RBL Bank picks 10% stake in Utkarsh MFI


Continuing the trend of smaller private sector banks buying into microlenders, the recently-listed RBL Bank   bought 9.99 percent stake in northern states-focused Utkarsh Micro Finance for an undisclosed sum. “It will help us extend our distribution footprint and strengthen our financial inclusion initiatives across the hinterland. We will strive to explore joint business opportunities,” RBL managing director and chief executive Vishwavir Ahuja said in a statement. He, however, added that this should be seen as a “strategic partnership” for the bank which has a focus on Western states, rather than the acquisition of minority stake. Utkarsh managing director and chief executive Govind Singh said the partnership will help his company augment its product and services, including ancillary services. The announcement comes two days after RBL’s larger rival Kotak Mahindra Bank announced the buyout of the Karnataka-focused BSS MFI for Rs 139 crore. It also comes within two months of acquisition of Grama Vidiyal Microfinance by IDFC Bank for an undisclosed sum. According to experts, the high growth in the micro lending segment which witnessed loan growth of 80 percent in 2015-16 as against the banking system’s struggles to touch the double-digit mark, is one of the biggest draw for the banks. Additionally, the treatment of loans as priority sector lending to fill up the mandatory requirements is also a very important reason.

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