Kolkata-based microfinance institution VFS Capital has applied for ‘on-tap’ licensing to become a Small Finance Bank (SFB), according to a press release by the Reserve Bank of India (RBI) on Wednesday.
According to the RBI, this is the only application received for the quarter ending December 31, 2024, under the Guidelines for ‘On-Tap’ Licensing of Small Finance Banks in the Private Sector, which were introduced on December 5, 2019.
The RBI’s 2019 guidelines made significant changes to the licensing framework first established in 2014. These guidelines introduced an open-ended application process, allowing entities to apply for SFB licenses at any time. They also set the minimum paid-up voting equity capital or net worth requirement at Rs 200 crore for all SFBs. For Urban Cooperative Banks (UCBs) seeking to transition into SFBs, the initial net worth requirement is Rs 100 crore, which must be increased to Rs 200 crore within five years of commencing operations. Payments Banks, after five years of operations, are also eligible to apply for conversion into SFBs if they meet the specified criteria.
VFS Capital, founded in 1996-97 and formally established as Village Financial Services in 2006, is among the oldest microfinance institutions in eastern India. It was the first MFI in the region to secure Non-Banking Financial Company (NBFC) status. The company serves nearly half a million borrowers across 22,021 villages in 15 states through its extensive network of 283 branches as of March 2022.
The institution manages a loan portfolio of Rs 803.57 crore, offering products designed to empower women and support small businesses.
The company’s product offerings include loan products such as Samriddhi and Briddhi loans, which target micro and small enterprises.
In addition to these, VFS Capital provides loans to small businesses and other financial services, with a strong focus on women’s empowerment.
VFS Capital has also seen notable fundraising activity in the past. Its most recent funding was a Series B round of USD 6.17 million on March 18, 2018, with participation from eight investors, including Capital First and Vijay Khetan, according to Tracxn.
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