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Micro finance company Satin to hive off its MSME lending business

Satin is hiving it off because 85% of its lending has to be micro finance lending, according to RBI rules

Indivjal Dhasmana  |  New Delhi 

Household loans

company Network Limited has decided to hive off its micro, small and medium enterprises (MSME) lending business to a separate company.

Satin CMD H P Singh said,"We are in the process of applying to for approval for Till then, we continue to do this lending under "

The lending business will be handled by Satin Finserv Ltd. Satin is hiving it off because 85% of its lending has to be lending, according to rules.

"So, when our non-Institution book starts taking shape and grows, we may breach that limit. Hence, we will branch out Satin Finserv Ltd. It will be a wholly owned subsidiary of Network Limited," he said.

As of now, the loan exposure to MSMEs is Rs 860 million under Satin Creditcare Network Limited, he said.

At present, Satin Creditcare is present in 20 states and plans to start operation in two more states, both in south India, in the current financial year. The company does not currently have any operation in south India.

It is trying to extend businesses to other states to diversify risks. Each state will contribute maximum 20% to total businesses from micro finance, Singh said.

Earlier Uttar Pradesh used to contribute 40 per cent but now its contribution has come down to 27%, he said, adding that this is followed by Bihar at 19%.

There were seven private equity investors in the company, three of which have exited profitably. Investors including ADB pumped in Rs 4.4 billion of capital in last financial year.

First Published: Tue, September 04 2018. 17:20 IST
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