Kotak Mahindra Bank to buy Karnataka-focused BSS Microfinance

Private lender Kotak Mahindra Bank Ltd yesterday struck a deal to buy a majority 99.49-per cent stake in Karnataka-focused BSS Microfinance Pvt. Ltd, for Rs139.2 crore in cash.

Kotak Mahindra Bank said that it expects to close the deal within 3-4 months, subject to regulatory clearances.

An ex-employee of BSS Microfinance holds the remaining 0.51 minority stake and Kotak Mahindra Bank is in talks to buy that as well.

The deal comes nearly two years after Kotak Mahindra Bank acquired its local rival ING Vysya Bank Ltd for Rs15,000 crore. (See: Kotak Mahindra Bank to acquire ING Vysya Bank)

Founded by Bengaluru-born gastroenterologist Ramesh Bellamkonda, BSS Microfinance is classified as a Non-Deposit taking Non Banking Financial Company-Micro Finance Institution (NBFC - MFI).

It extends money to the poor, rural and semi-urban women, primarily for income generating activities and also for life quality improvement activities.

The Bengaluru-based micro-lender has a net worth of Rs72.9 crore, loans of Rs483 crore, and annual turnover of Rs49.5 crore.

The deal will give Kotak Mahindra Bank a customer base of over 217,000, and a network of 78 branches.

''Financial inclusion is one of the imperatives of our country, and this acquisition is a testimony of our commitment to cater to the needs of weaker sections of society in a commercially viable manner…... BSS is of the right size, culturally compatible with Kotak, and has proven its processes and value systems over a decade,'' said, Narayan SA, president – Commercial Banking at Kotak Mahindra Bank.

''We will leverage BSS's deep presence in the segment and related experience to ensure that customers' needs are served best and consistent with the past culture,'' he added.