Anirban Majumder, CFO, Home Credit, speaks to us about the financial market in India and the role of NBFCs in driving business.
Question: What made you join the NBFC sector after a successful stint in one of the top multinationals?
Anirban Majumder (AM): I was looking forward to a CFO opportunity in the banking and the financial services space. My criteria were long-term strategic view, high-growth trajectory, treating employees and customers fairly, an opportunity to build and scale up the business /organization and fun/open culture. Home Credit met all these criteria and, thus, was a natural choice for me.
Q: Given your international exposure spanning Australasia, Europe, India, Japan and the USA, what is your assessment of India's financial market?
AM: The state of India’s financial market is linked to the state of Indian economy. Given the demographics, inherent potential of the economy, a relatively stable macro-economic environment, democratic institutions and growing consumer base, there is huge opportunity for growth. There’s also as huge push for financial inclusion from the government and that’s why NBFCs like Home Credit have a strong play here. This opportunity of enabling the unbanked population to have access to credit is significant and it cannot be compared to any of the developed markets. Another important factor to highlight is that the financial services market in India is quite diversified. As a result, competition is more and bouquet of products and services offered by banks and financial institutions is much more diverse and competitive. From a customer experience standpoint, the technology offered by banks and NBFCs in India is either at par or ahead of other markets.
Q: The continued run of bank-asset slippages guarantees NBFCs an extended Indian summer. What opportunities can you see in the market and how do you propose to ensure Home Credit stays ahead of the curve?
AM: From the time Home Credit launched its operations in India, our focus has been on serving customers that have been financially excluded historically. We are committed to drive credit penetration and financial inclusion by offering financial solutions that are simple, transparent and accessible to all. Irrespective of the bad loan issue impacting the domestic banking sector, we continue to focus on expanding access to credit to stay ahead of the curve.
Q: What are the current trends in the consumer loan and finance segment?
AM: India has a diversified financial sector that is undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. While banks and NBFCs have been servicing a major part of this sector, entities like Home Credit are playing an equally important role. While the sector has been witnessing growth across the board in the sector, there may be different multiples of growth in different sub-segments. The segment of unbanked population or people without any credit score that is supported by Home Credit is expected to witness explosive growth. Another important trend that is emerging in the consumer lending space is of leveraging technology in the retail delivery of financial services. This is turning out to be a game-changer for the financial landscape in India. It is a cost-effective means of reaching last-mile finance and, thus, helps in financial inclusion.
Q: The consumer loan and finance segment is making aggressive forays in the white goods market, as discretionary purchases have been witnessing a declining trend. What is Home Credit's plan to capture a big pie?
AM: The Consumer durables/white goods sector remains exciting sector for us. In all the segments we are present currently, our strategy is to provide access to credit to customers through faster processing and efficient services.
Q: The Reserve Bank of India announced the setting up of an ombudsman to address customer grievances in the non-banking finance companies. It will also bring out the rules by the end of the month. How will this affect the segment and Home Credit India?
AM: At Home Credit India, customer experience and satisfaction is one of our key strategy pillars. Around this philosophy, we already have standard processes to address customer grievance. Internally, we have our organizational ombudsperson, who performs the role of an arbiter and advocates protecting customers, employees and partners’ rights, upholds laws and regulations by investigating complaints and helps parties reach a mutually beneficial solution. We welcome this initiative by RBI, which is aimed at creating a conducive credit culture among the NBFCs and ensuring customers are treated in a fair manner.
Q: The Indian financial services space is at an inflexion point, and NBFCs and fintech companies are best poised to deliver new value propositions and experiences to consumers. There is also a hiring spree at the CXO level. What has brought on this wave and what is Home Credit doing to ride this?
AM: As the Indian financial services space reaches an inflexion point and technology makes significant inroads, CXO-level talent from multinationals, e-commerce and other financial services companies have been gravitating towards the NBFC space amid a top-level hiring boom in the sector. The aggressive hiring is driven by a combination of factors. This includes the government’s own agenda on promoting financial inclusion and an underbanked economy offering opportunity for growth. From a Home Credit point of view, we have started hiring local talent for key positions. This strategy is no different from other multinationals coming into India. They come in with expats, as they want to set up the operations and once it gets to an inflexion point, they start localising.
Q: NBFCs have outperformed banks in the last two years. What are the drivers of this growth?
AM: To begin with, NBFCs are more agile than banks. A key growth driver is that NBFCs reach out to customers that banks may not and operate in niche segments/sectors.