Fincare Small Finance Bank eyes IPO in 3 yrs, Rs 3,000 cr assets in 18 mths

At present three small finance banks -- Equitas and Ujjivan and AU -- are listed on stock exchanges

Fincare Small Finance Bank, formerly Disha Microfin Ltd, expects to build an asset base of Rs 3,000 crore in next 18 months. 

The bank, which commenced operations last week in Ahmedabad, plans to list its shares on the stock exchange in about three years, in line with regulatory norms.

At present three small finance banks -- Equitas and Ujjvan and AU -- are listed on stock exchanges.

Rajeev Yadav, managing director and chief executive, said the bank is starting with an asset base of about Rs 1,300 crore, carried over from the microfinance entity. Its priority now will to widen the asset base beyond microfinance, build a deposit base and reduce dependence on borrowings from banks.

The bank is offering higher interest rate on savings banks (7 per cent) and term deposits (up to 9 per cent). 

The higher rates would not hit margins as the business model was built around a fund cost of 10-11 per cent and the bank will look at revising rates after reaching a critical mass of deposits, Yadav said.

By 2022, the bank aspires to have 10 million customers, a deposit base of Rs 14,000 Crore and assets of Rs 20,000 Crore.

The bank aims to be a digitally driven, rural and semi-urban bank, focused on the base of pyramid, retail mass and Micro & Small Enterprises (MSE) client segments.

Fincare, with a corporate office in Bengaluru, is among the 10 entities out of 72 which received RBI’s nod in 2015 for converting to a Small Finance Bank. The RBI issued the final license in May this year to Disha Microfin.

It proposes to open 26 branches over the next 3 months in key markets of Gujarat, Tamil Nadu, Karnataka and Andhra Pradesh, taking the network to nearly 50 branches by the end of the current financial year.

The existing microfinance offices will be converted to banking outlets in a phased manner over the next three years, in line with the revised branch authorisation policy issued by the RBI in May this year.