Sumary of Explained: What's the market opportunity for new Unity Small Finance Bank:
- The Reserve Bank of India Tuesday issued a small finance bank (SFB) licence to a consortium of fintech company BharatPe and Centrum Financial Services Ltd. The new business entity Unity Small Finance Bank will see Centrum’s MSME and micro finance businesses merged into itself.
- The RBI had already given an in-principle approval to Centrum Financial Services to set up a small finance bank, and along with BharatPe, it took over the Punjab and Maharashtra Co-operative Bank, the assets and liabilities of which will be taken over by the new entity.
- Both Centrum and BharatPe had aspirations to evolve their businesses into a bank and coming together of both the companies, along side the PMC Bank crisis presented an opportunity for the two entities to join hands.
- In a statement, Centrum Group’s Executive Chairman Jaspal Bindra said: “We aspire to be India’s first Digital Bank”.
- There have been several examples of small finance banks and non-banking financial companies collaborating with fintech companies to access and monetise the data collected by these consumer tech firms.
- The startup already processes around $4 billion worth of transactions on its platform annually, and it had been planning to offer its customers — primarily comprising small and medium sized merchants — a bank account and lending services based on their transactions.