Thrissur - based ESAF Microfinance on Friday received the final approval from the Reserve Bank of India to launch Small Finance Bank (SFB) and will start operations by January next year.
A. K. Paul Thomas, Chairman and Managing Director of ESAF Microfinance, said this will give them the confidence to move deeper and wider in serving people at the bottom of the pyramid.
"We will now face increase in expenditure due to infrastructure development and HR requirements.
In course of time, the cost of funds will come down and the benefits can be passed over to the customers, " said Thomas.
Currently, ESAF Microfinance has around 3, 000 employees and by March next year it will be increased to 3, 500.
The bank will have presence in urban, semi - urban and rural areas.
The bank will be launched in Kerala and Tamil Nadu and gradually it will be expanded to other parts of the country.
It also plans to give special focus on the Northeast region.
ESAF will offer multiple channels to the clients to access accounts, including digital channels such as mobile and internet banking, apart from services through branches.
The company has invested around Rs 20 crore so far in IT.
FIS Global has been engaged as the system integrator for the project and E & Y as the principal consultant for the banking transformation.
The company hopes to improve operational efficiency and risk management through technological initiatives.
At present, the organisation has presence in 11 states in the country.
The company has 1. 2 million clients at present and has plans to reach three million households by 2020.