Private sector lender RBL Bank has acquired 9.99% stake in Varanasi-based Utkarsh Microfinance, which is transforming into a Small Finance Bank next year. Utkarsh is one of the 10 players given RBI nod last year to open SFB. The microfinance industry has grown at around 60% in the last two years, following the RBI sanction making them answerable and accountable.
Last year, the industry reported Rs.63,853 crore in growth, according to Sa-Dhan’s Bharat Microfinance Report, 2016. RBL is not new to microfinance sector either with investments in several MFIs. RBL recently issued its IPO and raised Rs 1,211 crore and after that it raised another Rs 330 crore from CDC Group Plc, a UK-based development finance institution.
The new tie up between RBL Bank and Utkarsh will help in synergy of services and new products for the unbanked segments. “The long-term partnership with RBL Bank will help us augment our bouquet of products and services, including ancillary services. We hope to greatly benefit from RBL Bank’s domain knowledge of the banking and financial sector,” said Govind Singh, MD & CEO of Utkarsh Micro Finance.
Utkarsh Micro Finance initially started with credit under Joint Liability structure and insurance, but subsequently it started Micro Enterprises Loan and Micro Pension. As of August 31, it has 340 branches serving 1.1 million customers in 10 northern states of India. It has an outstanding portfolio of more than Rs.4,000 crore.
The private equity is increasingly going into the microfinance space and RBL has become the third lender to acquire stake in a microfinance firm after IDFC Bank and Kotak Mahindra Bank, with an aim to reach the unbanked and underserved segments.