Satin to cap state-wise exposure

It was a conscious decision as part of derisking strategy

Microfinance firm Satin Creditcare Network Ltd. (SCNL) wants to restrict its State-wise exposure to 20%, said a top official.

“Prior to demonetisation, we had 50% exposure in Uttar Pradesh,” said Dev Verma, COO, SCNL. “It was a conscious decision as part of de-risking strategy to keep the exposure at 20%. We started the exercise soon after the demonetisation.”

SCNL operates in 21 States with significant presence in Uttar Pradesh and Bihar. To spread the risk evenly, SCNL entered the southern region by opening branches in Tamil Nadu. “Our entry into south was delayed due to demonetisation. It is an important market and accounts for 26% of microfinance business,” he said.We will be entering Karnataka and Puducherry in December, followed by Kerala,” he said.

Having planned to hive off its micro, small and medium enterprises (MSME) finance into a separate entity, SCNL had applied for a separate non-banking finance company licence to conduct MSME lending business.

“We have in-principle approval. After getting the final approval, MSME Finance will be hived-off to this subsidiary, named Satin Finserve Ltd. As of now, we have MSME Finance portfolio close to ₹86 crore. It is still a huge market and offers potential for growth,” he said.

Mentioning that as per the RBI guidelines, 85% of the firms lending has to be microfinance, he said: “So, when our non-microfinance book starts taking shape and grows, we may breach that limit. Hence, we have branched out Satin Finserve Ltd. It will be a wholly owned subsidiary of Satin Creditcare Network Ltd.”

Besides, the company also entered into affordable housing finance. Right now, it has close to ₹12 crore loan book under Satin Housing Finance Ltd.