While the current year could turn out to be a challenging one, with interest rates rising and liquidity becoming less abundant, Rajiv Sabharwal, managing director and CEO of Tata Capital, believes the company’s loan book will grow at a faster pace than that of the industry. “We will look to tap new geographies and move deeper into smaller towns since the growth in big cities may slow down,” Sabharwal said. The non-banking financial company (NBFC) did not restructure any corporate and infrastructure loan during the pandemic.
The CEO said while the demand for credit from SMEs had been somewhat muted in the past two years, it is picking up. “With OEMs in the auto and steel businesses doing well, vendors, too, are faring better now.”
The NBFC exited FY22 with a consolidated loan book of Rs 94,349 crore, up 22% over FY21. Revenues rose 16% to Rs 5,261 crore while the net profit jumped 46% to Rs 1,648 crore.
While retail loans account for 63% of book and are growing thanks to the revival in the housing sector, the corporate and SME segments are also doing well. The NBFC’s strategy has been to expand in Tier II, III and IV towns even as it explores opportunities in the metros. “We are well distributed and are present across the value chain from affordable to prime,” said Sabharwal, adding that consumers take decisions based not only on the price of the loan, but also the time of sanction. Like HDFC, Tata Capital has moved to a risk-based pricing model. It uses scorecards to make 80-85% of the credit decisions using 50 parameters, including inputs from CIBIL.
Other areas where Tata Capital is making headway include used cars and two-wheelers. The NBFC is also growing the unsecured personal loans segment. “The idea is to diversify the risk in terms of products and clients. So, we are also growing the corporate book. No single incident should impact us and we should have the opportunity to cross-sell,” Sabharwal explained.
The NBFC also provides working capital finance to dealers. The company has structured itself in such a manner that a large part of the operations, from acquiring and servicing customers to making collections, is run digitally. “While three years ago, we were servicing only 10% of our customers digitally, it has now gone up to two-thirds of the customers,” he said. The digitisation of operations has been done in a modular manner to make it more efficient. At the same time, branches will continue to be opened, Sabharwal said.