Kotak Mahindra Bank Ltd. on Friday said that it has acquired microfinance firm BSS Microfinance Private Ltd. for a sum of Rs 139.2 crore. The bank has executed a share purchase agreement for 99.49 percent of the equity in the firm from its existing shareholders in an all-cash deal, it said in a media statement.
BSS Microfinance is registered as a non-banking finance company (NBFC) and is categorised as a NBFC-MFI (microfinance institution). As of June 30, the company had a net worth of Rs 72.9 crore and a turnover of Rs 49.5 crore, said the Kotak Mahindra media statement. BSS Microfinance had loans of Rs 483 crore on its books.
The bank lists out the purpose of the acquisition as a “long-term need to embrace financial inclusion as well as cater the needs of weaker sections.”
Kotak Mahindra Bank is the most recent lender to expand into the microfinance segment due to the rapid growth seen in the industry over the past few years.
In July, IDFC Bank Ltd. acquired a Tamil Nadu-based microfinance company with an asset base of Rs.1,500 crore for a reported Rs.300 crore. In June, Axis Bank Ltd. announced its entry in the urban microfinance segment.
The increased interest comes at a time when the industry has seen a strong revival.
The gross loan portfolio of microfinance institutions (MFIs) rose 84 percent to Rs 53,233 crore as of 31 March 2016 from Rs 28,940 crore a year ago, according to data from the Microfinance Institutions Network (MFIN), a self-regulatory organisation for the industry. However, this was partly because a few large microfinance firms are in the process of converting into small finance banks.
In fact, growth rates have been on the rise for the last few years. In fiscal 2015, the gross loan portfolio of MFIs grew about 48 percent after a growth of 69 percent in fiscal 2014. Since 2012-13, the gross loan portfolio of the sector has grown from about Rs.11,600 crore to more than Rs.53,000 crore as of March 2016.
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