IDFC Bank to acquire Grama Vidiyal Micro Finance

The Dollar Business Bureau

IDFC Bank has signed a share purchase agreement on Tuesday to acquire Grama Vidiyal Micro Finance Ltd. After completion of the acquisition, Grama Vidiyal will be a completely owned subsidiary of IDFC Bank.

Tamil Nadu-based micro finance firm will act as IDFC Bank’s dedicated Business Correspondent. It will expand the delivery mechanism for the services of IDFC Bank. The acquisition will help IDFC Bank to increase its network and reach to a large customer base in the country.

Post-acquisition, IDFC Bank can access Grama Vidiyal’s network of 1.2 million households in 319 rural and semi-urban areas across 65 districts of Tamil Nadu, Kerala, Karnataka, Pondicherry, Maharashtra, Gujarat and Madhya Pradesh. 

With this, the customers of Grama Vidiyal will benefit from IDFC Bank’s range of banking products, credit offerings, digital services and banking at their doorstep. The 30-year old micro finance company has an AUM (Assets Under Management) of Rs.1502 crore, by the end of FY 2015-16. All these loan assets will be transferred to IDFC Bank.

Trichy-headquartered Grama Vidiyal has been focusing on the financial inclusion programmes for sustainable development of women. With more than 3000 employees, the micro finance firm understands the needs of local households.

IDFC Bank Founder MD and CEO Rajiv Lall said this is an industry first transaction where a bank has acquired a microfinance institution. IDFC Bank plans to be a mass retail bank having a huge customer base over a period of next five years. This acquisition has fast-tracked the bank’s aim to build a strong retail network, he said.

IDFC Bank also intends to build a public banking infrastructure that benefits the under-served segments. Grama Vidiyal is a perfect complement to this plan. IDFC Bank and Grama Vidiyal will work together to build sustainable communities, make small households self-reliant, financially empower women and encourage local entrepreneurship, he added.

Grama Vidiyal Chairman and Managing Director S Devaraj said that the common objective of both the firms is to transform lives in the rural areas and underserved segments of the country.  Grama Vidiyal customers will have access to a wider range of banking products using technology and new processes, he said.