Delhi NCR-based fintech startup BharatPe has announced that the Reserve Bank of India (RBI) has issued an in-principle approval to the take over of cash-strapped Punjab & Maharashtra Co-Operative (PMC) Bank by BharatPe and Centrum Financial Services Limited, the non-banking financial company run by the Centrum Group.
BharatPe and Centrum will establish a small finance bank (SFB) together with a core focus on digital banking. BharatPe said that the company’s technology and digital finance know-how combined with Centrum’s expertise in financial services will allow the SFB to be a new-age bank.
The fintech startup has been raising funds since the turn of the year in preparation for the banking play and has been rumoured to be taking over PMC bank since December last year.
In February, BharatPe took a big leap towards the unicorn club by raising $108 Mn in Series D funding round at a post-money valuation of $900 Mn. The funding round was led by the company’s existing investor Coatue Management, with the participation from other existing investors Ribbit Capital, Insight Partners, Steadview Capital, Beenext, Amplo and Sequoia Capital. Overall, it has raised $268 Mn in equity and debt till date.
In January this year, BharatPe CEO and cofounder Ashneer Grover told Inc42 that BharatPe plans to go heavy on the credit and lending segment to offset the low-margin payments business. The company noted that it spent its first two years focussing on product building, getting customers on board, building a team, making merchants aware of the BharatPe system and other aspects of the businesses.
“Now having done it successfully for two years, we have understood the market well enough. The market has understood our proposition well enough and now is the time to go aggressive in terms of the core business, which is lending,” Grover had said at the time.
Earlier this month, BharatPe announced the acquisition of loyalty and rewards platform PAYBACK from American Express and ICICI Investments Strategic Fund. The company said the acquisition is part of its strategy to build a network of over 20 million small merchants by 2023.
Founded in 1997, Centrum operates a lending platform for institutions and individuals and offers services such as investment banking, institutional and fund broking, wealth management services, housing finance, micro-lending, retail broking and asset management. The PMC takeover approval is the first new banking license issued by the RBI to an NBFC after nearly six years, the company’s statement said.
“We are delighted at the opportunity to build a high performing technology-led small finance bank serving the payment, investment and credit needs of the under-served. With Centrum as our partner, we are confident that we can create a world-class institution that provides a differentiated and superlative experience to retail customers as well as small businesses,” added Grover.
BharatPe currently claims to be serving over 60 Lakh merchants across 100 cities, with annualised transactions processed value reaching $10 Bn+. The company says it has already facilitated disbursement of loans totaling to over INR 1,600 Cr to its merchants since launch.