DCB to make microfinance debut, eyes co-op bank

HYDERABAD: The microfinance sector, which is on the radar of private equity investors, is now ripe for new entrants too. The Mumbai-based Development Credit Bank is set to make a foray into this segment, and is looking at taking an exposure of around Rs 100 crore in the next one year. To strengthen its reach, the bank is also open to acquiring a co-operative bank, if regulations allow it to do so.

However, while planning the microfinance foray, the Rs 440-crore bank is keeping away from the already crowded market of Andhra Pradesh. The bank, which will lend to both rural and urban sectors, has shortlisted Dediyapada in Bharuch district of Gujarat for rural lending, and is looking at Mumbai and Pune for its urban micro-lending programme.

“We will be offering services like savings, insurance and lending for the rural markets,” DCB managing director and CEO Gautam Vir told ET. The bank will seek inputs from the founder of microfinance major Basix, Vijay Mahajan, and Nasser Munjee, former IDFC chief and director on the board of DCB, for its microfinance foray. Mr Munjee is already associated with rural microfinance in Karachi and Lahore through the Aga Khan Agency for Microfinance.

Apart from microfinance, DCB will participate across the value chain of infrastructure financing, including funding tier II and III suppliers, SMEs and retailers. The bank is in the process of raising Rs 308 crore via preferential issue, wherein the Tata Group, the Royal Family of Abu Dhabi and Lehman Brothers will pick up a 16.6% stake in DCB.