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Dvara Kshetriya Gramin Financial Services (KGFS) is expecting a four-fold jump in loan portfolio in three to four years to around ₹7,000 crore, a size its top management deems appropriate to tap the primary market with an initial public offer.
This ambitious loan growth plan comes even as the non-banking finance company’s management has kept its fingers crossed on its application to the RBI in 2021 for starting a small finance bank.
The Chennai-headquartered NBFC, which provides financial services such as joint liability group loan, jewel loan, crop loan, and cattle purchase/ maintenance loan in remote rural areas, had a gross loan portfolio of ₹1,632.51 crore as at March-end 2023.
“As we speak, we are inching towards ₹2,000 crore, and hopefully we should close this financial year with a portfolio of around ₹2,500 crore,” said LVLN Murty, MD & CEO, Dvara KGFS.
On the possibility of tapping the primary market with an IPO, Murty observed that this will be the ultimate aim, but right now the portfolio size is too small.
He emphasised that ₹6,500 crore to ₹7,000 crore is an ideal AUM (assets under management) size to go for an IPO.
“Once we reach a portfolio range of ₹6,500 crore to ₹7,000 crore, that is probably the time we could explore going public,” Murty said.
As per the NBFC’s internal estimates, its portfolio could grow to about ₹7,000 crore somewhere around 2026-27.
SFB application
On the status of Dvara KGFS’ application made under the RBI’s guidelines for ‘on tap’ licensing of Small Finance Banks, Murty said: “As part of the due diligence of RBI, whatever clarification and additional information that was required from the time we filed our application have all been given.”
He underscored that if allowed to convert into a SFB, Dvara KGFS will be able to assist its customers by providing credit at competitive rates.
“From the company’s point of view, obviously, access to raising funds via CASA (current account, savings account) would be beneficial.
“So, what will happen is that once we are able to raise deposits that would help us in terms of cheaper availability of resources,” Murty said.
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