Month: March 2021

Karur Vysya Bank and Cholamandalam Investment and Finance Company Ltd (Chola), the financial services arm of the Murugappa Group, have announced a co-lending partnership.

The co-lending model is seen as a great opportunity for banks and NBFCs to draw upon each other’s strengths. The pact is expected to help Chola and Karur Vysya Bank expand their reach to new customer segments across the country where Chola has a stronger presence to target high-value loan segments such as construction equipment and commercial vehicles, according to a statement.

“We strongly believe our co-lending partnership with KVB will help us garner market share across segments of customers due to our stronger presence throughout the country. Co-lending is a new direction for Chola, but we are confident that this will soon evolve into a very fruitful partnership model for KVB and Chola,” said Ravindra Kundu, Executive Director, Chola.

Chola enjoys a unique position in the industry today due to its strong customer relationship built over four decades and reliance on an inherent value system. The partnership will help the bank expand its commercial customer base and also provide upselling and cross selling opportunities, said Natarajan J, President and Chief Operating Officer, Karur Vysya Bank.

The model not only allows both companies to scale their portfolio effectively, but also uses an effective composite risk management framework that inculcates the risk appetites of both companies, said the statement.

K Satyanarayana Raju has been appointed as the Executive Director of Canara Bank. In a regulatory filing to exchanges, the bank said the Central government has appointed Raju for three years and he has takencharge on March 10. Earlier, Raju served as Chief General Manager, Bank of Baroda.

Raju is a physics graduate, post graduate in Business Administration (Banking and Finance) and CAIIB. He joined Vijaya Bank in 1988 and roseto the level of Chief General Manager in Bank of Baroda.

During his 33-year-long banking career, he has headed various branches for 12 years, including Specialised Corporate Banking Branch. He was Regional head of Shivamogga, Vijayawada, Hyderabad and Mumbai. He was also Zonal Head of Mumbai Zone, which is the Biggest Zone of the bank. Later, he also headed Operations and Services Department at Head Office. He has rich experience in all Segments of Banking, including Branch Banking, Corporate Credit, Retail Credit, Agri Financing, Credit Monitoring, Credit Recovery, Compliance etc.

He has served as a Director in BoB Financial Solutions Limited, Subsidiary of Bank of Baroda and was also a member of the steering committee of BOB-IIT Bombay Innovation centre.

Digital lending apps continue to see robust demand from customers and there is more self regulation in the sector since the exit of Chinese lending apps, believe players.

“There are always bad apples in any business, but one should not paint the whole sector bad,” said Anuj Kacker, co founder, MoneyTap.

According to him, demand from customers has been high for quite some time due to a variety of issues, including improvement in the economy, return to some level of normalisation with offices opening up, people going on holidays, as well as the exit of Chinese apps.

“MoneyTap is seeing a 40 per cent to 50 per cent growth quarter-on-quarter in disbursements, and we had already reached pre-Covid levels by November and December 2020,” said Kacker.

Ranvir Singh, Managing Director and Co-founder of EMI payment and digital lending platform Kissht, also said there continues to be high demand for loans, especially after the crackdown on illegal Chinese lending apps.

“We also got impacted by the Covid-19 lockdown and pandemic, and our disbursement and collection were lower by 20 per cent in December and almost the same in January as well. However, from the last week of January, at the time of Republic Day, some of these issues receded,” said Singh, adding that the actual conversion is lower.

According to Singh, the general cost of customer acquisition has also come down, but this just may be a transient impact. “Earlier, what used to be about ₹300 to ₹350 to acquire a customer has come down to as low as ₹150 to ₹175,” he said.

Strict underwriting

However, most digital lenders are remaining cautious about customers. “In terms of underwriting, we have tightened norms post-Covid,” said Kacker.

Singh also agreed and said that many people who apply for loans nowwere earlier being served by Chinese companies, and may not have the capability to pay and so the conversion rate from an application is lower.

Self regulation

Players also believe that issues of harassment that were being reported about many companies in the sector are now easing as there is more self regulation and companies are more conscious.

The Reserve Bank of India had, in January this year, also set up a working group on digital lending, including lending through online platforms and mobile apps.