IIFL Finance partners with OFTPL to break into the neo-banking space

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Mumbai-based financial services firm IIFL Finance has entered into a joint venture with Open Financial Technologies Private Limited (OFTPL) to make inroads into the world of neo-banking.

Through this JV, the two companies aim to offer neo-banking services to consumers, micro-enterprises and retail customers. They also plan to offer services such as wealth management, loans and investments to certain groups.

After the incorporation of the new entity, IIFL Finance will hold 51% of the capital while OFTPL will hold 49%. The wholly owned subsidiary once incorporated will be a related party of IIFL Finance.

IIFL’s recent exchange filing states: “After incorporation, IIFL Finance and OFTPL will inject additional capital so that the total capital of the company would be mutually agreed that the participation of IIFL Finance and of OFTPL would be 51:49 respectively.”

IIFL Finance has tendered 50,000,000 shares of the company at Rs 10/- each, for an amount of Rs 5 crore. After further infusion by both entities, seven directors will be appointed to the board of the newly incorporated company.

Three of these directors will be appointed by IIFL Finance while the other three by OFTPL. These directors will then appoint an independent director to the board.

Under this joint venture, IIFL Finance will have exclusive merchant lending rights incorporated by the newly incorporated company, while OFTPL would not enter into a similar technology agreement with another non-bank financial company (NBFC).

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