Esaf Microfinance to launch small finance bank operations on 11 March


Mumbai: Esaf Microfinance and Investments Pvt. Ltd plans to do a soft launch for its small finance bank operations on 11 March in Kerala by running a pilot in five branches, according to a top executive. However, customers will be able to avail banking services from 18 March, when the full launch will take place.

In the first phase, Esaf will have 15 branches and will open another 70 branches in the next three months. Esaf received the final nod from the Reserve Bank of India (RBI) in November to start small finance bank 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 plans to have 20% of its portfolio for micro, small and medium enterprise (MSME) borrowers, 10% towards housing and agriculture and the remaining 70% towards microfinance borrowers in two years.

“We are in the process to raise Rs600 crore though non-convertible debentures and commercial paper route before conversion,” Thomas said.

According to Thomas, discussions are going with financial technology companies that provide credit scores based on non-traditional platforms and will get finalized by next year. They will help in giving loans to MSME borrowers who do not have proof for source of income.

Esaf plans to target 3 million customers by financial year 2020. Currently, five entities—Capital Small Finance Bank, Equitas Small Finance Bank, Utkarsh Small Finance Bank, Suryoday Small Finance Bank and Ujjivan Small Finance Bank—have started operations.

Other three entities, Janalakshmi Financial Services, Disha Microfin Ltd and RGVN Microfinance (North East) Ltd, are yet to receive the final nod from the central bank.