Agaseke Microfinance Bank is looking for investors to inject more working capital into the business and recruit the required personnel as it gets ready to launch into commercial bank operations.
According to the law that regulates the banking industry, a commercial bank must have a minimum capital of Frw 5 billion and requisite number of qualified and technical staff at managerial level.
Dr Faustin Ntezilyayo, the company's managing director told The Rwanda Focus that Agaseke will approach potential investors individually.
"There has been misinformation among members of the public that we are a commercial bank. We are just in the process of becoming one after attaining the status of a micro finance bank in 2011,"Ntezilyayo said.
The misunderstanding is quite understandable because the institution offers all the main services rendered by commercial banks except undertaking international transactions.
"It's true, we receive deposits, run current accounts, have electronic banking services; so there's nothing a commercial bank does that we are not doing except international services. But as I said, we are yet to become a commercial bank."
Agaseke currently has operating capital of Frw 1.5 billion and assets worth Frw 7.3 billion. Ntezilyayo said that the bank plans to recruit qualified personnel - experienced and young - to build a human resource base capable of operate a commercial bank. "So even as we chase for investors, it's not only a need for capital but also expertise to ensure we don't have problems at the next level," he adds.
Yet in keeping up with this ambition, Agaseke that started in 2003 as a micro-finance institution with must get ready for competition from big players "Competition is tough but healthy for us as it's a source of motivation," he said.
There are two other institutions in Agaseke's league: Zigama CSS and Unguka both of whom got their license to operate as micro finance banks only last year. These are in addition to eleven commercial banks that include the latest entrant, Equity Bank from Kenya.
Now, in order to maintain a reasonable share of such competitive market, Agaseke bank is planning to relocate some branches to busy locations with more commercial activity.
For example, the bank's branch at the headquarters in Remera will be moved to a location around Gisementi where they hope for more business. "For this year, we will not be opening any new branches but we shall be relocating the existing ones to busier areas with more commercial activities," he said.
The bank has branches in the districts of Muhaga, Huye, Musanze, Rubavu and Rusizi. There are several others in Kigali City and plans to open a branch in eastern province next year.
To keep the branches up and running efficiently, the bank's work force that was at 89 has since grown to 127 but the focus is on retraining and equipping them with relevant skills especially in customer care to keep the bank competitive and popular among clients.
Yet despite the tough competition, the bank is relatively doing well having posted gross income of Frw300 million in 2011 from its operations in eleven branches around the country.
This was facilitated by good products such as the Term Saving Account where one might choose to save for a certain period of time. The bank says it's keeping about Frw5billion worth of client's savings with about 10, 000 active accounts and a credit portfolio of about Frw 6 billion.
Ntezilyayo says his bank can lend a maximum of at least Frw 75 million up from Frw 50 million in 2010 at an average interest of 18 to 24%. About Frw 4billion has been lent out to businesses.
"We are quite a healthy institution, with our non-performing loans standing at 3% - a safe zone compared to the 7% minimum standard set by the national bank," said Ntezilyayo.
But while it's a good performance based on the national bank's red mark, it's a decline compared to the bank's own mark of less that 2% non-performing loans sometime in 2010.
With such a seemingly clean bill of health, it shouldn't be hard business for the bank to get good investors to join the SORAS Group Limited who currently have majority stake in the institution of 75%.