DishaMicrofin’s SFB will focus on women

Reported by: |Updated: May 22, 2017

Fincare  Small  Finance  Bank  is  the  name  that  DishaMicrofin’s  venture has. It is about to launch operations and intends to be a fintech company with a banking license
Microfinance  company DishaMicrofin, which  is  about to  start  operations  of  its  small finance bank Fincare Small Finance Bank, will continue to have a focus on women and their empowerment. It believes this focus is integral to its business and women would be a very major segment of the bank’s customer base as well.
“Women borrowers currently comprise over  95%  of  our  customer  base,”  says Keyur  Doshi,  CFO  at DishaMicrofin. “Going forward, women would continue to account for the majority of our customer base. We intend to offer savings, deposits and insurance offerings tailor-made to the needs of this segment to achieve financial inclusion in the true spirit.”

Keyur Doshi explains how the new small finance bank will continue to have the focus on women as well as the base of the pyramid segment

While  the  base  of  the  pyramid  segment would continue to be a strong focus area, the bank would also be targetingthe mass retail customer segment in the rural and semi urban areas and would be offering new products such as affordable housing, loan against  gold  and  overdrafts,  says  Doshi. “Our ability to offer deposit products would also help position us as a one-stop shop for their financial requirements,” he says.
DishaMicrofin was promoted in 2009 with  an  objective  to  make  measurable economic and social impact on the lives of the lower income households by carrying out  various  microfinance  initiatives  and creating environment friendly livelihood opportunities,  leading  to  a  lifetime  of progress. It was in 2010 that a like-minded PE  firm  –  TrueNorth  –  invested  in  the company  and  as  the  journey  continued over time and following integration with other group companies, the brand Fincare finally came into being. Doshi says today DishaMicrofin  is  ready  to  take  on  the exciting journey of small finance bank.

“ We   b e l i e v e   t h at   t h e   b a n k i n g transformation  would  help  us  set  new milestones in achieving our objective with which  DishaMicrofin  was  formed  and further  expanding  the  horizon  to  serve base  of  pyramid  customers  by  offering savings, credit, remittances and insurance products,” says he.
Which are the states that the proposed bank intends to focus initially? How many branches are envisaged?
Doshi says as of today, DishaMicrofin is  present  in  7  states  –  Gujarat,  Madhya Pradesh,  Maharashtra,  Tamil  Nadu, Rajasthan, Karnataka, Andhra Pradesh – and 1 union territory – Puducherry. “As Fincare Small  Finance  Bank,  we  would  continue to focus on the geography where we have a presence and will deepen  our penetration before expanding to  newer states.
“Other than the existing 250 NBFC- MFI offices, we plan to have about 100- 110 bank branches by the end of FY2018,” he adds.


Doshi  points  out  that  as  an  NBFC,  the Fincare  group  had  total  assets  under management of `1700 crore as of 31 March 2017. “As Fincare Small Finance Bank, we are targeting to reach an AUM of `20,000 crore by FY2022,” says he.DishaMicrofin recently concluded an equity  transaction  and  strengthened  its equity base. With the infusion of additional capital, it now has a net worth of ~`450 crore and a strong capital adequacy ratio of about 47 % as against the 15 % required for small finance banks. Says Doshi: “Over the next 2 years we’ll also generate adequate tier II funds and hence we are well capitalized for our growth over next 3 years.”


How  would  the  bank  attract  deposits? What are the loan products that the bank intends to offer? Says Doshi: “For small finance banks, the  overall  deposits  requirement  is  very small compared to the existing vast deposits market.  We  will  have  dedicated  and different channels sourcing deposits from different sets of customers. Also, as we are a NBFC-MFI converting into a small finance bank, we have the advantage of having an asset portfolio at better rates compared to traditional banks, resulting in better net interest margins and effectively allowing us to offer attractive interest rate for FDs for retail as well as corporate clients to generate required deposits.”

He adds that the bank would be offering a  variety  of  liability  and  asset  products such as savings accounts, current accounts, retail  deposits,  corporate  deposits, recurring  deposits,  overdraft  facilities, guarantee products, microfinance loans, loans against property, individual loans, affordable  housing  loans,  loans  against gold, institutional finance and other retail asset products.
He  also  expects  that  all  the  existing customers of the DishaMicrofin to become customers of the small finance bank.


Post the setting up of the bank, what would be the proposed structure of group? Explains  Doshi:  “DishaMicrofin,  the NBFC-MFI, would be the entity that would be converting as the small finance bank. After the group companies restructuring, it would be a 2-tier structure comprising a  holding  company  –  Fincare  Business Services Ltd and the subsidiary – Fincare Small Finance Bank.”


Doshi speaks about the technology platform the group is setting up for operations as a bank. As most of the transactions involve the rural India, there are challenges in creating a digital platform. He says: “I would say that  Fincare  Small  Finance  Bank  would be a fintech company with a small finance bank license. We would have a full-fledged omni-channel digital offering. As a bank, we would strive to attain ~95% paperless transactions,  with  paper  transactions  as  an exception.

“As a fintech platform, with ~97% of our  customers  being  rural,  we  see  some challenges  in  connectivity  and  comfort of  the  customers  in  transacting  online. However,  with  the  growth  in  internet access, initiatives to educate the customer along with product designs that incentivize use of digital channels, we believe we would be able to overcome these challenges.”


He  adds  that  the  bank  would  be  having ATMs  in  its  branches  and  through  debit cards,  customers  will  have  access  to  the entire ATM network of all banks. “We plan to offer instant account opening, powered by  Aadhaar  based  eKYC,  which  would result into quick TAT and customer delight. Besides, tablet banking would be an integral channel for the bank. Our field agents would be empowered by tablets for deposit account opening and servicing. These tablets would also be used for loan disbursals. A customer walking into the branch would be able to carry out all transactions using the tablets located in our branches,” he elaborates.

And  finally,  when  is  the  formal launch? And where will be the corporate headquarters?

“We are awaiting the final license from RBI and we are working towards launching Fincare Small Finance Bank in June 2017. The corporate headquarters of the bank would be Bangalore,” reveals Doshi.

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