Shivalik Small Finance Bank on Tuesday announced a strategic partnership with Bengaluru-based insurtech company, Go Digit General Insurance, to provide an array of instant, easy-to-understand insurance products through the bank’s network of branches across India.
This will include health insurance plans, motor insurance, and home and shop insurance. This partnership will enable over 4.5 lakh customers of Shivalik Small Finance Bank to instantly access and purchase from Digit’s list of offerings, through paperless processes, in real time.
This range of products will be available to the customers of Shivalik Small Finance Bank across all its 31 branches and its digital network across the country.
‘Committed to innovation’
Commenting on the partnership, Harsh Mittal, Chief Financial Officer, Shivalik Small Finance Bank said, “At Shivalik, we are committed to constantly innovating and adding new products and services to expand our offerings to the underbanked masses. Our collaboration with Go Digit General Insurance will aid us in making the process of buying cover, submitting and receiving claims easier for our customers leveraging the strong tech platforms that both organisations have and supported by our distribution network which reaches the far ends of Bharat.”
Vijay Kumar, CEO and Principal Officer, Go Digit General Insurance said, “Our partnership with Shivalik Small Finance Bank comes at a time when we are looking to expand our reach to newer markets with an aim to aid insurance penetration. The bank has a strong foothold in the northern states of the country and this association will help the bank’s customers in getting insured from a partner that believes in simplicity, transparency and hassle-free settlement of claims.”
Shivalik’s current customers predominantly fall into segments such as retail, manufacturing and services, housing and real estate and microfinance.
As part of its small finance bank proposition, Shivalik is actively engaged in discussions with multiple fintech partners to reach newer customer segments like entrepreneurial and underbanked women, kirana stores, millennials in need of neo banking services and individuals looking for gold loans, according to Mittal.
Shivalik SFB recently attained SFB status post successful transition as an Urban Co-operative Bank (UCB). The funds will be leveraed for digital expansion through fintech partnerships, physical expansion and product innovation.
Harsh Mittal, Chief Financial Officer, Shivalik Small Finance Bank said, “Our journey as a Small Finance Bank has been very exciting so far. The pace at which we have made progress to swiftly reach this stage is testimony to how meticulously we have planned our growth strategy, complemented by steps taken along the way to ensure we maintain a healthy balance sheet. We are pleased toappointEquirusCapital for the bank’s first fundraise as we look to onboard investors who believe in the vision of providing digital focussed financial services to the small and underserved segments.”
Donald D’Souza, Managing Director and Co-Head at Investment Bank, Equirus Capital, “We are delighted to partner with Shivalik Small Finance Bank to assist them in executing their growth plans including in their capital-raising plans. We look forward to a long and fruitful association with the bank.”
The bank is in talks with a number of fintech and financial institutions for business collaboration in the area of deposits, loans and third-party products, including customer onboarding and digital payments.
Private life insurer Bharti AXA Life Insurance has entered into a bancassurance partnership with Shivalik Small Finance Bank for the distribution of its life insurance products through the bank’s pan-India network of branches.
Under this agreement, Bharti AXA Life Insurance will offer its suite of life insurance products, including protection, health, savings and investment plans, to customers of Shivalik Small Finance Bank across its 31 branches and digital network across the country.
This alliance will enable over 4.5 lakh customers of Shivalik Bank to access the range of products offered by the company to provide financial security.
Commenting on the association, Parag Raja, Managing Director and Chief Executive Officer, Bharti AXA Life Insurance, said in a statement: “The outbreak of Covid-19 has led to a notable shift in customers’ perception of life insurance, which is fundamentally about protection. With our alliance with Shivalik Bank, we shall empower the bank’s customers with protection and holistic insurance solutions and help us strengthen our commitment while reaching out to urban, tier-II and tier-III markets. We believe this partnership will enrich our distribution footprint and help us increase insurance penetration in the country.”
Suveer Kumar Gupta, Managing Director and Chief Executive Officer, Shivalik Small Finance Bank, said this alliance is a part of the bank’s various measures towards financial inclusion and acceleration of wealth creation for its customers.
We will also have more opportunities to lend at a lower rate in terms of government-sponsored schemes and availability of refinance.
Shivalik Small Finance Bank (SFB), the first lender to transition to the model from a cooperative bank, expects to grow its business book by about 49% over the next 12 months to Rs 3,050 crore, MD & CEO Suveer Kumar Gupta told Shritama Bose. The bank’s collections have so far been unaffected by the Covid surge, but it will watch how things evolve from here, he added.Edited excerpts:
As you make the transition from an urban cooperative bank to an SFB, what are your immediate priorities?
We have already begun operations as an SFB. Our immediate priorities relate to certain aspects of banking that are different for a cooperative bank and a commercial bank, foremost among them being compliances. Our first priority is to stabilise them. As far as the customer-facing aspects are concerned, there’s not much of a change from how we delivered services as a cooperative bank. We have ensured that all our operations are handled seamlessly and the customer does not face any issues because of this transition. The second focus is on the digital side. We are a very digitally focused bank and we plan to acquire digital-only customers. This is especially for millennials and young people who are more comfortable doing things digitally. We are also developing tech, which will help us deliver services to the underbanked, especially in rural areas. We are coming up with an app designed with the rural masses in mind, which will be in Hindi. Physically, we would like to expand in areas where our presence is already high — in the states of Uttar Pradesh, Uttarakhand, Madhya Pradesh, Rajasthan, Haryana, Punjab and Himachal Pradesh. We would also like to expand pan-India digitally by means of video KYC.
Will you be adding more products to your platform?
As of now, we offer a complete bouquet of retail banking products, both on the deposit side as well as the lending side. Our products are specially suited to our target customer base, which is the MSME (micro, small and medium enterprises) sector — small businesses and industries as well as local kirana shops. Becoming an SFB opens up more areas of banking to us. On the deposits side, we would be coming up with tax-saver FDs (fixed deposits) for senior citizens, and specialised deposits for millennials and women. We would be soliciting government and institutional business for deposits. On the lending side, apart from offering all our loan products digitally, we would expand on the agri side and do lending against e-warehouse receipts and also finance allied activities, such as dairy farming. As a commercial bank, we can also make use of refinance schemes. Our microfinance book is now at 10%, which we would like to grow to 15-20%. We’d also like to offer loans against FDs and insurance policies, both of which can be done digitally. We already have a few fintech partnerships for loan sourcing and we will be looking for more of those as well as work with business correspondents.
What is your cost of funds right now and how do you expect it to change?
At the moment our cost of funds is between 6 and 6.5% and we expect it to fall as more CASA (current account savings account) becomes available to the bank in terms of government and institutional deposits. We will also have more opportunities to lend at a lower rate in terms of government-sponsored schemes and availability of refinance.
What kind of growth in loans do you expect over a one-year period?
We are currently at a business book size of about Rs 2,050 crore and we are targeting to grow it to Rs 6,000 crore in the next four years. In the next one year, the book will grow by Rs 1,000 crore. We are planning to add 40 additional customer touch points, which will include branches, ATMs and business correspondents.
Given the current Covid surge, how much of a problem are you facing in terms of repayments?
Last year, we had offered the moratorium to all our customers. Our approach was to engage with customers and help ensure good credit behaviour. Where required, we also offered top-up loans to help them tide through temporary difficulties. By the time it got lifted, 80% of our customers had started to repay. By March, our collections were almost back to pre-Covid levels. But the second wave has hit us in April and it’s a little early now to say how things will turn out. At the moment our collection rates are fine, but it’s hard to say where things will go from here.
RBI said, “Shivalik Small Finance Bank Limited has commenced operations as a small finance bank with effect from April 26, 2021.The Reserve Bank has issued a licence to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of small finance bank in India.”
The former co-operative bank was granted an in-principle approval for a transition into a small finance bank under the scheme on voluntary transition of Urban co-operative bank into a small finance bank issued on September 27, 2018.
Suveer Kumar Gupta, Managing Director & CEO, Shivalik Small Finance Bank said, “This is a momentous achievement for Shivalik, and I’m proud of all our teams that have worked relentlessly over the years to give us this edge, which has made it possible for us to embark on this exciting journey today. Credit also goes to all our esteemed customers and partners that have humbled us with their unwavering support through the years. Finally, and most importantly, a big thank you to Reserve Bank of India, Central Registar of Co-operative Socities and other regulatory bodies for their support and guidance in ensuring a smooth and seamless transition of business.”
He added, “There is a signifcant and urgent need for seamless access to professional banking services across all corners of the counrty, especailly when it comes to small businesses, which are the backbone of our growing economy. At Shivalik Small Finance Bank, we are well positioned to be able to cater to this growing demand through our multi-dimensional approach that has helped us scale up our physical presence, our digital presence through valuable fintech partnerships and a wide range of customized solutions that address a diverse set of needs. Additionally, with our migration now from a co-operative ownership structure to a corporate structure, we will only become more flexible and nimble in decision making which will further augment our ability to offer meaningful experiences to our customers.”
Shivalik Bank’s MD & CEO, Suveer Kumar Gupta in a interaction with ETBFSI had shared the transition journey from co-operative bank to small finance bank and its growth plans ahead.
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