Ahmedabad-based Disha Microfin, which has bagged an in-principle approval for a small finance bank, has already begun work on a road map to meet the Reserve Bank of India (RBI)'s norms on promoter shareholding and paid-up capital. In an interview with Vinay Umarji, founder and chief executive Sameer Nanavati, talks about how the microfinance institution is looking at tapping the micro-enterprise segment in the near future. Edited excerpts:
How soon do you plan to commence operations?
The timeline the RBI has talked about is 18 months. Typically, any banking organisation would always aspire to make that less. There are a lot of things we have to do in the interim. However, we will try for less than 18 months.
What are your immediate challenges?
As we go along, we aim to replace the word 'challenges' with 'opportunities'. As a microfinance entity, we are governed by a regulatory regime. For instance, we can only lend and 85 per cent of our lending has to be of a certain kind of product, which has a very small ticket size. When we become a bank, we are able to offer a bouquet of services, be it in terms of savings, insurance or loans. That is a huge opportunity.
Also, as an MFI, only 15 per cent of our product portfolio can include lending to segments such as micro-enterprise, which have bigger loans of Rs 10-15 lakh. We believe the micro-enterprise segment is probably less tapped than microfinance. These two opportunities have their own intrinsic challenges. We will have to build the right delivery structure on the liability side. The kind of innovation we foresee on the liability side will be huge and typically be led by small finance banks.
What is the current promoter and foreign shareholding? How do you plan to meet the RBI norms on these fronts?
RBI guidelines require the domestic equity share in small finance banks to be more than 50 per cent, of which promoter shareholding will have to be at least 40 per cent. We have created a road map. We will achieve this through a holding company structure.