World Bank's investment arm International Finance Corporation (IFC) will buy a 4.5 per cent stake in Navi Technologies (NAVI), a company founded by Filpkart founder and former CEO Sachin Bansal, for $30 million.
NAVI is in the process of acquiring 100 per cent ownership Chaitanya Rural Intermediation Development Services (CRIDS) via shares from Sachin Bansal and existing investors. An application has been submitted to the Reserve Bank of India (RBI) for the same.
CRIDS has a wholly owned subsidiary Chaitanya India Fin Credit Private Limited (CIFCPL).
CRIDS and CIFCPL are collectively referred to as Chaitanya. They provide loans to low income customers in rural areas on the model of joint-liability-group lending (JLG).
CIFCPL has made an application to the RBI for a universal banking license under the RBI’s On-Tap Banking License Guidelines, 2016.
IFC’s investment in NAVI is to support the transformation of CIFCPL into a technology led universal bank or NAVI Bank, which would provide mass market banking solutions for individuals, micro, small and medium enterprises (MSME) and select corporates.
NAVI is headquartered in Bangalore. Chaitanya has operations in Karnataka, Uttar Pradesh, Bihar, Maharashtra and Jharkhand.
NAVI Bank seeks to leverage technology platform and data analytics to simplify loan application processes and tailor loan terms to individuals and MSMEs. It aims to rapidly scale and achieve higher usage and deposit rates by delivering better terms, convenient and tailored product offerings to individual customers and MSMEs compared to incumbent financial institutions by leveraging digital channels and a more efficient business model.
The Bank will also contribute to fostering competitiveness in the market by demonstrating the viability of product and service innovations delivered through a technology-based business model.
IFC expects that 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, as well as by serving as a catalyst for the entry and growth of new digital banking models in the country.