The Reserve Bank of India’s permission to banks for roping in for-profit companies as business correspondents (BCs) for financial inclusion has generated interest among private equity (PE) investors.
Society for Educational Welfare & Economic Development (SEED), a New Delhi-based organisation, has formed a separate company to manage operations as BCs. It is in discussion with PE players to raise fresh capital.
Till now, SEED has been worked on lines of credit from banks. It needs equity venture funding to scale up business to meet its financial inclusion target for March 2012.
“Our initial plan is to raise about Rs 50 crore ($ 10 million) and talks with private equity players are at an advanced stage. Equity infusion plans will be firmed up next month”, Anirban Roy, managing director of SEED, told Business Standard.
SEED was formed in late 2006 to implement Corporate Social Responsibility (CSR) initiatives, first for PSUs and later for private enterprises. Now, it has branched out to take up work as BCs for banks.
With a headcount of 2,500, it is active in 250 districts, including those in Punjab, Haryana and Rajasthan. “We are adding more than 100 people a week and will scale up manpower strength to 5,000 by March,” he said.
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Roy said it was a resource-intensive activity. Besides funding, training of personnel and coordination of activities also demanded resources. All this involved capital expenditure till revenues began to generate. The revenue was expected to be around Rs 70 crore in 2011-12.
The work is undertaken with a three-year perspective. In the first phase, the focus is on enrollment of clients for banking services. The second stage involves beginning of transactions and the third one is marked by saving deposits.