Hyderabad-based Vaya Finserv is set to launch microfinance operations, also marking the comeback of Vikram Akula into the sector he’d substantially influenced not long before. Debuting as a banking correspondent (BC) in 2015, Vaya is opening its first set of 15 microfinance branches this week in Bihar, a state where it sees a big need for such loans. Akula is co-founder and chairman of Vaya. The entity currently operates 50 BC branches in five states and managed Rs 436 crore of a combined micro loan portfolio for YES Bank, RBL Bank and Reliance Capital. It recently got a non-bank finance corporation microfinance licence from the Reserve Bank of India (RBI). In 2012, Akula quit as chairman of Bharat Financial Inclusion (formerly SKS Microfinance), which he’d founded and led to a successful initial public offering (IPO) of equity in 2010. It was a result of differences triggered by the Andhra Pradesh microfinance crisis. Vaya has prepared a three-year growth plan, based on insights regarding the managing of risk and end-to-end use of technology, including big-data analytics. “In three years (by 2020), we’d like to grow our total loan portfolio to Rs 3,000 crore. While a third of it will come from the BC operations, the remaining loan portfolio will be generated through our own microlending platform and investments,” Jagadish Ramadugu, co-founder, managing director and chief executive officer (CEO) of Vaya, told Business Standard. While the initial rounds of investment were brought in by the founders, the company is in negotiation to raise $15 million (about Rs 100 crore) in equity and Rs 300 crore in debt from outside sources by the coming March, says Ramadugu, whose earlier stints included senior roles in Asian Paints and Coca-Cola India. Akula and he hold 26 per cent and 15 per cent stake, respectively. The majority equity is controlled by Vaya Trusts (formerly SKS Trust). The company intends to apply for a Small Finance Bank (SFB) licence around two of three years later.
This would bring down the cost of funds by at least four or five percentage points, according to the CEO.The aim is to expand to 150 districts across 10 states, from 50-odd districts in six at present. It seeks to establish 300-odd microfinance branches, on top of the present network of 140 BC branches that serve the three financial institutions. The target is 1.5 million customers across 40,000 villages by 2020, compared to 0.26 million customers at present. “The intervention of one state government (Andhra) had entirely disrupted microfinance activity in 2010, as 70-80 percent of microlending activity was concentrated in this single state. That’s a thing of the past now,” says the CEO, while adding that a lot of analysis would go into the selection of a particular district or segment of customers before spreading of operations. Vaya also says it prefers to disrupt the joint-lending model followed by other MFIs. It seeks to set up smaller groups, each with five women members. “After a typical loan amount has gone up to Rs 25,000 per customer, no women’s group was willing to take share of a joint liability. That is a structural shift which had happened in rural areas in the recent past,” he said.