Bharat Financial Inclusion preparing pitch for diversification ahead of merger
, ET Bureau|
Updated: Oct 16, 2017, 05.34 PM IST
KOLKATA: Bharat Financial Inclusion, which will soon be merged with IndusInd Bank, is in the process of diversifying into two-wheeler loans and home loans which may help it de-risk the asset portfolio from a monoline micro loan business.
Managing Director MR Rao said the new loan products will be offered to existing customers to grow in size but microfinance will remain its core focus and will be crucial to get new customers.
“It (diversification) is not a defence mechanism. It has always been a part of a larger plan. We are getting ready to offer more products to our existing customers who have the ability to repay,” Rao said in an exclusive interview.
Post-merger, Bharat Financial will work as a business correspondent for the Hinduja group promoted IndusInd while its entire loan portfolio will get transferred to the bank.
The micro lender is now running two pilot projects simultaneously to test the appetite for two-wheeler loans and home loans.
“Once we are confident that customers are ready, we will expand these lines of business across branches. For us, pilots are a long drawn process,” Rao said, adding that IndusInd management is expected to back Bharat Financial’s business plans.
The microfinance company, the second largest in terms of loan outstanding with Rs 9631 crore portfolio, is doing the pilot on two-wheeler loans in five branches and the service will soon be extended to another five or 10 branches. It has financed 400-odd vehicles so far. Rao said the pilot will be run for another three to six months while the company has just begun the home loan pilot a fortnight back.
Bharat Financial catered to 52 lakh customers through 1275 branches across 324 districts but it does not operate in Tamil Nadu, Gujarat, Telengana and Andhra Pradesh.
“We will have to figure out what IndusInd Bank thinks about doing business in these states. The priority is now to take the merger process to the next level,” Rao said on the suggestion that these states may offer bigger opportunities. “Tamil Nadu is overcrowded (in terms of micro loans). But, yes, there is huge potential in Andhra Pradesh and Telengana. We will rather wait on this till we become the 100% subsidiary,” the MD said.
As business correspondent, Bharat Financial will mobilise recurring deposits from customers. It intends to analyse the cashflow to assess their repayment capacity and creditworthiness as it plans to extend individual loans to them in the future.
Managing Director MR Rao said the new loan products will be offered to existing customers to grow in size but microfinance will remain its core focus and will be crucial to get new customers.
“It (diversification) is not a defence mechanism. It has always been a part of a larger plan. We are getting ready to offer more products to our existing customers who have the ability to repay,” Rao said in an exclusive interview.
Post-merger, Bharat Financial will work as a business correspondent for the Hinduja group promoted IndusInd while its entire loan portfolio will get transferred to the bank.
The micro lender is now running two pilot projects simultaneously to test the appetite for two-wheeler loans and home loans.
“Once we are confident that customers are ready, we will expand these lines of business across branches. For us, pilots are a long drawn process,” Rao said, adding that IndusInd management is expected to back Bharat Financial’s business plans.
The microfinance company, the second largest in terms of loan outstanding with Rs 9631 crore portfolio, is doing the pilot on two-wheeler loans in five branches and the service will soon be extended to another five or 10 branches. It has financed 400-odd vehicles so far. Rao said the pilot will be run for another three to six months while the company has just begun the home loan pilot a fortnight back.
Bharat Financial catered to 52 lakh customers through 1275 branches across 324 districts but it does not operate in Tamil Nadu, Gujarat, Telengana and Andhra Pradesh.
“We will have to figure out what IndusInd Bank thinks about doing business in these states. The priority is now to take the merger process to the next level,” Rao said on the suggestion that these states may offer bigger opportunities. “Tamil Nadu is overcrowded (in terms of micro loans). But, yes, there is huge potential in Andhra Pradesh and Telengana. We will rather wait on this till we become the 100% subsidiary,” the MD said.
As business correspondent, Bharat Financial will mobilise recurring deposits from customers. It intends to analyse the cashflow to assess their repayment capacity and creditworthiness as it plans to extend individual loans to them in the future.
