ESAF Microfinance, a Kerala-based micro finance institution, has applied for the final licence to start up a small finance bank. ESAF Microfinance had received in-principle approval for setting up small finance banking operations last year. AG Varughese, the executive vice-president of ESAF Microfinance, said that they have already submitted an application to the Reserve Bank of India (RBI) and ESAF will initiate banking operations within 60 days of receiving the final licence.
The Microfinance Institution (MFI) already operates in 10 states and it will initiate the banking operations with 10 branches. It aims to have 85 branches by March-end and 110 branches by the end of a year of operations. Presently, MFI has more than one million customers and assets under management (AUM) of worth Rs.2.220 Crore.
Varughese said that they have already invested Rs.110 Crore in establishing their banking operations. K Paul Thomas, the current chairman of ESAF group will be designated as the chief executive officer and managing director of the bank.
Some other financial entities that have already received their final licence and started operations include Capital Local Area Bank and Equitas. Small banking operations include basic banking operations like lending money to and accepting deposits from under-served and un-served sections of society. As per current regulations, these small banks may be transformed into universal banks at a later date but such transition will be subject to approval from RBI.