Tata Capital offers some unique products – loan for marriages and Prapti Home Loans for example. Govind Sankaranarayanan, COO – Retail Business & Housing Finance, Tata Capital, elaborates of these products and what the company aims to achieve
N.Mohan: You have gone on record stating that Tata Capital will have a focus on small ticket loans and tier-2 and tier-3 cities. Can you explain the strategy? How will this make a difference in your income?
Govind Sankaranarayanan: With the growth of consumption-based spending, the need for loans for comparatively smaller goals has grown – for example, travel, weddings, non-critical medical procedures etc. We have noticed that there is a sweet spot for these smaller ticket loans, between Rs3 lakh and Rs10 lakh. This trend has been observed especially in tier 2 and tier 3 cities where growing income levels have led to an increase in consumption and thereby need for loans. Additionally, there is a growing need for loans in the SME space, which has been an important pillar of the Indian economy, contributing to over 38% of the national GDP. We offer loans ranging from Rs 10-15 up to Rs3 crore to Rs4 crore and through initiatives like our recent tie-ups with LKP Securities and Saraswat Bank.
There are two interesting portfolios being mentioned – wedding loans and medical loans. What are the details? Who are all eligible for such loans?
We have noticed that wedding expenses are one of the key reasons for taking a personal loan. Recognizing this growing need, the Tata Capital Wedding Loans product was conceptualized to provide prospective brides and grooms with the ability to finance their dream wedding. Some of the added benefits include flexi EMI repayment options, quick processing and attractive interest rates that makes it easier to finance small or large ticket wedding expenses. The ticket size ranges from Rs1 lakh to Rs 15 lakh.
Our unique medical loan product extends financial aid to patients or their close family members in the form of an unsecured loan to specifically meet medical urgencies in the family. It also covers certain planned medical procedures. Payment is usually made directly to the healthcare provider instead of the loan applicant. The loan amounts can range from Rs 75,000 to a maximum of Rs 15 lakh. The medical procedures covered are aesthetic and cosmetic surgeries, bariatric surgery, ENT related procedures, general surgeries, infertility/ IVF treatment, obstetrics and gynecology, oncology, ophthalmology, orthopedic related/ joint replacement, pediatric surgeries, rheumatology, spinal surgeries, etc.
Both these products constitute around 5-10% of our personal loan portfolio and are growing at a rate commensurate with the rest of our products.
Can you talk about the home loans you offer? How are these loans different from those offered by HFCs?
Home loans is one of the flagship retail products being offered by Tata Capital. Tata Capital Housing Finance (TCHFL) has been constantly growing at an annual rate of 45-50% and has a book of around Rs. 15,300 crore as of August 2016. This strong growth can be attributed to robust policies and processes coupled with highly competitive interest rates (starting at 9.35%) and flexible EMI options.
TCHFL has also recognized the potential in the affordable housing finance space and has crafted special home loan products. Under the aegis of the Pradhan Mantri Awas Yojna initiative (PMAY), we recently launched the ‘Prapti Home Loans’ scheme to cater to the increasing number of individuals in the low income segment looking for low cost housing (where the property cost is below Rs25 lakh), especially in the peripheries of metros, tier I, tier II and tier III cities and towns. Loans under this scheme are provided at subsidized interest rates starting from 4%. This segment is also growing at a rapid pace and has contributed significantly to our overall home loan book as well.
How do you offer finance to SMEs? What is the share of this segment in your loan portfolio?
We believe that organized credit to small business owners has a largely untapped potential and is a facilitator for the growth of entrepreneurship in the country. To address this, we entered into a strategic partnership with Biz2Credit, a leading online resource for small business finance. By utilizing the acquisition channels on Biz2Credit’s small business lending marketplace in India, we will be able to make finance easily available to thousands of small and mid-sized companies in the country.
What has been the overall growth of the company over the past five years and what are the major factors that stimulated this growth?
The Tata Capital’s retail division, which includes home loans, car loans, 2-wheeler loans, loans against securities, consumer durable loans, personal loans, etc have been growing at an annual rate of 30-40%, and we aim to maintain that growth rate in the future as well. This growth has been possible due to a variety of factors including our recent foray into the digital space to tap into a new segment of customers, our unique flexible payment plans that offers customers the choice of structuring and customizing their EMI repayment options and with our tie-ups with various companies to help boost our reach and footprint while also strengthening our risk and credit related processes to help reduce our overall NPA levels.
Do you employ any unique methodologies in assessing customer needs so that you could custom-make the offerings? For example, social media?
Tata Capital currently employs a Social Listening tool to assess trends, customer behaviour etc. from social media. The system helps us to reach out to customers in need of our financial products as well as identify gaps, if any, at a macro level for developing new products.
How do you see the prospects of the company say in the next five years – in terms of turnover, business mix, new products?
The next 5 years are going to be an exciting phase for us. We have seen a lot of potential on the digital front and are focused not only on conceptualizing digital-only products to cater to the newer generation of credit hungry individuals, but are also exploring avenues for using data points garnered from digital platforms like social media channels and government initiatives like eKYC to assess an individual’s credit appetite. We are also looking at increasing the number of strategic partnerships with other key stakeholders, not only to increase our footprint but to also strengthen our processes.
As mentioned before, our retail portfolio has been growing at a CAGR of around 30-35% and we aim to maintain that growth rate in the future as well.
Can you talk about the technology platform that is there in the company? To what extent is loan sanctioning and loan management automated?
Recognizing the growing need to develop digital friendly financial products and services, Tata Capital launched its digital-focused business in 2014 with an aim to build rich digital interfaces and superior data mining and analytical tools to efficiently and effectively manage the entire customer life cycle, service and retention. While the initial efforts were focused towards building a holistic digital roadmap, our current aim is to enhance digital acquisition, servicing and engagement, by effectively using various web platforms, social media and mobility.
One such platform is the Tata Capital Online Car Loan Store – cars.tatacapital.com – a first of its kind integrated car loan store powered by Carwale where a prospective customer can research a car using the CarWale platform hosted on our website and can also get a loan at the same time.
Most recently, as mentioned above, we entered into a strategic partnership with Biz2Credit, which apart from their acquisition channels also includes access to their data and risk analytics online platform through the patented BizAnalyzer Score, which will help control the NPAs in this sector.
We have also entered into strategic partnerships with many online aggregators for lead generation purposes and have garnered significant business through these channels.
Currently, the products serviced through the digital platform include our flagship retail products like new and used car loans, personal loans, home loans and more recently, 2-wheeler loans, loans against property, consumer durable loans and business loans. Going forward, we are looking at opportunities in the digitization of other existing financial products while focusing on the development of unknown new digital financial products or access to newer and wider customer segments via digital channels.
