Capital First Says Tie-Up With SatinCare Only For Distribution In Tier III Cities

Lender to individuals and small businesses Capital First Ltd. is looking to expand into growth-driven tier III cities and will use microlender Satin CreditCare's branch network for distribution, V Vaidyanathan, its founder and executive chairman, told BloombergQuint in an interview.

Satin CreditCare issued convertible preferential shares to Capital First on July 10, which Vaidyanathan said is purely a “distribution network tie-up.” Capital First, a non-banking finance company, has no long-term business plans with Satin CreditCare and does not intend to enter the micro finance sector, he said.

Capital First's assets under management grew 24 percent in the April-June quarter. Vaidyanathan said it is not linked to the buying that took place before the implementation of Goods and Services Tax in July.

The Mumbai-based non-banking finance company would not see its margins improve by much after the rate cut by the Reserve Bank of India, said Vaidyanathan.

The margins will rise on a shift of mix towards higher yield businesses, he said. The margin is expected to expand by 100 basis points over the next 12 to 18 months, improving the profit, he said.