Cholamandalam Investment & Finance (Chola) has launched 3 new business divisions in the Consumer and SME eco-system namely Consumer & Small Enterprise Loan (CSEL), Secured Business & Personal Loan (SBPL), and SME Loan (SME). Chols is the financial services arm of Murugappa Group while consolidating its position as a leading player in the Vehicle Finance, Loan against Property, and Housing Finance businesses,
CSEL will focus on the following new product segments through traditional, direct to customer, and digital partnership channels.
Personal & Professional Loans are one of the fastest-growing segments in India with Rs3.5 trillion originations. Despite this kind of growth, there are innumerable individuals who do not have access to credit in India. Given this scenario, Chola is entering into the personal Loan segment to provide these loans to salaried and self-employed professionals. The product range would include term Loans, flexi-loans, etc. Chola will leverage advanced analytics-based underwriting using bureau and alternate data to underwrite these kinds of loans.
The MSME segment is significantly under-penetrated in India with more than 60% of MSMEs not having access to formalized credit. Considering the importance and contribution of MSMEs to India’s economy, Chola is introducing Small Enterprise Loans which will be offered to small businesses in the manufacturing, trading, and services segments. The product range would include term loans, flexi-loans, etc.
The company has entered in strategic partnership with 3 leading fintech companies – BankBazaar, Kreditbee, and Paytail. With these alliances, the company intends to drive greater financial inclusion especially among those customers who are economically active but not having adequate access to formal credit.
BankBazaar is a leading online marketplace for instant customized rate quotes on loans and credit cards. The partnership will enable pre-approved personal loans to salaried customers who are active on BankBazaar’s platform. Chola and BankBazaar will leverage their advanced technology and digital capabilities to offer loans 100% digitally.
KreditBee is one of the leading players in the digital lending segment in India, disbursing to over 5 million customers over the last few years. Chola has entered into a co-lending arrangement with them for funding loans to salaried and self-employed customers with good repayment track record in tier 1,2 & 3 markets.
Paytail is a new age fintech company focusing on offline ‘Buy Now Pay Later’ through brand partnerships. Through a funding partnership with Paytail, Chola has started providing check-out financing to customers with good repayment track record in tier 2,3 & 4 markets who do not own a credit card.
The SBPL vertical will offer loans to self-employed non-professionals, through traditional channels. These loans will enable small businesses like traders and service providers to meet their funding requirements for day-to-day operation and business improvements. These loans will create a positive impact in the lives of millions of informal micro-enterprise customers in India.
For SMEs, Chola will focus on the following businesses through traditional and digital partnership channels: (i) Term loan and working capital finance (ii) Equipment finance (iii) Supply chain finance.
Vellayan Subbiah, Chairman, Cholamandalam Investment & Finance Company said: “We are excited to launch three new business divisions in the consumer and SME eco-system spaces. We have also partnered with leading fintech companies. We are confident that these initiatives and partnerships will go a long way in helping us towards making our products and services easily available to our potential customers. The company is also in advanced discussions with many more fintechs and digital ecosystem partners for sourcing of personal loans, professional loans, micro & small business loans and BNPL. The company expects to go live with these partnerships over the next 3-4 months. The broader plan is to leverage our 40+ years of lending experience and 1100+ branch network to grow each segment rapidly over the next few years. We believe that these partnerships will help us in large scale customer acquisition and drive our next wave of growth.”
Investment in Payswiff Technologies
Chola has entered into an agreement to make a strategic investment in the equity shares of Payswiff Technologies up to a sum not exceeding Rs.4.5 billion in one or more tranches. The total investment will result in the company holding about 70% of the equity capital of Payswiff on a fully diluted basis and Payswiff will become a subsidiary of Chola. Payswiff is a leading POS provider in India enabling online payment gateway services for e-commerce businesses and providing e-commerce solutions with a total merchant base of 3 lakh+ small to mid-sized merchants like supermarkets, medical stores etc.
With this agreement, Chola sees itself as uniquely positioned amongst NBFCs to offer a comprehensive product offering to meet end to end needs of MSMEs including Lending, Payment solutions, neo banking and many other value-added services. This acquisition proposal is in line with the long-term strategy of the company to explore and expand in the entire lending ecosystem particularly in the MSME segment.
