New Delhi, June 6 -- The Reserve Bank of India has rejected an application by Annapurna Finance Pvt. Ltd, which counts Piramal Alternatives and mid-market private equity firm Oman India Joint Investment Fund (OIJIF) as investors, to set up a universal bank.
The RBI said in a statement on Friday that it has completed the examination of Annapurna's application. "Based on the assessment of the application as per the procedure laid down under extant guidelines, the applicant was not found suitable for granting of in-principle approval to set up a universal bank," it said.
The banking regulator didn't give any other details.
This is the second time in two years that the RBI has declined a banking licence to the non-bank lender; it previously denied permission to Annapurna last year.
The RBI's rejection comes at a time when Annapurna Finance is grappling with a sharp rise in bad loans during FY25. Despite loan write-offs, the company's gross non-performing asset (GNPA) ratio rose to 4% as of December 31, 2024, from 2.9% in March 2024, VCCircle previously reported.
Odisha-based Annapurna Finance provides microcredit primarily to women for income-generating activities using the group lending model. Its offerings also include individual loans to MSMEs, home and home improvement loans, and consumer durable loans.
With assets under management of Rs 10,439 crore as of December 31, 2024, Annapurna ranks among India's top 10 microlenders, competing with players like CreditAccess Grameen, Satin Creditcare Network, and Belstar Microfinance.
Last year, Piramal Alternatives became a key minority shareholder in Annapurna Finance with an equity infusion of Rs 300 crore. It later subscribed to the company's optionally convertible debentures for another Rs 300 crore. The lender's other backers include impact investors such as Germany's DEG, France's Proparco, Dutch firm Oikocredit, and Accion.
Published by HT Digital Content Services with permission from VC Circle.