Sidbi Venture Capital-backed non-bank microfinance institution (NBFC-MFI) — Janakalyan Financial Services Private Limited — has set its sights on an asset base of around Rs 350 crore by 2021-22.
The Calcutta-based NBFC-MFI is also planning to expand into new markets such as Chhattisgarh and eastern Uttar Pradesh next fiscal following a dose of capital infusion by Bhubaneswar-based investor Sun Tech City Pvt. Ltd, which picked up a 12 per cent equity stake.
Sun Tech becomes the second institutional investor in the microlender after Sidbi Venture Capital.
The MFI, which began operations in 2017, has 75 branches in six cities — Bengal, Bihar, Jharkhand, Odisha, Assam and Tripura, catering to 1.62 lakh borrowers.
“We are planning to expand into Chhattisgarh and eastern UP. In Tripura, there is also scope for further expansion. The equity capital raised will help us leverage more and support the expansion,” said Alok Biswas, managing director and CEO of Janakalyan Financial Services. He is also one of the promoters along with S.K. Mitra, a former banker with experience in SBI and Axis Bank.
After the capital infusion, the promoters hold 70 per cent and institutional investors hold the remaining 30 per cent in the microlender.
"The capital will also be used for investment in business processes, technology and human capital. This growth capital is critical when debt is also not flowing much into mid-sized MFIs since pandemic," said Biswas.
Equity infusion into NBFC MFIs has seen steady growth despite pandemic and from a base of Rs 14,324 crore as of September 2019, it has increased to Rs 17,178 crore as of September 2020, as per data from industry body Microfinance Institution Network (MFIN).
Last week, another Calcutta based NBFC-MFI - Arohan Financial Services - had filed for an initial public offer with plans to raise around Rs 1750-1800 crore.
According to industry body Sa-Dhan, the combined microcredit portfolio of all lenders as of December 31, 2020, was Rs 2,27,893 crore of which banks held the majority share with 42 per cent followed by NBFC MFIs at 32 per cent.
