Sachin Bansal-led Chaitanya India Fin Credit (CIFCPL) said on Friday the microfinance company had applied to the Reserve Bank of India for a universal banking licence, making it clear that it intends to play a bigger role in the broader financial services space in the country.
The application was made under the RBI’s On-Tap Banking License Guidelines 2016.
In September, Bansal had invested around $104 million to acquire over 90 per cent ownership of Chaitanya, a 10-year old Bengaluru-based firm that caters to low-income borrowers for vehicle finance, housing loans, small business loans and education loans, across five states.
This follows a disclosure earlier in the day by International Finance Corporation (IFC), the investment arm of the World Bank, that it would acquire around 4.5 per cent stake in Navi Technologies for $30 million.
Soon after his exit from Flipkart, Bansal, along with his IIT-Delhi batch mate Ankit Agarwal, set up Navi Technologies (earlier BAC Acquisitions) as a vehicle to invest in start-ups through a mix of equity and debt. Navi is in the process of acquiring 100 per cent ownership of Chaitanya from Bansal and other existing investors.
IFC in a statement said that its investment in Navi is to support the transformation of CIFCPL (Chaitanya) into a technology-led universal bank that would provide mass market banking solutions for individuals, micro, small and medium enterprises (MSMEs) and select corporate houses. The investment values Navi at around $670 million.
According to a press statement issued by Chaitanya, the proposed bank aims to bridge the credit gap for the retail and MSME sectors by developing industry leading technology and global best practices as a mainstay.
“Building a universal bank is a reflection of our commitment to provide financial services to those who need them most,” said Bansal, who is also the chief executive officer at Navi.
“Our vision is to go beyond what hitherto has been broadly defined as financial inclusion and provide access to formal financial services using technology that people can use intuitively and easily.”
The proposed bank seeks to leverage technology platforms and data analytics to simplify loan application processes and tailor loan terms to the needs of individuals and MSMEs. It aims to rapidly scale and achieve higher usage and deposit rates by delivering better terms, convenient and tailored product offerings, compared to incumbent financial institutions.
IFC expects the new bank’s success will contribute to increasing competitiveness in the retail and MSME banking segments in India, by leading incumbents to invest in technology-driven products for customer engagement and financial service provision. Thus, it hopes to serve as a catalyst for bringing in new digital banking models in the country.
“We are looking beyond the traditional way of delivering banking services to people with a focus on ease of use and customised offerings. It is going to be an exciting journey,” Ankit Agarwal, chief financial officer at Navi, said.
On Thursday, Navi Technologies had also announced that it was looking at acquiring the general insurance business from Wadhawan Global Capital, a step that is seen as part of its strategy for the financial services space. Reports suggest the firm may shell out around Rs 100 crore to acquire the business.