VFS Capital withdraws small finance bank licence application: RBI

The NBFC-MFI, which reported a 117% rise in profit in FY25, has withdrawn its SFB licence application filed under RBI's on-tap licensing framework

VFS Capital has withdrawn its application for a small finance bank (SFB) licence, the Reserve Bank of India (RBI) said in a press release on Monday. The central bank had received an application from VFS Capital under the guidelines for “on tap” licensing of small finance banks in the private sector.

 

“The Reserve Bank had announced the receipt of application from VFS Capital Limited under the Guidelines for ‘on tap’ Licensing of Small Finance Banks in the press release on January 1, 2025. It is now communicated that VFS Capital Limited has withdrawn its application,” the RBI said.

 

West Bengal-based NBFC-MFI began operations in 1994

 

VFS Capital, previously known as Village Financial Services Private, is headquartered in West Bengal and was incorporated in 1994 as a non-deposit-taking NBFC-MFI. It started microfinance activity in 2006 and was registered with the RBI as an NBFC-MFI in September 2013.

 

VFS provides loans to individual female members, mainly from rural areas, through a joint liability group (JLG) model, with each group comprising five members. The company disburses its entire loan portfolio through digital channels.

 

Promoter shareholding exceeds 92%

 

VFS Capital’s current promoters — Chairman Ajit Kumar Maity and Managing Director & Chief Executive Officer Kuldip Maity — together hold 92.74 per cent of the company’s shares, while 7.03 per cent is held by IDFC First Bank Limited as of December 2023.

 

Profit doubles; asset quality remains stable

 

In FY25, its total income stood at Rs 194 crore, up from Rs 178.85 crore in FY24. The total assets under management (AUM) rose from Rs 942.3 crore to Rs 948.34 crore in FY25. Net profit increased to Rs 49.7 crore from Rs 22.94 crore in the previous year.

 

The net interest margin (NIM) of the NBFC-MFI rose to 10.46 per cent for FY25 from 9.83 per cent in the previous year. On the asset quality front, gross non-performing assets (GNPA) decreased to 2.14 per cent in FY25 from 2.20 per cent in FY24, while net NPAs remained nil in FY24.

 

RBI’s on-tap licensing norms for SFBs

 

In December 2019, the RBI had announced guidelines for “on tap” licensing of small finance banks in the private sector. As per 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 voluntarily transition into SFBs, the initial requirement is Rs 100 crore, which must be raised to Rs 200 crore within five years.