IndusInd Bank, an India-based bank offering commercial and personal banking services, recently merged with Bharat Financial Inclusion Limited (BFIL), an India-based, for-profit microfinance institution (MFI) formerly known as SKS Microfinance. IndusInd is assuming the assets and liabilities of BFIL, the business activities of which will continue as a wholly owned subsidiary of IndusInd Bank.
The transaction increases IndusInd’s outreach to rural customers in that roughly 75 to 80 percent of BFIL’s loan portfolio is deployed in rural areas. BFIL reported loans totaling INR 77 billion (USD 1.1 billion) as of March 2018. As of the same month, the MFI reported total assets of INR 115 billion (USD 1.7 billion) and serving 7.2 million customers. BFIL was launched in 1998, converted into a public limited company in 2009 and issued its initial public offering in 2010. It has since diversified into offering gold loans and microinsurance services but does not accept deposits. BFIL loans only to women with loans ranging in size from INR 1,799 (USD 26) to INR 49,585 (USD 722) with terms ranging up to two years. Thirty-two percent of the MFI’s customers use their loans to buy livestock.
Established in 1994, IndusInd headquartered in the city of Mumbai and owned by Mumbai-based conglomerate, Hinduja Group. As of March 2018, it had approximately 1,400 branches in the country plus representative offices in London, England, and Dubai, UAE. As of the same month, IndusInd reported total assets of INR 2.2 trillion (USD 32 billion), deposits of INR 1.5 trillion (USD 22 billion) and outstanding loans of INR 1.4 trillion (USD 20 billion). For the 12-month period, it reported return on equity of 16.5 percent and return on assets of 1.90 percent. Post-merger, IndusInd has approximately “3,600 banking points (excluding ATMs [automatic teller machines]) serving more than 16.8 million customers.”
By Jolene Khor, Research Associate
Sources and Additional Resources
Economic Times news article
https://m.economictimes.com/markets/stocks/news/bharat-financial-indusind-bank-merger-to-complete-in-4-weeks/articleshow/69009750.cms
CNBC news article
https://www.cnbctv18.com/finance/lnduslnd-bank-bharat-financial-inclusion-merger-to-be-effective-from-july-4-3743291.htm
BFIL homepage
http://www.bfil.co.in/
BFIL 2017-2018 Annual Report
http://www.bfil.co.in/wp-content/uploads/2018/06/BFIL-AR-2018.pdf
Induslnd homepage
https://www.indusind.com
Induslnd 2017-2018 Annual Report
https://www.indusind.com/content/dam/indusind/AnnualReports/2017-18/2017-18/Indusind-AR2018_R1.pdf
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