. Now, because of technology, banking is fully moving to digital. But India is not fully ready for digital banking.

“So, an ‘Assisted Digital’ is the way forward, I believe. All our field officers have tabs (tablets). So, they are able to do the sourcing faster. Also, we have reduced the loan disbursal time to two days, from seven days, due to the use of tabs.

“Currently, we have about 3,000 field agents in micro-finance. They will now act as the bank’s agents at the doorstep. They are doing only loan sourcing and loan collection. But now they will be able to do cash-in, cash-out, too. I aim to have an agent every five kilometres; the agent will be the bank’s touchpoint. Here, we will be using technology in a big way. Also, this will create jobs.”

As for the Atal Pension Yojana, Thomas said ESAF was the aggregator for the PFRDA for the government’s Swavalamban Yojana.

“We enrolled more than 3-lakh people in that scheme. Then this scheme was almost stopped and Atal Pension Yojana was started. For this scheme, only banks were permitted to act as aggregators. In Atal Pension Yojana, those in the age group of 18 to 40 years can join.

“We have a large rural range, and our active borrowers are 17 lakh, of which, 40 per cent are eligible to join the Atal Pension Yojana. So, we have now become an agent for PFRDA and we are launching that initiative on March 10. We have set a target of enrolling one lakh by the end of this month,” he said.

Thomas said ESAF SFB has a novel deposit product, the Hridaya (heart) Deposit. It is a ₹15-lakh deposit for a minimum of two years. Here, the depositor can choose from the bank’s pool of priority sector advances, whether it be micro-finance, micro-housing, or agriculture, where his/her deposit can be deployed.

“Here we use the concept of Social Return on Investment. I got this idea from a tool developed by the SROI network based in London. In 2013, Opportunity International, an Australian organisation, used this tool to conduct a study on ESAF’s customer base.

“For the first time in the world, we used this SROI tool in micro-finance to measure the social return of these small loans. The study found that for every ₹1 invested, the social return is ₹3.19. So, when the depositor gets to know how his money is being used – whether to build a house, or for agriculture – it gives the customer a lot of mental satisfaction, besides, of course, the financial returns.”

Thomas said the company has a triple bottomline approach, or the Three Ps – People, Planet, Profit. “Our activities are socially and environmentally focussed, besides being financially sustainable,” said Thomas.

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