Disha Microfin, one of the recipients of a Small Finance Bank (SFB) licence, plans to start its SFB operations by December. Rajeev Yadav, chief executive officer, tells Namrata Acharya how the microfinance company is planning to change into a bank. Edited excerpts:
How prepared are you to launch Disha Bank?
We’re looking at various legal modalities to bring all our financial services companies, which are Future Financial, Disha Microfin and Lok Management Services, together under one entity. The collective assets under management would be close to Rs 1,500 crore. This apart, over the next two to three months, we would be able to infuse equity of Rs 300-400 crore, which will also bring down foreign shareholding in the proposed bank to below 50 per cent.
By when do you expect to launch Disha Bank?
We should be able to do so in the last quarter of this year, between October and December.
Do you envisage some crowding-out, as a number of banks are expected to come up at the same time?
I believe between September and December, a number of banks will come up, as there is not much window available after that. SFBs are required to start operations by March 2017. However, I don’t think there will be any crowding-out, as the size of the banks will be initially small and they will be distributed across geographies.
Have you started your recruitment process? How many people will you recruit?
Recruitment is a continuous process. However, we will need specialised staff for various functions, such as information technology design and branch network, apart from field staff. We will actively start our recruitment process about three to four months prior to the launch. At present, our staffers number about 3,000. We will be adding 700 to 1,000.
What kind of products and services will you be offering, to make you stand out among other SFBs?
Our focus will be on serving rural and semi-urban customers. We will be introducing innovations in our servicing model in a cost-efficient way. For example, through the use of technology and using the Aadhaar platform, we can start instant loan approvals. We will also definitely expand our product basket. We might introduce products such as gold and two-wheeler loans, among others.
What will be your strategy for deposit mobilisation?
At present, we have a borrower base of close to a million. Initially, we will be tapping our existing borrowers for deposits. However, to attract these in urban and semi-urban areas, we will have to offer a slight premium. This will not be significantly higher from existing market rates so as to affect our profit and loss account. Initially, the interest rates on deposits could be higher by 25 to 50 basis points over the existing market rate.