ESAF SFB to discontinue business correspondent services of ESMACO | Company News
ESAF Small Finance Bank (ESAF SFB) has decided to discontinue the services of business correspondent ESAF Swasraya Multi State Agro Co-operative Society Limited (ESMACO) to reduce concentration risks and absorb its 5,000 plus employees on the rolls of the lender.
ESAF SFB, in a filing with the stock exchange, said ESMACO, one of the promoter group entities of the bank, was managing 54.53 per cent of the gross advances of the bank as on March 31, 2024. Its assets under management (AUM) rose by 20.4 per cent on year-on-year (Y-o-Y) basis to Rs 19,649 crore as on March 31, 2024. The total business – AUM plus deposits – stood at Rs 39,527 crore at the end of March 2024.
The discontinuation will reduce the contribution of ESMACO to the management of the gross advances to 14.90 per cent. The bank will directly manage such services. The discontinuation of the scope of services is not expected to have a material adverse financial impact on the bank.
The decision was part of the bank’s strategy to mitigate concentration risk associated with reliance on a single business correspondent and to bring the business operations in-house, ESAF SFB said.
Kadambelil Paul Thomas, managing director and chief executive, ESAF SFB, told Business Standard that the lender would absorb 5,000 plus employees of ESMACO from July 1, 2024. They will continue to work at their current location. At present, these employees are doing only micro loans. They are experienced, have a good understanding of the customer base, and would be gradually deployed into wider services of the bank.
“This move (discontinuation) aligns with our risk management and operational efficiency objectives for further improving our control and visibility on these operations,” ESAF SFB added.
First Published: Jun 14 2024 | 11:39 PM IST
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