Yes Bank to set up NBFC for micro-finance

MUMBAI: Yes Bank plans to set up a micro-finance subsidiary in a joint venture with possibly two US-incorporated institutions with expertise in the segment. The subsidiary will be in the form of a non-banking finance company (NBFC), for which the bank has applied to the Reserve Bank of India (RBI) for a licence two months back.

The minimum equity investment needed for a NBFC is currently Rs 5 crore and the initial capital infusion would be Rs 5-10 crore, said Yes Bank president, (corporate finance and development banking) Somak Ghosh.

The bank’s board has given its approval to raise it up to Rs 20 crore if necessary, he revealed. “We are now awaiting RBI approval,” he said, adding that the two foreign partners will join the JV with minority financial participation if the RBI gives its approval to Yes Bank’s proposal.

“Both the organisations have tremendous experience in micro-finance in emerging economies, especially Latin America and Africa, and will bring to the table their expertise in the areas of helping in the formation of self-help groups (SHGs) as well as in their capacity-building, as borrowers in this segment are normally first-time borrowers,” Mr Ghosh said.