Investment firm Dhruva Capital joins the microfinance sector through a merger with Vector Finance.
In a significant move for the Indian microfinance industry, Dhruva Capital Services, a non-bank lender, has announced a strategic merger with Vector Finance. The merger, subject to approvals from the National Company Law Tribunal (NCLT), other competent authorities, and the shareholders and creditors of both companies, aims to provide a boost to both entities.
As of March 31, 2025, Vector Finance had a loan book of Rs 390.2 crore and total revenue from operations of Rs 27.2 crore. The company operates across six states, primarily in eastern and northeastern India, and has disbursed Rs 222.7 crore to 43,274 customers.
The merger comes at a time when the microfinance industry is recovering from a period of rising delinquencies, loan losses, and weak profitability. The sector's stabilization has been aided by stricter lending norms and easing credit costs.
Dhruva Capital, on the other hand, posted a net loss in FY25 compared to a profit in FY24. The company offers a diverse range of loan products. Notably, Prodyut Purkait, CEO of Dhruva Capital, resigned in August, and Amit Rathi, CFO of Dhruva Capital, resigned earlier due to inability to devote time to board affairs.
The merger is expected to help reduce the overall cost of borrowing and provide access to additional capital for Vector Finance. It also aims to help Vector Finance improve its topline and reduce interest rates for customers.
Following the merger announcement, the shares of Dhruva Capital hit the 5% upper circuit on the BSE. However, there are no publicly available search results indicating specific institutions that have previously acquired equity stakes in Vector Finance.
The merger of Dhruva Capital and Vector Finance is a significant development in the Indian microfinance sector. As the industry continues to recover, such strategic moves are expected to shape the landscape and drive growth.
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