Navi Mumbai-headquartered Microfinance Institution (MFI) Suryoday is set to convert itself into a small finance bank by the end of this month or early next month. The company has been able to migrate its MFI operations to a banking platform using a cloud-based core banking platform provided by FIS.
R Baskar Babu, Founder CEO of Suryoday, told that the bank would start with 8 lakh borrowers who have availed of microfinance loans. “The microfinance experience in Bangladesh has shown that small borrowers end up saving more than they borrow. The ability of financially excluded to save is also highlighted by the thousands of crores that have been mobilized by pyramid schemes from this segment,” said Babu.
Suryoday has a net worth of Rs 350 crore and the promoter group led by Babu holds 26%. Domestic institutions such as IDFC Bank, HDFC, HDFC Life and ASK Group hold 25%. Other institutions include IFC, Lok Capital and Developing World Markets. One of its founding PE investors, Avishkar Funds, recently sold its stake to investors responsibility, Gaja Capital, Evolvence and Americorp Group.
Besides its existing base of MFI borrowers, Suryoday would also target retired savers and other non-customers for fixed deposits. “There are also segments in metros that have not been tapped by banks. For instance, in the vegetable market of Dadar in central Mumbai, there are vendors willing to deposit Rs 1,000 a day if they have a representative come to collect cash late at night,” said Babu. “There are success stories like that of Pakistan’s Tameer Bank which has built up deposits by operating post-midnight to cater to the fishing industry,” he added.
Babu said that unlike payment banks, which rely largely on technology for customer interaction, MFI-turned-banks will offer customers a personal touch. To continue with the personalised service, the company is in the process of hiring 1,000 employees to reach out to depositors.
“Opening savings accounts will enable us to underwrite borrowers based on analytics. If we are able to open accounts for the drivers and housemaids in just one location in Mumbai, in two years we will be able to build a loan book of Rs 500 crore,” said Babu.
Source: Times of India
