The NBFC sector is yet to recover from the liquidity crunch despite certain measures recently announced by finance minister Nirmala Sitharaman. Healthy retail business, smart credit risk management, strong parentage and ability to raise funds has made certain NBFCs stand out. As the sector goes through a downturn, successful leaders are reminded of key business lessons. Whether the economy is in a downturn or not, risk management is agnostic to macroeconomic situations, says Kusal Roy, managing director at Tata Capital Financial Services Ltd (TCFSL). The right way to grow a business is more important than just chasing growth. A management graduate from IIM Ahmedabad and an engineer from IIT Kharagpur, Roy has vast experience in retail finance and payments domain spanning across the private sector and multinational banks like ICICI Bank, Barclays Bank and Citibank. Technology played a critical role in creating new platforms, simplifying processes and identifying newer business avenues, says Roy. In an interview to Kumar Shankar Roy, the Tata Capital Financial Services MD shares his insights into NBFC business, company's prospects and the increasing use of technology in the business.
In the aftermath of the NBFC liquidity crisis, investors are beginning to make the distinction between strong NBFCs and weak NBFCs. Tata Capital Financial Services has always preferred sustainable growth by conservatively growing its portfolio. So, did you anticipate the downturn and chose to remain cautious?
We have impeccable parentage i.e. the Tata Group. Tata is India's most trusted brand. We have a triple-A rating (AAA). The rating is a reflection of the strong risk management practices that we have followed. Whether the economy is in a downturn or not, risk management is agnostic to macroeconomic situations. We believe we are risk managers. Understanding the right way to grow a business is part of our DNA. Our numbers show our measured approach to our growth. We will continue to do so even if the economy is facing a bit of downtime. We feel we are well-positioned to deliver profitable and sustainable growth.
Did Tata Capital Financial tighten lending norms for auto and allied sectors as the automobiles sector is in the slow lane? How big is your auto loans business?
We don't discuss our credit norms in the public. We have strong checks and balances in the auto loans segment. Such measures have helped us when the sector showed signs of stress. In the current scenario, we have looked at our operations carefully and we have been cautious, especially in the new incremental business area involving channel finance segment.
The real estate sector too is not doing well. Has this affected your business?
Tata Capital Financial Services does not look at home loans per se. It is looked at by our subsidiary, Tata Capital Housing Finance. They have strong credit norms and have shown growth. There are a lot of opportunities.
In the business loans space, how is the portfolio growing?
It is growing at around 20%. Business loans is a good segment. The SME focus that the government has brought in helps create a conducive environment.
Your second public NCD issue has ended. How much did you finally raise?
In our Tranche II, we have successfully raised over Rs 2157 crore through our NCD.
Tata Capital Financial Services has tapped the public NCD market successfully. You are comfortably placed in terms of capital adequacy norms as well. Are you testing the market to do an equity raising later?
The question of equity raising is something the owners i.e. Tata Sons can answer.
Digital lending has become a big thing now among retail borrowers. What is Tata Capital Financial doing to capture the market given that one of your core focus areas is personal loans?
TCFSL for the FY 2018-19, set its digital strategy to drive growth and innovation. Technology played a critical role in creating new platforms, simplifying processes and identifying newer business avenues. Adopting a customer-focused approach, a series of platforms and initiatives were launched for the retail as well as the commercial business.
During the year, customer-facing digital platforms including the new Tata Capital portal and the Tata Capital mobile application were refreshed and relaunched with improved user experience, content and conversational interfaces including chat-bots. As an innovation, TCFSL launched AI-powered Voice bot, Tata Capital Intelligent Assistant (TIA). TIA is designed to answer loan related queries as well as voice-assist a customer’s personal loan journey, check loan eligibility and help the customer through the loan approval process. Other new platforms that were launched included a re-imagined personal loan application journey, a revamped wealth management platform for customers and CRM for wealth RMs, a seamless pre-approved personal loans for employees and a new digital sanction process for loans sourced by distribution channels.
On the commercial lending side, a series of digital journeys were launched on the ‘The Online Working Capital Platform’. These include new journeys for Sales Invoice Discounting (SID), Equipment Finance amongst others. These capabilities ensured that the working capital needs of SME customers were met faster and in a more transparent manner. TCFSL will continue to empower the SME sector with easy access to finance through its customer-centric digital products and services. TCFSL has worked on enhancing synergy with the Tata Group ecosystem as part of the One Tata – One Tata Capital strategy. Alliances with Tata AMC, Tata AIA, Tata Motors and Croma have made substantial progress. TCFSL will continue to focus on using technology to increase productivity, build scale and optimize cost.
Tata Capital Financial is into wealth management. Tell us about your offerings.
Tata Capital Wealth Management is a part of Tata Capital Financial Services Limited (TCHFL), a Tata Capital Ltd (TCL) group company. At Tata Capital Wealth Management, there is a wide range of wealth management solutions that are tailor-made for family and your business. The endeavor is to provide suitable products to our customers based on risk profile so that customers take aware decisions on their investment by selecting appropriate products to achieve the investment objective.
We offer investment solutions like mutual funds, Portfolio Management Services (PMS), Alternative Investment Funds/PE, corporate fixed deposits, bonds/NCDs, real estate. Protection solutions include term plans, endowment, ULIPs and medical insurance. Financing solutions include home loans, personal loans, loan against shares, loan against properties.