New Delhi, Sept 6 (KNN) Micro finance company Satin Creditcare Network Limited has decided to shift its micro, small and medium enterprises (MSME) lending business to a separate non-banking finance company for which it is in the process of applying to the Reserve Bank of India (EBI) for its approval.

Satin CMD H P Singh has said the company is in the process of applying to RBI for approval for NBFC. Till then, it will continue to do this lending under Satin Creditcare.

The MSME lending business will be handled by Satin Finserv Ltd.

Satin is hiving it off because 85% of its lending has to be micro finance lending, according to RBI rules.

"So, when our non-Micro Finance Institution book starts taking shape and grows, we may breach that limit. Hence, we will branch out Satin Finserv Ltd. It will be a wholly owned subsidiary of Satin Creditcare Network Limited," he said.

As of now, the loan exposure to MSMEs is Rs 860 million under Satin Creditcare Network Limited, he said.

At present, Satin Creditcare is present in 20 states and plans to start operation in two more states, both in south India, in the current financial year. The company does not currently have any operation in south India.

It is trying to extend businesses to other states to diversify risks. Each state will contribute maximum 20% to total businesses from micro finance, Singh said.