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Banks look to take acquisition route to build MFI book
May 18, 2023
Banks are looking to acquire microfinanciers to get their lucrative high-yielding loan book and tap into the under-banked customer segment.
While Yes Bank and Federal Bank have expressed interest in acquiring microfinanciers, Kotak already has Bengaluru-based BSS Microfinance, and has announced plans to acquire Lucknow-based Sonata Finance for ₹537 crore. The latter is awaiting approval from the Reserve Bank of India.
“The microfinance space is of interest to us because the segment offers an opportunity for the bank to get into the large segment of customers who are under-served today,” says Tapobrat Chaudhuri, president and business head microfinance, Kotak Mahindra Bank.
Microfinance subsidiaries of these banks serve as business correspondents, who deliver various banking services to customers in rural and semi-urban areas.
“We were engaging third party business correspondents who are business correspondents of other banks also. But since we wanted to go a bit deeper, we feel that this acquisition method that we have taken is a good one, “Chaudhuri said.
Bharat Finance Inclusion merged with IndusInd Bank around six years ago. Both Yes Bank and Federal Bank have expressed interest in acquiring microfinanciers in a bid to grow their loan books.
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