Centrum Capital acquires FirstRand’s microfinance operations

Centrum Capital is acquiring FirstRand Bank’s (FRB’s) microfinance business. The move is part of Centrum’s strategy to boost lending operations focused on retail and small & medium enterprises (SMEs). The acquisition will help the non-banking finance company Centrum, which has already received a microfinance institution (MFI) licence from the Reserve bank of India (RBI), a ready platform besides leveraging FRB’s microcredit balance sheet and network.

FRB — which is part of the South African banking, insurance and investment group FirstRand — had earlier stated plans to exit retail and SME lending operations in India. FRB’s microfinance business consists of a Rs 200-crore loan book, around 70,000 customers with an average ticket size of Rs 20,000, primarily from Maharashtra, and a staff strength of over 300 people.

The microfinance foray will see Centrum tapping the below Rs 1-lakh loan market, giving a fillip to the existing lending business dealing in affordable housing and SME loans, which will end the fiscal with a Rs 1,000-crore book.

In 2016, former Standard Chartered Bank Asia CEO Jaspal Bindra acquired 20% stake and emerged as a co-promoter in Centrum, a two-decade-old financial services firm founded by Chandir Gidwani and Khushrooh Byramjee.

Centrum provides affordable housing loans in the bracket of Rs 1-10 lakh and SME loans in the Rs 1-25 crore range. While the affordable housing loans are currently rolled out in 12 locations, mostly cities outside state capitals, the SME lending has its footprint in a dozen big cities.