IFC to infuse Rs 130 cr in Ratnakar Bank

International Finance Corporation (IFC) is planning to make an equity investment of Rs 130 crore in Ratnakar Bank Ltd through the preferential allotment route, sources said. The investment is, however, subject to regulatory approval.

According to sources, the Kolhapur-based bank is in the process of raising Rs 325-330 crore from about five investors.

For IFC, the proposed investment is in line with its strategy to support financial inclusion. IFC’s investment will help Ratnakar Bank to augment its capital base and prepare for Basel-III implementation.

The bank will also be able to grow its assets, increase reach and improve its market share, especially in the micro, small and medium enterprises (MSMEs), said IFC.

Established in 1943, Ratnakar Bank was granted the status of scheduled commercial bank in 1959. It was established as a commercial bank with the core objective of catering to the needs of MSMEs.

It has branches across Maharashtra, Karnataka and Goa. It also has presence in Delhi and Gujarat.

Currently, it serves the trading, agriculture and manufacturing sectors through 1,750 employees, 117 branches and 158 ATMs. The bank’s customer base is largely semi-urban and rural, with a judicious mix of urban customers. It has about 400,000 customers across wholesale, consumer/retail banking and financial inclusion verticals such as MSME and agriculture.

The bank has a diversified shareholder base with 40 per cent held by retail investors and 60 per cent held by professional and institutional investors. Institutional investors include Beacon India Private Equity Fund, Cartica Capital, Faering Capital, Gaja Capital Partners, HDFC Ltd, Norwest Venture Partners, and Samara Capital.

By FY16, the bank intends to grow advances to the MSME segment from Rs 40 crore in FY12 to Rs 450 crore. The joint liability group loans is expected to increase from Rs 23 crore in FY12 to Rs 1,000 crore in FY16. The bank’s growth strategy also involves increasing its women borrowers from around 10,350 in FY12 to 450,000 in FY16.

According to experts, IFC’s involvement will help Ratnakar Bank grow in trade finance and prepare it for a potential IPO. It is led by managing director and CEO Vishwavir Ahuja who took over in July 2010.