Kerala-based ESAF Microfinance and Investments will open five of its pilot small finance bank (SFB) branches on 11th March in Kerala and provide banking services to customers from 18 March. Initially, Esaf plans to have 15 branches and open 70 more in the next quarter. the Esaf Microfinance was given the RBI nod in November to start the SFB operations.
“We will offer higher than 4% on savings account and deposit too will be more than existing bank rates. On liability front we will target high income and large non-resident Indian (NRI) population in Kerala. Pensioners will also constitute to that large numbers as interest rate matters a lot to them,” said K. Paul Thomas, chairman and managing director of ESAF.
ESAF is planning to have 20% of its portfolio in MSME sector and 10% in housing and agriculture, while the remaining 70% will be its traditional microfinance borrowers, at leasr for two years period. It is planning to raise Rs.600 crore though non-convertible debentures (NCDs) and on the technology front, Mr. Thomas said the discussions are underway with technology companies, which will be finalized next year. ESAF hopes to enrol three million customers by 2020.
So far, Capital Small Finance Bank, Equitas Small Finance Bank, Utkarsh Small Finance Bank, Suryoday Small Finance Bank and Ujjivan Small Finance Bank have started their SFBs among the eight MFIs allowed by RBI. Other MFIs – Janalakshmi Financial Services, Disha Microfin Ltd and RGVN Microfinance (North East) are awaiting the final nod from the RBI.
Ujjivan, Bangalore-based MFI opened its SFB branches in five locations on February 6, 2017 in the presence of MFI pioneer and Nobel laureate Prof. Muhammad Yunus. Ujjivan has aleady raised capital from the IPO route and partnered with Artoo for its technology front before launching the Small Finance Bank.