IDFC Bank acquires Grama Vidiyal

 

IDFC Bank on Tuesday July 12,2016 announced it had acquired Tamil Nadu-headquartered microfinance institution Grama Vidiyal in an all-cash deal. 

The company did not disclose the deal size. 

On finalisation of the deal, the MFI will become a wholly owned subsidiary of the bank and act as a dedicated business correspondent for it. 

The acquisition gives IDFC Bank access to Grama Vidiyal’s 12 lakh customers across seven States, besides giving it 319 branches across 65 districts in these States. 

The bank has obtained in-principle approval from the Reserve Bank of India for the deal. 

Rajiv Lall, MD and CEO of IDFC Bank, said the acquisition will help the bank reach out to those segments of customers that are usually not served by the banking system, besides transforming it into a mass retail bank. 

The acquisition was value-accretive for the bank, he added. S Devaraj, Chairman and MD of Grama Vidiyal, said: 

“Our business has been growing at the rate of 30 per cent .We make a profit of ₹15 crore per quarter, have a spread of 12 per cent besides recovery rate of 99.9 per cent. Half of our customers are urban and the other half both semi-urban and rural.” 

All 3,000 employees will be absorbed by IDFC Bank and the current top management of the microfinance institution will remain. 

Grama Vidiyal has a presence in Tamil Nadu, Kerala, Karnataka, Puducherry, Maharashtra, Gujarat and Madhya Pradesh and has a net asset base of ₹1,502 crore as of FY16, all of which will be transferred to IDFC Bank.