Credit and finance for MSMEs: Bhubaneswar-based microfinance non-banking financial company (NBFC) Annapurna Finance has applied for an on-tap license to operate as a universal bank (UB), according to the Reserve Bank of India (RBI). The central bank in a statement on Wednesday said it received the application from the company “during the quarter ended December 31, 2022, under the Guidelines for ‘on tap’ Licensing of Universal Banks in the Private Sector dated August 1, 2016.”
Established in 2009, the company was registered with RBI as an NBFC-MFI in 2013. It provides working capital credit of Rs 50,000 to Rs 25 lakh to MSMEs apart from housing finance, loans to people with disability or financially excluded sections of the society, loans to street vendors, dairy development loans, etc. As of September 2022, the company had a portfolio outstanding of Rs 7,322 crore with 2.3 million borrowers and had 1,120 branches across 20 states.
Read More: BSNL seeks over Rs 200 crore from USOF for 500,000 broadband connections
“It makes a strong case to have a large localised bank with a strong focus on financial inclusion. Moreover, there are no nationalised banks currently headquartered in Bhubaneswar. So, Annapurna Finance seems to focus on emerging as an MSME lender focusing on areas where financial inclusion is slower and bank branch presence is lower,” a source on anonymity told FE Aspire. The company’s MSME portfolio was around Rs 1,400 crore catering to around 25,000 micro entrepreneurs.
For the uninitiated, on-tap licensing means that the window to license applications with the RBI is open throughout the year. UBs are financial entities that combine the offerings of a commercial bank and an investment bank including asset management, investment advisory services, capital raising, mergers and acquisitions, securities underwriting etc.
“Applying for a license other than UB would restrict Annapurna only to services offered by a regular bank. A UB license would enable them to expand into other offerings and cater to a bigger set of customers,” the source noted.
Annapurna Finance had last raised $15 million from Proparco — the private sector financing arm of the French public entity AgenceFrançaise de Développement Group (AFD Group) in June 2022. The total round size was $100 million. It had earlier raised $30 million from Nuveen Global Impact Fund in March 2021, $20 million from German development finance institution DEG in November 2021 and $35 million from Encourage Capital, Accion and existing investor Oikocredit.
In May last year, the RBI had rejected UB applications of UAE Exchange and Financial Services, The Repatriates Cooperative Finance and Development Bank (REPCO Bank), Chaitanya India Fin Credit, and Pankaj Vaish and others, it had said in a statement.
