Disha Microfin Ltd, part of the rural-centric financial inclusion platform Fincare, has received the final licence from the RBI to set up a small finance bank. The Fincare platform provides microfinance loans, micro-enterprise loans and bank partnership loans to emerging consumers at the base of the pyramid, through its group companies.
Disha Microfin had received an in-principle approval from the RBI in September 2015 to convert to a small finance bank, valid for 18 months, subject to meeting conditions laid out by the regulator. Disha Microfin is one of the entities to receive in-principle approval from the RBI in September 2015 to set up small finance banks.
As part of the restructuring process for transitioning to the small finance bank, Disha Microfin had completed the process of acquiring the business of Future Financial Servicess Private Limited, another Fincare group company, in October 2016. Further, in March this year, Fincare Business Services, the promoter company of the small finance bank, closed a Rs 550 Crore equity transaction with marquee investors such as True North, TA Associates, Tata Opportunities Fund, SIDBI and Leapfrog Investments, among others.
The small finance bank will be called Fincare Small Finance Bank, and commence operations in July this year. The bank will continue to focus on the priority sector and retail segments, and additionally offer products such as gold loans and affordable housing loans. “The small finance bank licence will enable us to expand our product basket to include liabilities products, higher ticket loans to micro and small enterprises, as well as gold and affordable housing loans”, said Rajeev Yadav, CEO of the Fincare platform. He further added, “We will commence banking operations in July this year, with bank branches in our existing states of operation. We are targeting a loan book of Rs 20,000 crore over the next five years”.
Fincare is one of the fastest-growing microfinance platforms in India, reporting a 79% annual growth rate in its assets under management over the last three years. Its primary product, the joint-liability group loan, reaches over 12 lakh customers, 95% of whom are based in rural areas. The platform operates over 270 offices in seven states in South and West India.