ESAF Microfinance, a leading Kerala-based non-banking financial company – microfinance institution (NBFC-MFI) has applied to RBI for small finance bank licence.
An NBFC-MFI is defined as a non-deposit taking NBFC (other than a company licensed under Section 25 of the Indian Companies Act, 1956) with a minimum net owned funds of ₹5 crore.
ESAF Microfinance meets most of the criteria spelt out by the RBI, including the promoter’s capital, for aspirant small finance banks. It has branches across nine States and serves more than seven lakh clients.
K Paul Thomas, founder Chairman and Managing Director, said the small finance bank status would help the organisation to meet the demand for lending above ₹50,000. This would go a long way to support micro enterprises, small businesses and agriculture and allied activities.
ESAF has presence in the rural hinterlands of Jharkhand, Chhattisgarh, Maharashtra and Madhya Pradesh. Plans are on the anvil to expand operations to Northeastern States.
Being a pioneer in the field of microfinance in Kerala, ESAF has been serving its clients for more than two decades, offering them both financial and non-financial services.
The earlier draft guidelines had restrictions on areas of operation. In the final guidelines, this was removed. “This is a positive development and will allow us to have scale and sustainability,” added Thomas.
He saw only ‘limited’ competition for the licence, but also expressed hope that small finance banks could also aspire to convert as universal banks in course of time.
ESAF Microfinance is headquartered at Thrissur. Dia Vikas Capital, a subsidiary of Opportunity International, Australia, and Maanaveeya Holdings, a subsidiary of Oiko Credit Netherlands, are two major social investors in the organisation.