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.