MICROCAPITAL BRIEF: SEED Financial Services, Financial Information Network and Operations Limited (FINO), A Little World Seek Private Equity Funding to Scale Up Business Correspondent Operations in India

Business Standard, an Indian newspaper, has reported that SEED Financial Services, an Indian consulting, planning and implementation agency; Financial Information Network and Operations Limited (FINO), an Indian technology company that seeks to enable financial inclusion; and A Little World, a technology company based in India are seeking private equity funding to scale their business correspondent operations. Business correspondents are individuals or organizations that are permitted to “raise deposits; disburse tiny loans; recover bad loans; sell micro insurance, mutual funds, pension products and other third-party products; and receive and deliver small value remittances” on behalf on banks [2].

SEED Financial Services, which acts as a business correspondent for 19 banks including State Bank of India (SBI), reportedly plans to raise USD 5.5 million from private investors. SEED Managing Director Anirban Roy told Business Standard, “We are cash-positive now. But we need this capital to scale up our operations, build infrastructure and augment our resources” [1]. FINO has reportedly raised INR 1.5 billion (USD 33.3 million) from private equity investors [1]. Business Standard reports that investors expect high returns from business correspondents as they may increasingly be appointed by banks to provide financial services in rural villages on their behalf in order to meet the Indian government’s goal to provide banking services in 73,000 villages by March 2012.

As reported by MicroCapital in October 2010, the Reserve Bank of India (RBI), India’s central banking authority has updated guidelines so that “individuals, non-governmental organizations, cooperative societies, post offices and companies with large and widespread retail outlets” may serve as business correspondents [2].

By: Alexandra Pattee, Research Associate

About the Reserve Bank of India (RBI): The Reserve Bank of India (RBI) is India’s central banking authority. Established in 1935, the RBI undertakes consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies. The current focus of RBI is to supervise financial institutions, consolidate accounting standards, resolve legal issues in banking fraud, monitor non-performing assets and supervise the rating model for the banking sector. RBI operates twenty-two regional offices as of 2010.

About Financial Information Network and Operations Limited (FINO): Financial Information Networks and Operation (FINO) is an Indian company that provides technological products to microfinance institutions (MFIs), banks and insurance companies. Some of its products include management software for microloans and biometric smartcards that store transaction records. The company was founded in 2006. As of December 12, 2009, the company has approximately 8 million enrolled customers served through the financial institutions that use its products.

Sources and Resources:

[1] Business Standard, “Business correspondents explore PE funding route”, http://www.business-standard.com/india/news/business-correspondents-explore-pe-funding-route/432187/

[2] MicroCapital.org Article, October 16, 2010, “Reserve Bank of India (RBI), in Move to Expand Rural Financial Access, Updates Guidelines to Allow Individuals, Nonprofits and Corporations “But Not Microfinance Institutions” to Serve as Business Correspondents for Banks”, https://www.microcapital.org/microcapital-brief-reserve-bank-of-india-rbi-in-move-to-expand-rural-financial-access-updates-guidelines-to-allow-individuals-nonprofits-and-corporations?but-not-microfinance-institution/

MicroCapital.org Article, March 22, 2011, “India’s Business Standard Supports Reserve Bank of India (RBI) Proposal to Establish Two Types of Banking Licenses”, https://www.microcapital.org/microcapital-brief-india?s-business-standard-supports-reserve-bank-of-india-rbi-proposal-to-establish-two-types-of-banking-licenses/

MicroCapital’s Microfinance Universe Profile: Reserve Bank of India (RBI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Reserve+Bank+of+India+%28RBI%29

MicroCapital’s Microfinance Universe Profile: Financial Information Network and Operations Limited (FINO), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Financial+Information+Networks+and+Operation+%28FINO%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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