We have strong faith in mi­cro­fi­nance busi­ness: Romesh Sobti

The Hindu Business Line - - BANKING -

In­dusInd Bank has strong faith in mi­cro­fi­nance busi­ness, said Romesh Sobti, MD & CEO.

This ob­ser­va­tion comes in the back­drop of the pri­vate sec­tor bank en­ter­ing into a ‘con­fi­den­tial­ity, ex­clu­siv­ity, and stand­still’ agree­ment with Bharat Fi­nan­cial In­clu­sion last month for due dili­gence and dis­cus­sions to eval­u­ate a po­ten­tial strate­gic com­bi­na­tion be­tween the two fi­nan­cial sec­tor en­ti­ties.

Sobti said, “The (mi­cro­fi­nance) in­dus­try is back at nor­mal lev­els of dis­burse­ment since de­mon­eti­sa­tion…The in­dus­try has taken more than af­fir­ma­tive steps to get over the hump…The mi­cro-fi­nance in­dus­try has per­formed much bet­ter than it was ex­pected to.”

“We’d never get into a trans­ac­tion of this na­ture when there is volatil­ity… De­mon­eti­sa­tion was a black-swan event and thus was only a blip and has thus not de­terred us.’”

As at Septem­ber-end 2017, mi­cro­fi­nance ac­counted for 2.18 per cent of the over­all loan book. Sobti said this is ex­pected to grow to about 5 per cent by 2020.

Un­der mi­cro­fi­nance, the bank pro­vides loans to weaker sec­tions of so­ci­ety through the ‘busi­ness cor­re­spon­dent model’ in­volv­ing mi­cro­fi­nance in­sti­tu­tions that are ge­o­graph­i­cally spread across the coun­try. Ac­cord­ing to the bank’s an­nual re­port, the loans have helped sup­port mi­cro-en­ter­prises such as sa­ree trad­ing, snack stores, tea stalls and bi­cy­cle re­pair shops.

The bank, ac­cord­ing to the re­port, has a ded­i­cated In­clu­sive Bank­ing Group which adopts a col­lab­o­ra­tive ap­proach by part­ner­ing with suit­able in­ter­me­di­aries/ in­sti­tu­tions for fur­ther­ing the cause of fi­nan­cial in­clu­sion.

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