VFS Capital seeks small finance bank licence from RBI under 'on-tap' scheme

Microfinance company VFS Capital has applied for a small finance bank (SFB) licence under the guidelines for 'on tap' licensing of SFBs in the private sector, the Reserve Bank of India (RBI) said on Wednesday.

 

“During the quarter ended December 31, 2024, the Reserve Bank of India has received one application under the guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector dated December 5, 2019 from VFS Capital Limited,” the RBI said in a release.

 

VFS Capital, previously known as Village Financial Services Private and headquartered in West Bengal, was incorporated in 1994 as a non-deposit taking non-banking financial company-microfinance institution (NBFC-MFI).

 

It started microfinance activity in 2006 and got registered with RBI as NBFC-MFI in September 2013.

 

VFS provides loans to individual female members mainly from rural areas in a joint liability group (JLG) with each group consisting of five members. VFS Capital makes its entire disbursements through digital mode.

 

VFS Capitals’ current promoters — Ajit Kumar Maity, chairman, and his son Kuldip Maity, managing director & CEO — own more than 92.74 per cent of the shareholding and 7.03 per cent is held by IDFC First Bank Limited as of December 2023.

 

In FY24, its total income stood at Rs 178.85 crore, up from Rs 169.05 crore in FY23. The total Assets Under Management (AUM) rose from Rs 935.65 crore to Rs 942.30 crore in FY24. The net profit rose by nearly 64 per cent to Rs 22.94 crore from Rs 14.01 crore in the year ago period. 

 

The net interest margin (NIM) of the NBFC-MFI was down 9.83 per cent for FY24 from 10.93 per cent in the year ago period due to increased finance costs.

 

On the asset quality front, the gross non-performing assets (GNPA) decreased to 2.20 per cent in FY24 from 2.76 per cent in FY23. However, net NPA for FY24 was nil as the company provided 100 per cent provisioning.

 

In December 2019, the RBI had announced guidelines for 'on tap' licensing of small finance banks in the private sector. According to the guidelines, the minimum paid-up voting capital or net worth for SFBs should be Rs 200 crore. In the case of urban co-operative banks that want to voluntarily transit into SFBs, the initial requirement of net worth is Rs 100 crore, which will have to be increased to Rs 200 crore within five years.