During the covid outbreak and subsequent lockdown, the Centre and the Reserve Bank of India (RBI) took steps to ensure immediate relief through partial credit restructuring, moratorium benefits, TLTRO operations amongst other measures. Through the budget, centre can continue supporting economic activities until a complete recovery is achieved, which will result in growth in the coming fiscal says HP Singh, Chairman & Managing Director, Satin Creditcare Network Limited.
In an exclusive conversation with Rashi Aditi Ghosh of Elets News Network (ENN), Singh also talks about company’s growth projection for FY21 and future recovery plans.
The outbreak of pandemic has changed leadership across the globe. What challenges did you witness and how did you overcome them?
The abrupt halt of economic activities during the COVID-19 crisis, has had a major impact on businesses across economies and sectors. Barring few essential services, all commercial activities stood at complete halt due to imposition of nationwide lockdown, until May-2020 when things started to stabilize with staggered lifting of lockdown restrictions. Satin Creditcare Network Limited has a very diversified geographical presence. 97% of districts have less than 1% exposure. ~80% of the Company’s portfolio is in rural areas where there is no major impact of the pandemic. Majority of the Company’s portfolio has not been impacted as it is lent to borrowers engaged into activities of animal husbandry and agriculture allied services. As a strategy, Satin Creditcare Network Limited focused on cashless collection and quickly launched digital collections which witnessed a good traction and scale. The company also launched customer service app to connect with clients and for cashless collection.
How did Satin perform during the uncertain times? What changes did you see in customer mindset?
The company witnessed good recovery and has remained resilient on the backdrop of strong fundamentals and leadership. Lifting of lockdown restrictions in major parts of the country makes the demand scenario look promising across sectors. SCNL saw significant improvement both in terms of our disbursements as well as our collection activities. SCNL endeavours on achieving steady growth while focussing on portfolio quality and expect to regain growth trajectory with the coming quarters to be much better, both on financial and operational aspects.
During the lockdown, we continuously improvised by launching Customer Service App, regular customer-connect via phone calls, social connect by distributing masks and sanitisers and awareness drive for our clients and field staff to be cautious.
The loans taken are mostly small ticket loans by women from bottom of the pyramid for a variety of small businesses. Women borrowers have recorded the lowest NPAs, even on unsecured loans even during these unprecedented times. There is still unmet demand in the sector, hence there is a potential to grow.
Satin has a strong presence in the rural area. How optimistic are you regarding the recovery post the Covid induced adversities?
Satin Creditcare Network Limited has a very diversified geographical presence. ~80% of the Company’s portfolio is in rural areas where there is no major impact of the pandemic. Majority of the Company’s portfolio has not been impacted as it is lent to borrowers engaged into essntial services.100% clients are women. ~11% of customers opted for moratorium. Most of the customers have already started paying instalments.
It is evident that rural economy has bounced back faster owing to lower infection rate and the nature of services, hence we are convinced that the growth will be sustainable. With the upcoming vaccination drive, hopefully the nationwide businesses will return to normalcy.
Digital dominance is going to play a major role in the coming years. How is Satin gearing up for the same?
The combination of IT and mobile technology combined with IT enabled services has emerged as a viable solution for financial inclusion with the lack of physical presence and stringent social distancing norms in place. With the growing economic impact of COVID-19, there will be an increase in the need for affordable and personalized financial assistance as well as an upward spiral of bad loans. The nature of risk is no longer estimated by just the credit history. A robust underwriting process is the need of the hour. While traditional risk profiling predicts the likelihood of repayment on the loan based on past track record, the financials of the borrower combined with the nature of the industry that the borrower operates in is very important in the present scenario.
Artificial intelligence (AI), machine learning (ML), and big data analytics has made it possible for fintech lenders to collect and analyse the data to carry out a more comprehensive and accurate credit risk profiling. Real-time Credit Bureau checks help in tracking the loan history of the prospective clients and SCNL has also adopted an MFI Scorecard for individual clients for better screening. With the introduction of Centralized Share Services like video KYC, account aggregators combined with Geo Tagging etc., lenders can easily access as well as track customer data, with their consent, and ensure better due diligence. Such stringent regulations, strong integration and data driven approach has helped to understand potential credit risks and make faster credit decisions, even in the absence of traditional credit history.
Budget is going to be announced soon. What is your expectation?
During the outbreak of the pandemic and subsequent lockdown, the government and RBI took several pragmatic measures to restore liquidity and bring immediate relief through partial credit restructuring, moratorium benefits, TLTRO operations amongst other measures. Through the budget, the government can continue supporting economic activities until a complete recovery is achieved, which will result in growth in the coming fiscal. SCNL is keen with the implementation of regulatory measures to promote easier credit flow, financial inclusion, and the orderly growth of digital lending across board.
What are your plans for 2021?
SCNL maintains a focus on rural and semi-urban areas, ensuring that the services reach deep within those numerous regions that usually face low or at best, moderate rates of penetration by other financial institutions. SCNL’s belief in rural growth is clearly exhibited in ~80% of its operations focused on rural India with presence in around 84,000 villages. Satin Creditcare Network Limited shall continue to strengthen its Pan India presence. This deep-rooted approach puts Satin Creditcare Network Limited in a sweet spot to leverage the growing capabilities of India’s hinterland to avail financial loans, and thereby, embark on the journey of rising economic growth and development. The company wishes to evaluate the business environment and consider the challenges, expects a nominal growth for the end of FY21, and a decent growth recovery from FY22 onwards.