Manappuram Finance Ltd has long been at the forefront of technology in gold loans and it continues to invest in technology. The first corporate entity to get into gold loans, Manappuram is now expanding its profile catering to the diversified demands of its customers, says V.P. Nandakumar, Managing Director and Chief Executive Officer, Manappuram Finance Ltd, in conversation with Rashi Aditi Ghosh of Elets News Network (ENN).
Tell us about Manappuram Finance Ltd and its services in India.
Manappuram Finance Ltd is a Non-Banking Financial Company (NBFC) incorporated in 1992 and predominantly engaged in gold loans the business of lending against used household gold jewellery.
We were the first corporate entity to get into gold loans. Prior to our entry, this used to be the preserve of moneylenders and pawnbrokers operating in lanes and bylanes. As the first corporate to get into this business, we introduced scientific management practices to this hidebound business and pioneered the use of technology in gold loans. The most recent example of our tech focus is our “Online Gold Loans” (OGL) which we launched in September 2015. A customer who has completed the initial formalities can now avail a gold loan 24X7, from anywhere in the world, even if he is sitting at home. The loan proceeds are instantaneously transferred to his bank account.
After nearly two decades of exclusive focus on gold loans, we have now diversified into promising new areas like microfinance, home finance, vehicle loans, SME lending, insurance broking etc. The entry into microfinance followed our acquisition (and turnaround) of the Chennai-based Asirvad Microfinance Pvt. Ltd. in 2015. Over the next few years, we hope to become a multi-product NBFC with a range of products from housing loans, vehicle finance, microfinance, SME loans etc. besides our core offering of gold loans.
Today, new businesses contribute about 18 to 19 per cent of our total business. Over the next two to three years, that share is likely to go up to about 25 per cent, in line with our vision to become a multi-product NBFC.
Technology interface is transforming banking, what measures have you taken to remain updated in this context?
Manappuram has long been at the forefront of technology in gold loans and we continue to invest in technology. We are preparing for future challenges with innovative products with a focus on technological development. Given the rapid growth in online platforms, there’s no doubt that conventional ways of doing business through brick and mortar branches will become less important in future and we are prepared for that eventuality.
In May this year, we launched a co-branded prepaid money card. The card can be pre-loaded up to a maximum amount of Rs 50,000 and then used to withdraw money from all ATMs . We are planning to issue the prepaid card to our customer base and link their existing gold loan accounts to the card.
Along with the prepaid card, we have also launched our branded eWallet under the name “MaKash” which we hope to scale up in the coming months. We expect that the prepaid card and the eWallet will eventually help in making our Online Gold Loans a more compelling proposition for our customers. We are also working on an SGL, or SMS-based gold loan product, for customers who find it difficult to access the Internet . And, we are continuing with our long term work to develop a high tech IoT (internet of things) based network enabled keyless gold storage technologies that will significantly address the security aspect at the branch.
To sum up, we recognise that technology will be a key differentiator in this business and we are determined to lead the way.
India is progressing, so does its choices of investments, how do you maintain consumers’ interest in gold investment?
Regarding gold as an investment option, it is true that there has been a substantial correction in price from the peak levels of 2011 and 2012. However, beginning from January 2016, gold prices have regained ground and generally held steady in the range of $ 1,200 to $ 1,300.
Investment in gold and jewellery for the long-term is a safe option because the supply of physical gold continues to be meagre in relation to the demand. Therefore, while the price may fluctuate, there is protection on the downside. Recently, Gold bonds have emerged as a useful alternative to those who buy gold purely for investment purpose who now get to earn some interest on their investments though it may not interest those who buy gold jewellery for consumption.
Digital payments is the new trend, how are you encouraging it?
Post-demonetisation, we have entered an era where the role of cash is being systematically downgraded. We recognise that the future is increasingly cashless or “less cash” , and therefore, we have to think of ways to ease the transition for our customers by offering them a choice of convenient alternatives to cash. Even before the demonetisation announcement, a significant proportion of our total disbursements was made through NEFT payment or by cheque. We had set up alternative repayment channels like online repayments using net banking, debit cards and e-wallets and we have been encouraging our customers to make use of these channels.
We have tie-ups with PAYTM, MPESA, M-RUPEE, ITZCASH and other new-age mobile wallet services to enhance our brand positioning, collection, lead generation, and customer experience.
We have also incorporated automatic several 24×7 online payment options like IMPS, NEFT and RTGS gold loan payment system and we have done away with the need for manual intervention.
In October 2015, we had launched our online gold loan (OGL) product, which is totally cashless at our end. A customer has to come to our branch only once to deposit his gold and execute necessary documents. After that, he can avail a loan up to his eligibility anytime, from anywhere in the world using a smart phone, computer, or other internet- enabled devices. The loan proceeds are instantaneously transferred to his bank account. Even after repayment, the gold will continue to remain with the Manappuram branch for future loans to be availed online.
And we are now working on an SGL, or SMS-based gold loan product, for customers who find it difficult to access the internet.