Colorado-based 4B Capital Fund A has acquired a 30% stake in rural banking infrastructure provider Eko India Financial Services Pvt Ltd for an undisclosed amount. The investment will be made in three tranches, according to the company officials.
4B Capital Fund A is a social fund set up by the US based 4B, a Christian charity group, in August to invest in long-term sustainable business ventures and Eko is its debut deal. 4B Capital’s General Partner Christopher Murdoch has joined Eko’s board.
According to Abhishek Sinha, co-founder of Eko India Financial Services, one tranche of funding was completed on September 30th, while the second is scheduled for December 30 and the last will be in April 2011.
Eko launched in 2007 with $0.5 million donated by family and friends and in March 2009 received a “grant funding” of $1.78 million from CGAP Technology Program which is housed within the World Bank and co-funded by Bill & Melinda Gates Foundation.
Eko’s goal is to increase the reach of banks by establishing a network of retail customer service points across rural India. At Eko’s financial services counters, people can sign up for bank accounts and, in the future, can perform small ticket transactions. Eko has entered into distribution partnerships with SBI and ICICI bank and enables users to set up an SBI Mini Savings Account, ICICI Apna Savings Account and take up Bharti AXA Life – Bachat Bima policies.
Eko currently has 900 outlets – 600 in NCR-Delhi and 300 in Bihar and Jharkhand. Sinha explained the reason for setting up outlets in Bihar and Jharkhand was because the majority of migrants from Bihar were in Delhi and one of their key needs is to send money back home. He is not planning to expand to other rural areas in India as yet.
“We are trying to consolidate our network in Delhi and Bihar – we want to step back and take a good look at the network. We will use this funding to set up 20,000 more points by end of next year,” said Sinha.