Nabard microfin arm in expansion mode nationally

To get fresh dose capital to grow business

The National Bank for Agriculture and Rural Development (Nabard) will scale up the business of its microfinance arm Nabard Financial Services (Nabfins) to become a national-level player.

Nabfins, a 68 per cent non-banking finance subsidiary of Nabard, consolidated its operations in southern states such as Tamil Nadu and Karnataka and expanded in Maharashtra in 2013-14.

Harsh Bhanwala, chairman, Nabard, said, “Nabfins would become an all-India organisation. It has identified areas in Odisha, Jharkhand, Rajasthan and Madhya Pradesh for starting operations”.

Nabfins lends money to self-help groups and works on thin margins, with lending rates in the range of 15-16.75 per cent against the RBI cap of 26 per cent.

The microfinance company reported net profit of Rs 18 crore in FY14 up from Rs 8.42 crore in 2012-13.

Its outstanding loan book grew to Rs 644 crore by March-end this year from Rs 412 a year ago. It plans to grow book to Rs 1,000 crore over the next two years, the Nabard chief said.

The capital of MFI will be expanded to support expansion of operations. MFI received equity investment from Bank of Baroda (Rs 5 crore) and Union Bank of India (Rs 2.5 crore) in 2013-14. The total share capital of the company at the close of FY14 was Rs 112 crore.

Meanwhile, Nabard posted a flat growth in net profit at Rs 1,860 crore for FY14 as against Rs 1,808 crore in FY13. Its balance sheet size, comprising loans, investments grew to Rs 2,54,574 crore in March 2014 from Rs 2,13,170 crore at the end of March 2013.

The capital adequacy ratio declined to 16.61 per cent from 18.24 per cent. The rural finance body has sought capital infusion of Rs 1,500 crore from the government to support business.