Come July, Disha Microfin's small finance bank to be operational

Reserve Bank grants final license to start SFB

Come July, Disha Microfin Private Limited will commence small finance banking operations as it has received the apex bank's nod.

The Reserve Bank of India (RBI) has granted the final license to the company to start a small finance bank (SFB). The bank would be named Fincare Small Finance Bank.

Disha is a part of Fincare Business Services Private Limited (Fincare).

"Today we have received final approval from RBI and will commence banking operations in July this year, with bank branches in our existing states of operation. The name of SFB will be Fincare Small Finance Bank," said Rajeev Yadav, chief executive officer of Fincare.

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 Services 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 bank will continue to focus on the priority sector and retail segments, and will additionally offer products such as gold loans and affordable housing loans.

Yadav said, "The SFB license 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. We are targeting a loan book of Rs 20,000 crores over the next five years."

Disha, which had received in-principle approval for SFB in September 2015, will act as a rural and semi-urban focused bank after the SFB becomes operational.

"As an SFB, we will continue to play to our current strengths and be a rural and semi-urban focused bank, with a focus on the MFI and Mudra (MSE) segments for lending," said Yadav.

Fincare is one of the fastest-growing microfinance platforms in India, reporting a 79 per cent annual growth rate in its assets under management (AUM) over the last three years. It has Rs 1,735 crore in AUM. Its primary product, the joint-liability group loan, reaches over 1.2 million customers, 95 per cent of whom are based in rural areas. The platform operates over 270 offices in seven states in South and West India.