The move has come in the wake of the trend of private sector banks investing into microlenders.
Mentioning about the motive behind the investment RBL managing director and chief executive Vishwavir Ahuja said: “It will help us extend our distribution footprint and strengthen our financial inclusion initiatives across the hinterland. We will strive to explore joint business opportunities.”
He added this should be seen as a “strategic partnership” for the bank which has a focus on Western states, rather than the acquisition of minority stake.
Explaining about the alliance with RBL bank, Utkarsh managing director and chief executive Govind Singh said, “The partnership will help the company augment its product and services, including ancillary services.”
The announcement has come few days after RBL’s larger rival Kotak Mahindra Bank announced the buyout of the Karnataka-focused BSS Microfinance for Rs 139 crore.
It also comes within two months of acquisition of Grama Vidiyal Microfinance by IDFC Bank for an undisclosed sum.
According to experts, the high growth in the micro lending segment which witnessed loan growth of 80 per cent in 2015-16 as against the banking system’s struggles to touch the double-digit mark, is one of the biggest draw for the banks.