Capital investment firm Dhruva embarks on microfinance venture through merger with Vector Finance
In a significant move for the Indian financial sector, Dhruva Capital Services, a non-bank lender, has announced a strategic merger with Odisha-based 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, is expected to enhance customer service across segments, expand product offerings, and unlock synergies in operations and capital efficiency.
Dhruva Capital Services, known for its diverse range of loan products, offers business loans, invoice discounting, loans against property, construction finance, personal loans, gold loans, and affordable home loans. Vector Finance, on the other hand, primarily operates in eastern and northeastern India, disbursing Rs 222.7 crore to 43,274 customers, according to its latest disclosures.
The merger is expected to help reduce the overall cost of borrowing for Vector Finance, potentially allowing for lower interest rates for customers. It may also aid Vector Finance in further improving its topline, as the combined entity could leverage the operational synergies and economies of scale.
However, it's important to note that no disbursement data is available for Dhruva Capital Services in the article. Financial data for Dhruva Capital Services, as of March 31, 2025, is also not available, while Vector Finance reported a loan book of Rs 390.2 crore and total revenue from operations of Rs 27.2 crore during the same period.
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.
The merger news has positively impacted Dhruva Capital Services' shares, with them hitting the 5% upper circuit on the BSE on Friday. However, it's worth mentioning that the Chief Financial Officer of Dhruva Capital Services, Amit Rathi, previously resigned, citing inability to devote time to board affairs. Furthermore, Prodyut Purkait, the CEO of Dhruva Capital Services, resigned in August to focus on his commitments in other ventures as an entrepreneur.
Rahul Johri, the Chairman of Keventer Agro, is not directly involved in this merger. The operational states for Dhruva Capital Services have not been specified in the article.
As the merger process unfolds, more details about the combined entity's operations, product offerings, and financial performance are expected to emerge. The merger, if approved, could potentially create a significant player in the Indian financial sector, offering a wide array of loan products to a broader customer base.
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