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Micro-finance platform Disha plans the formal launch of its small finance bank (SFB) in the next quarter, followed by 30-40 branches in the next three months.
The SFB, under parent Fincare Business Services, also looks to offer products such as gold loans and micro-enterprise loans to rural customers.
“The branches will have all liabilities products, as well as mobile and internet banking capabilities. On the asset side, we will continue to focus on our existing product lines of micro-finance and micro-enterprise loans, and also launch gold loans.
“The target audience will continue to be our rural customers, who are our current focus segment, as well as semi-urban retail customers,” said Rajeev Yadav, Group CEO, Fincare, in an emailed response.
Recently, Fincare raised ₹500 crore from private equity investors TA Associates, True North, Tata Opportunities Fund and LeapFrog Investments to meet the RBI requirement of having a maximum of 49 per cent foreign holding. Earlier, Fincare had 72 per cent foreign holding.
The funding is expected to fuel growth of the SFB over the next two to three years and grow its existing portfolios such as micro-enterprise loans, loans against gold and affordable housing.
“We will also utilise the funds to develop our liabilities base — in the form on investments in technology, infrastructure and people,” added Yadav. Primarily focussed on micro-finance business, Disha is present in Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Tamil Nadu, Karnataka, Puducherry and in some parts of Andhra Pradesh.
Fincare as a group has total assets under management (AUM) of about ₹2,000 crore, including all platforms, primarily Disha, and covers about 1.2 million borrowers, mostly from the bottom of the pyramid.
“We are becoming more and more retail dependent, which augurs well in the long run. When you have business on both sides of the balance sheet, it is more stable,” said Sameer Nanavati, Director-Founder, Fincare. According to Nanavati, Disha as an SFB will also explore the under-penetrated segments such as micro-small and medium enterprises (MSMEs).
Nanavati looks to strengthen the bouquet of offering for small borrowers.
Underlining the upcoming challenges for the SFB, Yadav maintained that transformation of the business model from a largely micro-finance-driven model to a diversified portfolio on the assets and liabilities side will be a crucial aspect.
According to Yadav, building the infrastructure for bank risk management and technology roll-out will be key factors for successful transformation into a small finance bank.
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