MUMBAI: Reliance Capital, the financial services arm of Reliance ADA group, has launched its microfinance initiative in partnership with two Gujarat-based microfinance institutions (MFIs).
Reliance plans to fund MFIs in Gujarat and Maharashtra in the first phase and subsequently have a national presence. The company is joining hands with two Gujarat-based microfinance institutions — MAS Financial Services and Vardan Trust — for the project.
The initiative, a part of Reliance Consumer Finance, will have an initial corpus of Rs 100 crore and is expected to be ramped up further.
Whether the project is a part of the group’s corporate social responsibility (CSR) or is expected to contribute to the balance sheet, group president Amitabh Chaturvedi said it would be a bit of both. He further explained that the initiative was launched in the two states initially, only because the group already has a presence in them.
The project, aimed at enhancing penetration of microfinance in the country at the grass roots level, was kicked off by handing over the first disbursement cheques. The two cheques worth Rs 5 crore and Rs 40 lakh were handed over to the heads of two MFIs on the occasion.
In the coming decade, the potential micro-finance client base in India is likely to be at 300 million to 400 million, according to a survey done by Sa-Dhan, the apex body of micro-finance institutions in the country. It is exactly this space that Reliance ADA group is looking to tap.
“We envisage lending to MFIs, which would then be on-lending finances to self help groups, individuals and joint liability groups as per their norms,” Reliance consumer finance’s deputy CEO KV Srinivasan told reporters at a press conference on Monday.