IndusInd Bank + Bharat Financial Inclusion

[atulvora]

@ppsingh3

SKS does look good considering the growth rate of MFI industry in general. But, with new Small/payments Bank regulations in place, there needs to be more analysis on the future. Vikram Akula in an interview said that RBI is saying the days of NBFC-MFIs are over. They have to become Small or Payment bank, so that they can be regulated by RBI. This would mitigate the regulatory risk (state level), but would add costs of banking operations to MFIs. It would not be possible for a bank to sell nokia phones and charge a margin on that. Cost of start of banking operations and that of raising deposit (~5% of the deposit amount) might end up to be drag on SKS, if it becomes a small bank. I think we need more thought on the possible effects of changing dynamics of the regulations in the industry.

disclosure: I am invested.

Pranav,

I missed the vikram akula interview I will try to dig it. You bring an interesting point about cost of deposit mobilization. That is the reason why SKS does not want to convert into bank I guess. They (SKS) are raising money at 13% now and with improving credit rating it will drop more. Which mean they can pay at best 8% for deposit which I guess SKS thinks is not good enough for deposit mobilization. Bit I also agree with Akula bank is the way to go for MFI industry and I think SKS will bite to bullet and apply for license.