Udaya Kumar Hebbar, MD & CEO of CreditAccess Grameen, reveals the company’s progress in terms of products, people, process, technologies (PPPT) and ESG:
CreditAccess Grameen started as a trust in a small village in Bengaluru and has grown into a valuable market brand on the back of over 2 decades of perseverance. Vinatha Reddy (Founder) and Suresh Krishna (Co-founder) nurtured the institution as an NGO and transitioned it to an NBFC in 2007-08. The strong fundamentals inculcated by the founders helped attract key investors and transformed the institution into a mainstream NBFC-MFI thereafter.
Manoj Agrawal: What are the most popular financial products in the company’s portfolio? What new products are you planning to add?
Udaya Kumar Hebbar: CA Grameen caters mainly to customers from low-income segments who lack access to formal financial products because of limited credit history or asset ownership. We offer diverse loan products to meet the life cycle needs of this customer segment based on the ‘credit-line’ concept. Since supporting the livelihood activities of the customers is one of the critical aspects of our objective, Income Generation Loans (IGL) under microfinance is our main product. In addition, we also provide loans that have social objectives such as primary education, water connection, building toilets and medical emergencies. In our aim to diversify our asset base and fulfill household needs, we plan to offer loans against property, affordable housing, and 2-wheeler loans to graduated as well as open market customers. We expect good traction on this during FY 2022-23 as the new microfinance lending guidelines allow us to build a secured asset franchise up to 25% of the total assets compared to the 15% norm earlier. This would help us strengthen our balance sheet and make it future proof to weather any external risks.
What is the geographical spread of the company? Which are the top 5 states where it does business? What new states will the company expand to during the next 12 months?
The company has operations across 14 states and 1 union territory with a combined portfolio exceeding Rs150 billion, spread over 300 districts. The top 5 states in terms of the gross loan portfolio are Karnataka, Tamil Nadu, Maharashtra, Madhya Pradesh and Odisha. We would continue with our strategy of contiguous district-based expansion, aiming to grow our branch network by 10-15% every year, particularly outside of the mature markets of Karnataka, Tamil Nadu and Maharashtra.
Give an overview of the human resources of the company in terms of numbers, skills, education, diversity, age group, role, etc.
At the CA Grameen level, we have a total staff strength of around 12,000 of which 70% are loan officers. We believe in building a culture around customer centricity and employee centricity in our business which supports resiliency in our business. Therefore, the field staff is primarily the young family members of our customer base hired from rural parts of the country, providing them an opportunity to be a part of the organized sector. Being largely field operations, our average age group is around 26 and most of them are 12th passed and graduates. There are elaborate post-hiring training programs that help candidates develop skills and understand the business. These talents will get priority in internal promotions thereby providing them with career-growth opportunities. We take pride in being an equal opportunities employer and believe in the diversity of our workforce.
Give an overview of the software applications running in the company?
We use Temenos T24, a robust world standard core banking solution since 2015, which is one of our key pillars in managing operations efficiently and sector-related risks. On top of it, we use different software for loan origination, mobility, etc, keeping in mind the growing needs of the organization.
The company has an in-house IT team that caters to all the business requirements. The team works closely with various IT vendors to ensure robust systems helping customize the software that aligns with our business process.
Briefly describe refinements in the credit underwriting process during the last 12 months?
We have been following decentralized decision making in terms of loan sanctions to group-level customers. The field operations management has been enabled to make informed decisions within the credit policy requirements. However, the customer credit history check and related policy decisions are completely centralized. We have started using comprehensive credit bureau reports to ensure that the obligations of customers for consumer lending are also captured in our lending decisions. Refinements to the credit underwriting process are a continuous requirement and are a very critical component of our group lending business, to remain ahead of the curve.
What are the key expansion and transformation projects in the pipeline during the next 12 months?
The geographical expansion is in auto mode for us as we believe in a contiguous district growth approach. Once we establish a branch in one district, we go deep into the district to cover the market and move on to the next adjoining district. The expansion will continue in a similar manner. We are excited about our secured business strategy and will enable the same during FY 22- 23 and build our portfolio in subsequent years. We have also developed an individual lending product for graduated group customers and the same is in the pilot phase. We expect this product to scale during FY 2022-23. The merger benefits around Madura Microfinance branches should also start accruing during the next 12 months.
What initiatives has the company taken in the last 12 months to improve its rating to attract more investors?
The company has taken several initiatives in the last 12-24 months ranging from building a strong management team, working on ESG compliances to strengthening collection systems. The company while managing the challenges posed by the pandemic, silently built the management for the future by hiring Chief Technology Officer, Chief Risk Officer, and Chief Business Officer who also transitioned as Deputy Chief Executive Officer. On the ESG front, we have worked closely by modifying our existing policies and creating a new one to comply with GRI, CDP, and S&P (DJSI) requirements. Business Responsibility & Sustainability Reporting (BRSR) was adopted as we prepared an integrated annual report for the financial year 2021 and gave a glimpse of our detailed performance divided among 6 kinds of capital namely Financial, Social & Relationship, Human, Manufactured, Intellectual and Natural. Similarly, we have strengthened the liability side of the balance sheet with strong diversification and stable/long-term borrowings. We have consistently delivered strong financial results by building robust collection system and continue to focus on our geographical diversification strategy. We hope all these factors will be noticed by the key stakeholders.