Insights success the 10 most valuable nonbanking financial companies july 2017

www.insightssuccess.in JULY 2017

THE

10 MOST VALUABLE

NON-BANKING FINANCIAL COMPANIES

Business Things Asset FinancingA Flexible Approach to Funding

Evolution

Fostering Twists and Turns of NBFCs

Keki Mistry CEO & Vice-Chairman

HDFC Limited India’s Premier Housing Finance Corporation

Editorial

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n India, NBFC sector has observed substantial transformations over the past few years and has emanated to be centered as a methodically essential element of the financial system. The NBFC segment has countersigned enormous consolidation since few years. Certainly, it is obvious in India that with the expansion of the NBFC segment within the total financial system, it braved the other segments, i.e. banks, to renovate, to progress quality and competence, and deliver their services at competitive prices and at flexible timings. In fact, in an amount of untreaded trajectories, NBFCs were the ones to venture majorly to reconnoiter the market and initiate develpoments before banks.

NBFC’s Boosting Edge Towards Indian Economy

NBFCs are present in the rival meadows of vehicle financing, hire purchase, housing loans, personal loans and lease. NBFCs have emerged as key financial intermediaries mostly for retail and small-scale regions.

Through easier sanction procedures, low operating cost, flexibility, and emphasis on core business activity, NBFCs stand on an unquestionable footing as followed by the banks.

According to regional analysts, India has thirteen branches per 100,000 populations as correlated to 40 branches per 100,000 populations in advanced countries. Economists reflect that although the country has regional rural banks, cooperative banks and other small entities, besides a giant network of public and private sector banks, however, there is still a vast void in the banking sector. This gap can be filled by small finance banks.

Since a year, we have witnessed a number of key modifications such as the deployment of GST, income hike due to the seventh pay commission and demonetization. With more economic transformations on the anvil as per the announcements in the Union Budget 2017, we can predate the, upcoming months of 2017 to be a fast-moving year. The challenges faced by the banking sector, rising crude oil prices subdued private investments and the ambiguity in the global markets. These challenges are likely to be key concerns facing India in the year of 2017.

Through, improvements in domestic consumptions after the convincible difficulties of demonetizations and GST, a positive NBFC market will and still predictably ensure India’s strong growth in the upcoming months of 2017.

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FINANCIAL C O M P A N I E S

Strengthening the Financial Sector with the Aid of NBFC

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BFCs are developing as an alternative to mainstream banking. Moreover, it is also evolving as an integral part of Indian Financial System and have commendable contributions towards Government’s agenda of financial Inclusion. NBFCs form an integral part of the Indian Financial System. It has been providing credit to retail customers in the underserved and unbanked areas. Their ability to innovate products in consonance to the essentials of their clients is well established. They have played a key role in the development of important sectors like Road Transport and Infrastructure which are the life lines of our economy. Here, in this issue of our magazine, we have shortlisted “The 10 Most Valuable Non-Banking Financial Companies”, which are providing distinguished and diversified monetary solutions to their consumers.

On our cover story, India’s primer housing finance corporation; HDFC Ltd., who has pioneered housing finance since 1977 in India, has assisted 5.8 million Indians to own a home thus far. Their widespread distribution network of 427 interconnected offices, including 130 offices of HDFC Sales, caters to over 2,400 towns & cities across the country and endeavors to serve the housing demand in India.

Apart from the cover story, we have also shortlisted, for their out-of-the-box financial offerings, Fusion Microfinance, for providing underprivileged women with economic opportunities to transform the quality of their lives, HDFC Credila, for empowering students for progressive & peaceful world , RGVN (North East) Microfinance, for providing financial and non-financial support services, Shikhar Microfinance, for serving financial services and livelihood opportunities to the underprivileged segments of the society, SREI Infrastructure Finance, for their innovative solutions in the infrastructure sector, Bajaj Finance, providing support with their QA processes and methodologies, JM Financial, for providing a spectrum of businesses to corporations, financial institutions, high networth individuals and retail investors, KKR India Financial, for managing investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit strategies and hedge funds, India Factoring & Finance Solutions, for delivering factoring and forfeiting services, encompassing finance and value added services, efficiently and competently, to business entities in India.

We have CXO’s of; “India’s Fintech revolution is primed to put banks out of business” derived from the thoughts of Balkishan Chandak, Founder Partner of SMART CFO Services LLP, Digital Remonetization of Indian Economy, Mr. Ra Arjunamurthy, Founder & Chairman, YELDI Softcom Private Limited, Chennai, “Managing User Expectations in Rapidly Changing Technology Market” by R. Gurumurthy, Founder & CEO of Processware Systems, and “Comma not a Full stop- Indian Microfinance Industry will Continue to Demonstrate Sustainable Growth” by Mr. Manoj Kumar Nambiar, MD of Arohan Financial Services.

We also have included “Fostering Twist and Turns of NBFCs” and “Asset Financing- A Flexible Approach to Funding” scripted by our editors in the amazing pages of this magazine.

So, do flip the pages of our magazine to uncover the prominent influences of these Non-banking Financial Companies.

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Cover Story HDFC Limited:

Comma not a Full stopIndian MicroďŹ nance Industry will Continue to Demonstrate Sustainable Growth

cxo standpoint

CONTENTS

India’s Premier Housing Finance Corporation

India's Fintech revolution is primed to put banks out of business

Managing User Expectations in Rapidly Changing Technology Market

Digital Remonetization of Indian Economy

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Fusion Microfinance: Building Opportunities by Serving Financial Services

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Article

HDFC Credila: India’s First Dedicated Education Loan Company

32 Business Things

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RGVN (North-East) Microfinance:

Ornamenting Business by providing Microfinance Solutions

38 Shikhar: Delivering Best-in-class Financial Services

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Asset FinancingA Flexible Approach to Funding

22 Evolution Fostering Twists and Turns of NBFCs

SREI:

Together We Make Tomorrow Happen

Editor-in-Chief Pooja M. Bansal Managing Editor Sachin Bhandare Co-Editors Pooja Jain Ujal Nair Sagar Bhattacharjee Poonam Yadav Art & Design Director Amol Kamble Co-designer Vanshika Mittal Picture Editor Alex Noel Art Editor Karan, Shweta Visualiser Shweta Shinde Business Development Manager Akansha Garewal Marketing Manager Dhruv Apte Business Development Executives Priyanka, Dhyaneshwar, Ankush, Rutuja, Meera, Tarun Research Analyst David Circulation Manager Swapnil Database Management Sharad Technology Consultant Vishal More sales@insightssuccess.com

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Insights Success Media Tech LLC 555 Metro Place North, Suite 100, Dublin, OH 43017, United States Phone - (614)-602-1754 Email: info@insightssuccess.com For Subscription: Visit www.insightssuccess.com ,

Cover story

L i m i t e d India’s Premier Housing Finance Corporation

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With You, Right Through

We form a powerful emotional connection with the customers by empowering their nancial cravings

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he changing economical ways of financial establishments are giving a new shape to India's financial situations. NBFC plays a vital role in the core development of infrastructure, transport, wealth creation opportunities, employment generation, and financial support for economically weaker sections; they also create a mammoth of contribution to the state exchequer. Moreover, with the banking system noticeably constrained or escalating their lending activities, the NBFCs plays an even more important role now, especially when the government has a strong emphasis on promoting entrepreneurship where India can transpire as a country of job creators instead of being one with the job seekers.

In between these monetary fluctuations, Housing Development Finance Corporation Limited (HDFC Ltd.) has pioneered housing finance since 1977 in India and has assisted 5.8 million Indians to own a home thus far. Their widespread distribution network of 427 interconnected offices, including 130 offices of HDFC Sales, caters to over 2,400 towns & cities across the country and endeavors to serve the housing demand in India.

HDFC Ltd. has 3 representative offices in Dubai, London and Singapore offering advice on Home Loan products/solutions to Non-Resident Indians and Persons of Indian Origin. They have efficaciously emerged as the trusted ecosystem leader and have been nominated as the best managed financial services company with a proven track record of admirable corporate governance and value creation for its stakeholders.

HDFC Ltd. is the only organization in India to have received the ‘AAA’ rating for its deposits from both CRISIL and ICRA for 22 consecutive years. It has turned the concept of selling mortgages into a profitable, professionally managed and world-class enterprise. The faith that HDFC's customers and capital providers have placed in it, over the years, has been nurtured as an epitome of customer relationship on the Indian corporate world.

An Ingenious Leader of HDFC Ltd. A Chartered Accountant from the Institute of Chartered Accountants of India (ICAI), Mr.Mistry, the Chief Executive Officer & Vice-Chairman of HDFC Ltd., has a vast work experience over three decades in the Banking & Financial Services domain. In 1981, Mr. Mistry joined HDFC Ltd., India’s premier Housing Finance Company. He was inducted onto the Board of Directors of HDFC Ltd. as an Executive Director in the year 1993 and was appointed to the post of Managing Director in November 2000. In October 2007, Mr. Mistry was re-designated as Vice Chairman & Managing Director of HDFC Ltd. and became the Vice-Chairman & Chief Executive Officer in January 2010.

As a part of the management team, Mr. Mistry has played a critical role in the successful transformation of HDFC Ltd. into a financial conglomerate by facilitating the formation of companies including HDFC Bank Ltd., HDFC Asset Management Company Ltd., HDFC Standard Life Insurance Company Ltd. and HDFC ERGO General Insurance Company Ltd. Besides being on the board of several HDFC Group companies and HDFC Bank, Mr. Mistry is also on the Board of HCL Technologies, Sun Pharmaceutical Industries Ltd, Torrent Power Ltd, CDC Group (London), Greatship (India) Ltd., Griha Investments – Mauritius, Griha Investments pte ltd – Singapore a few others. He is also the Non-Executive Chairman of GRUH Finance Ltd., a subsidiary of HDFC Ltd and also on the Advisory Boards of a few Indian corporates.

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Mr.Mistry has been a Consultant to the Commonwealth Development Corporation (CDC) in Thailand, Mauritius, Caribbean Islands and Jamaica, guiding the company to review and evaluate the operations of mortgage financial institutions in these countries. He has also been a Consultant to the Mauritius Housing Company and Asian Development Bank.

Some of Mr.Mistry’s recent achievements include, being awarded ‘BMA Management Man of the Year 2016’ by Bombay Management Association,‘Best Independent Director Award 2014’ by Asian Centre for Corporate Governance & Sustainability. ‘Best CEO Financial Services’ (Large Companies) 2014 by Business Today magazine, CFO India Hall of Fame by the CFO India magazine in 2012. One of the Best CEO’s for Investor Relations – India at the Thomson Reuters “Extel Awards” – 2012, Best Banker of the Year in 2011

by Financial Express, the QIMPRO Gold Standard 2011 – Leader for Quality in Business award by the Qimpro Foundation.

He was also honored with the ‘CA Business Achiever of the year, award in the Financial Sector by the Institute of Chartered Accountants of India (ICAI) in 2011 and CNBC TV18’s award for the ‘Best Performing CFO in the Financial Services Sector’ for three consecutive years - 2006, 2007 and 2008.

Rising as a Brand by Nourishing Financial Needs HDFC’s success in the mortgage industry and its involvement across the financial services industry has proven

it to be a financial conglomerate with presence in banking, life insurance, non-life insurance, asset management, real estate fund and education finance.

The banking endeavor, HDFC Bank is rated to be the best in the business.

The life insurance venture is with the Standard Life Assurance, UK, and the General Insurance with ERGO International AG of Germany a company of the Munich Re group, while the asset management company is in connotation with Standard Life Investments, UK. Every aspect of these expansions into innumerable other aspects of financial services has come over since two decades, thus creating a lot of value for its shareholders.

Presently, the broadenings that HDFC Ltd. has prepared into many areas of financial services return a small portion of HDFC’s amalgamated earnings, but as these businesses relish swift evolution visions over the next few years, their share of the consolidated profits will upsurge the overall returns for HDFC’s shareholders. The banking, life insurance and asset management businesses have already accomplished scale and have the necessary perilous mass to cultivate rapidly.

Dedication & Devotion towards Client Satisfaction

Our focus on product quality and service excellence leverages the best customer satisfaction

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At Present, HDFC Bank is a leader in consumer banking, capital markets and transaction banking. HDFC Mutual Fund is one of the major asset management companies in the country in terms of assets under management.

The life insurance business has a huge value creation potential, as the penetration of insurance products is currently very low in India. The HDFC group has an asset base of over 16 trillion rupees and a customer base of

over 61 million, helping it to cross-sell products among the customers of group companies.

The cornerstone of HDFC’s excellent brand strength emerges from its unrelenting focus on corporate governance, its high standards of ethics and clarity of vision, which percolates through the organization.

This brand standing derives from the solidity - both financial and managerial that the company is well known for. Its capital adequacy, its ROE, and quality of assets reflect its financial solidity.

It has consistently striven for and acquired an excellent reputation for professionalism, transparency, integrity and an impeccable record of customer friendly services. These values have not

only helped to sustain but have propelled the company further. And despite cut-throat competition especially from commercial banks, it has gone from strength to strength in its core business due to its operating efficiency and its firm bastion of customers across the country.

A testimony of the influential brand that HDFC Ltd. has assembled over the years is echoed in its ability to preserve a compounded annual growth rate of 19 % over a five-year period in Individual loan origination. In fact, it not only retains its dominant position in the housing mortgage sector but continues to grow very rapidly and profitably. In spite of this scorching pace, HDFC’s gross NPAs have always been less than 1%, the lowest in the industry. This is a very rare thing in the Indian financial sector.

HDFC offers best play for investors looking at advancing from the growth in the Indian mortgage as it is the ‘only’ great player dedicated primarily to the mortgage market.

Its cost competitiveness is fabled with a cost-to-income ratio of 7.4%, one of the lowest in the world.

Driving the Future with Innovation & Excellence

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Till date, HDFC Ltd. is roaring as a role model for a number of countries that have begun to institute their own housing finance institutions. Internationally, HDFC Ltd. has accepted consultancy assignments thoroughly with the World Bank, USAID, the Asian Development Bank, United Nations and the Commonwealth Development Corporation (CDC) in a number of countries in Asia and Africa, which include Sri Lanka, Bangladesh, Indonesia, Bhutan, Nepal, Ghana, Egypt, Thailand, Philippines, besides Jamaica, Russia among other countries.

We pioneered housing nance in India

As an investment vehicle, the reputation of the HDFC Ltd. stock has been well documented. Currently, especially for foreign investors looking to direct the Indian equity market, HDFC Ltd. is something of a safe harbor. Foreign investors at present, hold 77% of the outstanding equity, one of the highest for any listed Indian company. The confidence that investors, foreign and domestic alike, place in the company is comprehensible as the potential for the industry and to prove company’s significance.

HDFC Ltd. is well poised as the potential for real estate sector to growth is enourmus given the stable property prices, low interest rates, rapid urbanization, huge government incentives and sustained tax

Our goal is to increase the ow of resources to the housing sector by integrating the housing nance sector with the overall domestic nancial markets

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benefits on housing. These key factors have the potential to drive a growth by continuously improving affordability in the housing mortgage market.

The increasing potential of the Indian housing mortgage is reflected in the housing shortage of 18.6 million units in urban India and surprisingly housing mortgage is just 9% of GDP as against 20% to 36% for most Asian countries and above 50% for developed countries.

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THE

10MOST VALUABLE

NON-BANKING

FINANCIAL C O M P A N I E S

Company Name

Management

Brief

Bajaj Finance Ltd. www.bajajfinserv.in

Sanjiv Bajaj MD

Bajaj Finance is a one of the most diversified non-bank and the largest financier of consumer durables in India.

Fusion Microfinance Pvt. Ltd. www.fusionmicrofinance.com

Devesh Sachdev Founder & CEO

Fusion Microfinance is a self-sustainable financial institution which leverages the distribution network to channel other products and services.

HDFC Credila Financial Services Pvt. Ltd. www.credila.com

Ajay Bohora Co-founder & CEO

HDFC Credila Financial Services Pvt. Ltd. is the specialist Education Loan lender and well-known as India’s First Dedicated Education Loan Company.

Housing Development Finance Corporation Ltd. www.hdfc.com

Keki Mistry VP & CEO

HDFC Ltd. is a leading provider of Housing Finance in India.

Ramasubramanian India Factoring & Finance Executive Vice President, Solutions Pvt. Ltd. Ravichander Varadarajan www.indiafactoring.in CEO & MD

India Factoring & Finance Solutions is to provide factoring and forfaiting services, encompassing finance and value added services, efficiently and competently, to business entities in India.

JM Financial Ltd. www.jmfl.com

Varun Bajpai CEO

JM Financial is one of India’s prominent financial services groups, specialising in providing a spectrum of businesses to corporations, financial institutions, high net-worth individuals and retail investors.

KKR India Financial Services Pvt. Ltd. www.kkr.com

Sanjay Nayar CEO

KKR is a global investment firm that manages investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit strategies and hedge funds.

RGVN (North East) Microfinance Ltd. www.rgvnnemfl.com

Rupali Kalita MD

RGVN (North East) Microfinance Ltd. operates as a multi-state development and support organization that delivers financial and non-financial support services.

Shikhar Microfinanacae Pvt. Ltd. www.shikharfin.com

Satyavir Chakrapani CEO & MD

Shikhar came into existence to extend financial services to protect the livelihood and provide greater economic stability to the unprivileged.

SREI Infrastructure Finance Ltd. www.srei.com

Indranil Dasgupta CEO

SREI Infrastructure Finance Limited is one of India’s largest holistic infrastructure institutions, constantly and consistently delivering innovative solutions in the infrastructure sector.

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FINANCIAL C O M P A N I E S

Fusion Microfinance: Building Opportunities by Serving Financial Services

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he financial evolution of the country is cultivating every day with major thrust towards digital and cashless economy. NBFC sector is having dynamic flexibility operations and offers an opportunity to tap into the huge potential market segment by giving a competitive advantage. Established in January 2010, Fusion Microfinance operates on the time-tested Grameen Joint Liability Group (JLG) model with 100% women clients from rural and semi urban areas.

Situated in Delhi, Fusion is providing financial services through 264 Branches in 145 districts spread across 12 Indian states. Over 85% of its active loan clients belong to the marginalized communities and backward classes of the Society.

Fusion believes in healthy business practices, crystal clear policies conveyed in its Customer Centric efforts towards its Clientele. Striving to deliver sustainable socio-economic growth to its Clients, Fusion reaches out to the most backward and poorest districts in Madhya Pradesh and Uttar Pradesh under Poorest State Inclusive Growth Program of SIDBI. About the Instigator of Fusion Microfinance Devesh Sachdev, Founder & CEO of Fusion Microfinance, an XLRI Post Graduate with 16 years of experience in the Service Industry prior to starting his Fusion in 2009-10. He started his career with Citigroup in 1996.

His entrepreneurial quest started with BSA, a small size logistics company. He spearheaded the growth of BSA from single city operations with limited service offerings to Pan India foothold with diversified services making BSA the Market Leader in its segment. Devesh was the first professional manager to be appointed Director on the Board of all the group companies of BSA.

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Amongst the diverse experiences, his expertise lies in building business, managing large teams in a cost efficient manner, strategy, key relationship management and handling all dimensions of the business. Under the leadership of Devesh, Fusion has grown into one of the prominent microfinance institutions and endures to expand its operations.

In 2015, he attended and successfully completed Strategic leadership program in Harvard Business School. He also sits on the Board of MFIN, a Self-Regulatory Organization for NBFC-MFIs. MFIN works meticulously with regulators and other key stakeholders and plays an active part in the larger financial inclusions dialogue through the medium of microfinance.

Awards and Recognition: • Business World Digital India Award 2017’ for the usage of Information Communication and Technology (ICT) in Rural Development.

• Super Achiever’s Award 2016' under BFSI category instituted by Stars of the Industry Group, Mumbai.

• Best MFI of the year 2014 Award’ at ‘Microfinance India Awards 2014’ instituted by ACCESS. • CRISIL has included Fusion in the list of India’s 25 leading MFIs. • MFIN has ranked Fusion as fastest growing NBFC-MFI in 2014 Distinctive service with unique serving style Since inception, Fusion’s strategy has been on client centricity, collaborating team, risk governance, transparency, robust IT platform and prudent lending while acclimating to progressions in line with the embryonic JULY 2017|

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Our aim is to provide underprivileged women with economic opportunities to

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transform the quality Devesh Sachdev Founder & CEO Fusion Microfinance

of their lives

business environment in background of microfinance crisis. These attributes helped Fusion to overcome the teething challenges of raising Equity, frequently changing regulatory norms and credit risk that was created post the microfinance crisis. This is all due to the strong foundation laid down at inception.

Fusion offers an extensive range of products and services to its Clients. These include Products which enable income generation. Income Generation Loans are provided either to start a new business or to scale up existing business. To provide a risk cover, Life insurance is provided to both the Client and her Spouse.

Fusion’s clients get a cutting edge as they have a bouquet of products to choose from as per their financial need. The company strongly believes in providing flexible financial solutions, hence a vivid range of products have been launched. Moreover, Fusion has conceptualized and formulated a pictorial tool kit for raising Clients awareness on Financial Management.

Delivering the class of business Fusion brings a formal structure in the lives of its Clients while making them financially literate thereby empowering them. The clients have become economically better off and self-sufficient in earning their livelihood with doorstep services. This has improved their overall standard of living, financial

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security and socio-economic conditions.

Fusion’s client base comprises of approximately 7,00,000 women.

The company promotes women entrepreneurs and strengthens women’s workforce in marginalized communities. About 90% of Fusion Clients are Aadhar linked, with majority of them holding a Bank Account. The company has conducted more than 25 Digital Literacy Workshops, building awareness on various modes of digital payments.

Driving towards future goals Fusion wants to build a brand image on pillars of transparency, continuous improvement and strong governance, thereby creating value for all the Stakeholders. The company has a vision to increase its coverage in new territories pan India and expand in the existing areas of operation. It is launching new products in the market that appeal to the customer requirements and market dynamics.

Fusion has taken a huge stride in helping clients shift to digital payments in less than a year through cashless payments.Further, Fusion is going to become more technologically savvy combined with strategic decisions and backed up by data analytics.

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THE

10MOST VALUABLE

NON-BANKING

FINANCIAL C O M P A N I E S

HDFC Credila: India's First Dedicated Education Loan Company

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he trends emerging in India in terms of newer NBFCs entering various segments are highly encouraging. HDFC Credila is India’s First Dedicated Education Loan Company. HDFC Credila pioneered the concept of a ‘Specialist Education Loan lender.’ HDFC Credila is facilitating the Education Finance in terms of specialization, customization and understanding, though not to the scale and size of HDFC’s operations.

HDFC Credila has devoted time and resources to set up appropriate systems, processes and know-how related to the education industry and has numerous databases on the education sector and their credit scoring model for the approvals of loans, designed precisely for student loans.

With specialized focus, in-depth understanding of the requirements of students who wish to pursue higher education, HDFC Credila offers Customized Education Loans Home Delivered! They have funded Indian students studying over 1000 different courses in 2500+ Institutes, across 35 different countries and disbursed over Rs. 4500 crore for education loan in this short span of time, making them one of the most familiar names in the higher education sector.

Creative Leaders of HDFC Credila Founded by Mr. Anil and Ajay Bohora in 2006, HDFC Credila is an HDFC Ltd. subsidiary since 2010, with HDFC holding majority stake. Co-Founder and Chief Executive Officer of HDFC Credila, Ajay Bohora, has started his career with Tata Exports Ltd. and then went to New York to pursue his MBA. After his MBA, Ajay worked in the field of Finance at various positions for six years at MetLife Insurance Company in its New York offices. He is also a Certified Financial Planner from the states of New York and Connecticut.

Ajay served as the Member of the Sub Committee on “Student Financial Aid” of Government of India, Delhi. He has served as the member of the Senate of 125 years old

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prestigious Engineering Institute: VJTI, Mumbai. He has also served as a special invitee to one of the committees of the University Grants Commission UGC. Ajay was also a member of Higher Education Network, FICCI, Federation of Indian Chamber of Commerce and Industries, Delhi. He is a recipient of “Engineering Achievement Award” by The Institute of Engineers (India) for the year 2007-08. He is the recipient of “Emerging Leader of the Year Award” in 2012-13.

Co-founder and MD of HDFC Credila, Mr Anil Bohora is also Member of Board Of Directors of HDFC Credila.

His professional experience includes diverse technological and managerial areas.

He has held senior management positions from startup to large corporations including AOL Time Warner, Pitney Bowes, etc. where he was responsible for successfully managing the design, development and implementation of large complex systems to reduce cost and increase efficiency by outsourcing critical business processes. At AOL Time Warner, he was responsible for managing large business relationships. He earned his Master of Science (Electrical and Computer Engineering) degree from Ohio University, USA. After spending over 8 years in the USA, Anil & Ajay returned to India, to start a joint venture. It was in the field of Business Process Outsourcing (BPO) where the US based company owned 51% and remaining 49% was owned

by Ajay him and his brother Anil. After the expansion of the healthcare focused BPO, it got acquired by the global BPO giant WNS Global Services. Ajay then served as one the Board of Directors of WNS Global Services.

With a track record of success, in 2006, Anil along with his brother Ajay, founded India’s First Dedicated Education Loan Company, HDFC Credila (formerly known as Credila Financial Services Pvt Ltd.), India’s 1st dedicated Education Loan Company.

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Empowering students for progressive &

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peaceful world

Encouraging the Student by Aiding their Financial Needs Being a specialist, HDFC Credila created multiple benefits in the conventional products and processes.

Education Loans with competitive lending rates as NBFC model was possible with a disruptive business model. Keeping cost to income ratio low for sustained profitable growth, the strategy to build end to end technology platforms for high operational efficiencies & high impact customer experience has been followed.

HDFC Credila engages with the eco-system to add value at each touch point in the life cycle of students for higher education. An unconventional approach has been adopted & a value proposition matrix has been created for the eco-system with HDFC Credila’s deep insights & domain expertise.

Global network of partners has been hand-crafted with strategies & passion. Apart from ease of applying & customized loan solutions, special privileges and offers have been curated under the CredilaOneStop platform, as a value added service for students.

Ajay Bohora Co-founder & CEO HDFC Credila Financial Services Pvt. Ltd.

the domain expertise over the years. This domain expertise of the specialized NBFCs can enable them to get real insights of the market requirements and compliment the banks in meeting the credit and funding requirements of various segments of society.

Enthusing Future Panoramas HDFC Credila has devoted time and resources to set up appropriate systems, processes and know-how related to the education industry and has numerous databases on the education sector and their credit scoring model for the approvals of loans, designed specifically for student loans. With specialized focus, in-depth understanding of the requirements of students who wish to pursue higher education, HDFC Credila offers customized loan solutions.

HDFC Credila provides pre-approved loans to eligible students, instilling confidence to confidently apply to the Universities, of their choice, without worrying about the finances.Also, they have been rolling out various initiatives to create awareness among students and parents on the Income Tax benefit of Education Loan under section 80 E of the Income Tax. Under that clause, the repayment of Interest paid on Education Loan is eligible for the deduction, without any cap on the amount to be deducted.

HDFC Credila focuses on one asset class and build The company is committed to this vision and the mission. HDFC Credila’s team has been and will continue to be zealous about empowering as many students as possible within the given framework of risk and credit assessment. Education is the biggest enabler of dreams. HDFC Credila wants to continue to help more and more students and parents towards transforming their lives through higher education and in the process play very crucial role towards the nation building!

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CXO Standpoint

Comma not a Full stopIndian Microfinance Industry will Continue to Demonstrate Sustainable Growth

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he microfinance industry has seen tremendous growth over the past five years, growing at a 45% CAGR. It has witnessed rapid evolution with regulatory reforms post the AP crisis in 2010 to regulate product, pricing and protection of customer interest, growth of regulated NBFC MFIs – a special class of RBI regulated entities carrying out microfinance, the formation of the first ever Self-Regulatory Organizations (SROs) of the RBI, Aadhar based lending by NBFC MFIs and transformation of some of the entities into universal and small finance banks. Today, with over 45 million end clients with a loan outstanding of over INR 1 lac crores across the private JLG (Joint Liability Group) and the public SHG (Self Help Group) programmes, employing over 120,000 people across 10000 branches in 28 states of India, it is a key force for financial inclusion in the country. However, this level of outstanding is still lower than 25% of the demand across India and indicates the future potential for growth.

The key reason for the growth of the sector has been adaptability to change, resilience in the face of challenges and ability to maintain high repayment rates of almost 99.5%.

The Nobel prize winning Grameen model of social collateral combined with a high touch model and rigorous credit bureau discipline has helped to maintain such high levels of repayment for this small ticket sized unsecured loans. The USPs of the sector have been microloans, door step delivery and frequent repayments. The business thrives on a very high level of customer connect before, during and after the credit approval with all clients being met face to face in a weekly, fortnightly or a monthly meeting for about 30-45 minutes in a group setting. Unfortunately, the business is still highly cash oriented – both on disbursements and repayments.

With demonetization, this proved to be an Achilles heel for the sector. Lack of availability of new notes hit the informal cash intensive economy of the low-income groups served

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by microfinance in the weeks following the old INR 500 and 1000 rupee notes being declared illegal tender.

Microfinance institutions which went door to door collecting these very notes to fulfill repayment of loans by customers were forced to ask customers to get new notes or other denominations. The rural areas were far more affected than urban areas initially. However, demonetization bought with it not only the impact on liquidity for this segment of the population, but over the period of 4-12 weeks also showed a negative impact on livelihood generation and cash flows for microfinance customers as their businesses slowed down. This had a further impact on collection efficiencies.

The RBI dispensation on asset recognition provided to NBFC MFIs was mistakenly interpreted by some borrowers as dispensation on their loan repayments. In some states, repayment ratios dipped to under 50%, primarily due to local activism, misunderstanding of regulations and rumors of a loan waiver from the state or central government. Some poll bound states were especially affected by these rumors.

Clearly, a business which has to manage its costs within 10% with staff, occupancy costs itself taking up almost 6070% of that cannot be viable at less than 99% collection efficiencies if it has to be a sustainable model.

While given the underlying strength of the business model, collection efficiencies have been estimated to move from 78% in November 2016 to 85% in March 2017, there is still ground to be covered, and specific states and local areas are more deeply affected than others.

Today the imperative for microfinance institutions is to get back to their pre-demonetization collection levels. The industry has cumulatively served millions of customers, almost all of whom are women. Microfinance is a viable source of finance for them to grow their businesses and support their livelihoods. In order for this form of finance to reach more people and further the cause of financial inclusion in the country, it is important for various stakeholders to come together to restore credit discipline

JULY 2017|

About the Author Mr. Manoj Kumar Nambiar serves as Managing Director of Arohan Financial Services Private Limited. Manoj served as Chief Executive Ofcer and Managing Director of Intellecash Micronance Network Co. Pvt. Ltd. He served as Deputy Chief Executive Ofcer of Retail & Private Banking at Ahli Bank. He has more than 25 years of experience across Marketing, Consumer Finance, Retail Banking and Micronance in India and the Middle East. amongst borrowers in order to facilitate the growth of the sector.

The sector has attracted significant debt and equity capital over the past few years. In order to grow and reach out to more clients and bridge the financial inclusion gap, the sector has to continue to be able to tap into more debt and equity capital as this is a capital intensive business. The key to this will be moving to the next level of evolution for the industry.

This is a sector where the inclusion and cashless agenda of the government should be pursued and has the potential to create significant empowerment and impact. With the opening up of more Business Correspondents from banks, new age Small Finance Banks and Payment banks, payment platforms such as Aadhaar Pay etc., it is indeed possible to enable a majority of the 45 million end clients to receive loan disbursals and eventually make repayments through bank accounts – this could mean over 100 million e – transactions every month!

Focus on financial literacy drives, increased enablement of cash-in, cash-out points in remote areas using biometric authentication, growth in digital transaction infrastructure with new age banks and UPI will all be key drivers of change. Microfinance institutions will have to experiment with a few models and fine tune ways to enable their customers on a digital transaction platform leveraging the penetration of mobile phones. This will also entail a focus on the technology backbone of the microfinance institutions themselves to facilitate and monitor the increasing volume of transactions.

|JULY 2017

Mr. Manoj Kumar Nambiar

Managing Director Microfinance is at a critical juncture today. It has proved its viability as a business model, as well as, its ability to reach out to a significant section of the population which needs mainstreaming. It will continue to remain a relevant and important conduit for providing financial services to a vast segment of the population, acting in complementarity to banks. However, given the inherent vulnerability of the customer base, it is important to plan for current and future risks that can impact repayments and slow down the access to regulated credit lines for the underserved. While there maybe external shocks such as natural calamities, initiatives such as loan waivers also do not bode well for credit discipline. Instead, in a country where 1 in 2 people still do not have a bank account and only 15% have access to formal credit lines, it is key to seriously think of the right to financial inclusion as a fundamental right.

The key focus areas and building blocks for stable and prudent growth of this business to play its role in furthering the financial inclusion objective of the country would be: strengthening/ restoring the credit discipline and culture of repayment, operating cost optimisation through IT enablement, a stronger self-regulatory commitment from all players in the sector including banks and NBFCs, safeguarding of the business model of natural calamities and external activism and mainstreaming of the business within the larger financial services sector in the country. If these factors are taken care of, it can become possible to reach the last Indian in need of financial services, thereby taking a significant step towards greater development and economic parity in the country.

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Evolution

Fostering Twists and Turns of NBFCs I

n India, the NBFC sector has experienced a substantial revolution over the past few years. It has come to be accepted as one of the systematically significant modules of the financial system and has shown reliable year-on-year evolution. NBFC composes a precarious role in the core expansion of infrastructure, wealth creation opportunities, transport, employment generation and financial support for economically weaker segments; they also create a vast influence to the state exchequer.

In order to play in the fluctuating advancing landscape, NBFCs must understand the mammoth value of substitute data and build investments in technology and analytics to progress an advanced credit scoring model that powers both nontraditional and traditional data sources. NBFCs will have to advance behavior-based credit risk models on the positions of those advanced by online lenders, which integrate the social graph, employment history, personal network and educational background of the debtor into their credit scoring rules.

Customers who are experienced to attain credit, but are impotent to do so because of their credit score will precisely benefit from the use of marginal credit scoring mechanisms that work besides the NBFC’s traditional credit underwriting model. This will familiarize spur product

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innovation, healthy competition and eventually help support the Indian government's outline of complete financial inclusion.

Growing outline of NBFCs Over the years, NBFCs have appeared as essential financial intermediaries, mostly in the retail and small-scale sector, in under-served zones and un-banked regions. NBFCs have evolved out to be evolution engines in a ground where amplified prominence is consigned to financial insertion.

The developing significance of the NBFC segment in the Indian financial system has directed to a moving scenery of the NBFC structure. The progression of the regulatory framework for NBFCs in India has moved out through a cyclical phase–from streamlined regulations too stringent and all-embracing regulations and finally towards validation as part of the newly studied NBFC regulatory framework.

Accumulation of resources of various NBFCs in a cluster It has been proposed that various NBFCs that are guided by a mutual set of promoters should not, for regulatory and supervisory determinations, be viewed on an impartial basis but in aggregate. In line with the commendation, the revised JULY 2017|

regulatory framework offers for the aggregation of total assets of all NBFCs in the group to regulate the categorization and administration of an NBFC as an NBFCND. If the integrated asset size of all NBFCs within the group is more, each NBFC in the group will have to fulfill with the regulations applicable to NBFCs-ND-SI. NBFCs have been frolicking with an identical key role from the macroeconomic standpoint and as a core compound in the Indian financial system. NBFCs are positively evolving as improved substitutes to the conservative banks for meeting the financial desires of various sectors. However, to endure and to persistently cultivate, NBFCs have to emphasize on their main strengths while refining on weaknesses. They will have to be very energetic and continuously striving to search for new services and product in order to continue in this ever-competitive financial market. Due to the groundbreaking and vigorous nature of the NBFC sector, there is an essential reform to the regulatory framework.

Streamlining of guidelines for core investment companies The core investment companies’ regulations were |JULY 2017

distributed by the RBI as a welcome move, with the objective to streamline the NBFC framework and regulations that relate to assembly holding companies.

However, since its initiation, the industry is struggling to get a whole clarity on this framework and, thereby, the structure has not completely taken off well. There are still concernes with regards to the description of a core investment company. Also, with the prevailing situations for a thing to succeed as a core investment company, it may be challenging for that entity to commence any other business activity of the assumed entity. For occurrence, there could be some group holding companies which not only keep shares of the group companies but also accept other business actions in the same entity.

The NBFC piece is a facilitator to the economic expansion of the country. The RBI is persistently struggling to convey essential fluctuations in the NBFC regulatory space to proactively deliver regulatory support to the section and also to safeguard financial stability in the protracted run.The approaching changes in the pipeline will further fortify the sturdiness of the NBFC sector and consent them to activate in an empowering regulatory environment.

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THE

10MOST VALUABLE

NON-BANKING

FINANCIAL C O M P A N I E S

RGVN (North-East) Microfinance: Ornamenting Business by providing Microfinance Solutions

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leading microfinance institute operating in the North-Eastern region of India, RGVN (NorthEast) Microfinance, is contributing in the improvement of the people in this region by facilitating better access to health, education and livelihood opportunities. It is the first and only NBFC-MFI from the North East to be receive the coveted Small Finance Bank stature from Reserve Bank of India, which was awarded to RGVN(NE)MFL on 31st March, 2017. Dedicated towards the service of providing inclusive evolution for all sections of the society, RGVN (NE) MFL was set up in the year 1995 as RGVN-CSP and registered as a public limited company in 2008. Since their inception, they have been focused on their mission of providing financial and other support services to the underprivileged sections of the society in the Northeast and have been striving hard to improve their quality of life. They registered their first success in the year 2010, when they received the licence from RBI to operate as an NBFC-MFI. Ever since there has been no looking back for them as they continued their march towards success by spreading their business over 7 states in the North Eastern region of India and West Bengal, with a network of 139 branches and touching and improving the lives of over 4.07 Lakh clients with a portfolio outstanding of Rs. 688 crore and a cumulative disbursement of Rs. 680 crore as on 31st March, 2017 About the Noblewoman of RGVN Rupali Kalita, Managing Director of RGVN (NorthEast) Microfinance is an experienced development banker with an experience of over 33 years in the Banking and Financial Services sector. She has 20 years of experience in Retail Banking with Langpi Dehangi Rural Bank as Senior Manager.

Kalita, has to her credit a degree from Boulder Microfinance, Turin, Italy besides various other certifications from different institutions. She has been trained in Microfinance from Basix and has exposures to ASA, BRAC premier institutions in Bangladesh and in

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Amana Ikhtiar, Malaysia, Bank Patanian and Bank Simpanan, Malaysia, to name a few. She has also attended a certificate course on Strategic Leadership in Financial Inclusion from HARVARD, USA in March 2016.

Kalita joined the RGVN Society to head its microfinance programme in 2004 and was instrumental in successfully turning around the operations of a loss making RGVN-CSP into a profitable NBFC, within a period of 2 years by streamlining the existing processes, instilling financial discipline and boosting the staff morale. She was instrumental in reducing the Portfolio at Risk in less than 60 days from a whopping 23% to a Minuscule 0.13% and also in reaching out to a total of 4.07 Lakh clients in Mar 2017 as against 30,939 in 2004.

The expansion of outreach of the RGVN (NE) MFL to 7 states of North East and North Bengal with a network of 139 branches and the consistent growth in the business with a total portfolio outstanding of over Rs. 688 crore as on March 2017, as against Rs. 40 Lakh in 2005, has only been possible for her able leadership and dedication, which has further enabled the transformation of RGVN (NE) MFL from an NBFC-MFI into a Small Finance Bank called North East Small Finance Bank, the only NBFC-MFI from North East to receive this coveted stature from the Reserve Bank of India. She has been working for the empowerment of the underprivileged women in the rural and urban sector through financial intermediation by persistently encouraging them to form up their confidence and to emerge as successful entrepreneurs.

Spreading happiness by providing services Since inception, RGVN (NE) MFL has been motivated on their mission of providing financial and other support services to the underprivileged sections of the society in the Northeast and has been striving hard to progress their quality of life. They registered their first success in the year 2010 by receiving the license from RBI to function as an NBFC-MFI. JULY 2017|

‘‘

Creating Opportunities, Transforming

‘‘

Lives

RGVN (NE) MFL, efficaciously assessed the gap in the delivery of financial services to the last mile and assumed the fact that if this Eastern Corner of India, which is amusing in traditional economic activities, is provided with the right financial assistance and guidance, then it can advance lives of the people in this region and can help in alleviating poverty.

Meanwhile, RGVN (NE) MFL has been focused in bridging the gap in the financial services protracted to the weaker section of the society viz. small traders, farmers, marginal agriculturist and micro entrepreneurs, who are waiting at the fringes for financial services to come their way by providing them micro-loans for various income generating purposes. They have been extending financial support to them by providing loans for Agriculture & Allied activities, Handloom & Handicrafts, Petty Trades and other welfare purposes like Water & Sanitation, Education, Marriage, and Health. Besides providing financial support RGVN has also been providing various support services to their clients which includes conducting Health Camps and Animal Health check-up cum treatment camps, Skill Development Training and various social awareness programmes for their clients.

Boosting Future Outlooks From a non-descript microfinance institution to becoming a Small Finance Bank, RGVN (NE) MFL has, since then, traversed a long way, braving all hurdles and overcoming all challenges that come in their way. From a small NGO, they became a bank, an RBI regulated financial institution having over 4

|JULY 2017

Rupali Kalita Managing Director RGVN (North-East) Microfinance Limited

Lakhs women clients under their realm, providing employment to around 1000 graduates from North East Region and thereby touching and helping over 2 million lives.

They have already received RBI’s nod for setting up 164 bank branches spanning across 9 states, including all the 8 states from North East and the state of West Bengal. They are now targeting to transform themselves into the leading Small Finance Bank from the North East. RGVN (NE) MFL shall now be the promoter of the Small Finance Bank, and it will be transformed into a CIC and all its assets and liabilities shall be transferred to NESFB by way of Slump sale. The net worth of RGVN (NE) MFL stands at Rs. 246 crore after having raised an equity amounting to Rs. 97.33 crore from SIDBI Venture Capital (Rs. 40 Cr), RNT Associates (Rs. 28.33 Cr), Pi Ventures (Rs. 20 Cr) and NMI (Rs. 9 Cr).

Thereby gratifying the minimum equity criteria and thus making the Bank domestically owned with the ratio of domestic to foreign equity 52.16% and 47.84%.

Thus, as RGVN (NE) MFL progressively inch closer to charm as a Small Finance Bank. They are now emphasizing on developing a robust IT infrastructure which shall ensure the smooth functioning of their banking processes, strong policy framework which shall guide their operations, a dedicated team of professionals who can carry and uphold the reputation of the organization. Currently they are striving to yield it to greater heights along with a qualified and vibrant Board, which can escort the company organization as it steps into newer terrains and nurture it with their good governance.

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CXO Standpoint

India’s Fintech revolution is primed to put banks out of business About Balkishan Chandak, Founder Partner of SMART CFO Services LLP. He has 20 years of post qualication experience in various industries in Capital Restructuring, Fund Raising, Financial Analysis, Strategic planning, Budgeting & Forecasting, Commercial Negotiations, Corporate Tax planning, Supply Chain Management, Legal & Secretarial, Systems Development and ERP Implementation (SAP & Oracle). Balkishan proves his excellence as leader with a track record of documented contributions leading to improved nancial performance, heightened productivity, and enhanced internal controls.

With Balkishan’s superior management, communication, leadership and supervisory skills has “Hands on” style and willingness to embody the core values of the Company. A keen planner, strategist & implementer with demonstrated abilities in spearheading Finance function, he has accelerated the business growth. Under his headship, the company provides shared CFO Services to SME’s and Startups. Driving signicant improvement to the clients nancial health through innovative business solutions & supportive implementation, while building enduring business partnerships.

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Balkishan Chandak Founder Partner SMART CFO Services LLP. JULY 2017|

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t its heart, FinTech is the business of using technology to improve financial services. These services are the ways in which consumers and businesses manage, move and store their money: paying, lending, saving, borrowing, investing and so on. Fintech firms are aiming to fragment the finance industry by making these services more efficient, convenient and accessible.

Fintech enablement in India has been seen primarily across payments, lending, security / biometrics and wealth management.

These have been the prime focus areas for RBI and we have seen significant approaches published for encouraging fintech participations.

Impact of Fintech in Banking Banks have the two Cs which fintech start-ups want but cannot easily acquire—customers and capital.There are three areas where the Fintech disruption will be most keenly felt: • Consumer banking • Fund transfers • Payments and wealth management Additionally, there is a second wave of disruption making its market in the asset management and insurance sectors. Banks are adopting new solutions to improve and simplify operations, which fosters a move away from physical channels and towards digital/mobile delivery. 80% of the leadership felt that FinTech is or will be a strategic partner to banks. More than 75% of the banks are involved with FinTech companies whose services are focussed on consumer banking, payments and remittances.

A recent survey among consumerson various offering by Fintech Cos. gave us the below result Source : Website

Key service offerings to emerging on digital platforms by Fintech Cos. includes : • E-Wallet Services: Companies allow both private individuals and businesses to accept payments over the web and on mobile without needing merchant accounts. Transfers are made directly to the bank account linked to the payee in order to secure against fraud. Examples are Paytm, Mobikwik, and Oxigen Wallet.

• Remittance Services: A few Startup ventures, albeit registered abroad, are trying to address the gaps in remittance transactions (both inbound and outbound) as the current process is cumbersome and expensive. These start-ups aim to disrupt the current monopoly held by firms like Western Union and MoneyGram. Examples are Remitly, Instarem, and FX. • Peer-to-Peer (P2P) Lending Services: Companies use alternative credit models and data sources to provide consumers and businesses with faster and easier access to capital. P2P lending allows online services to directly match lenders with borrowers who may be individuals or businesses. Examples are Lendbox, Faircent, i2iFunding, Shiksha Financial, Market Finance, and GyanDhan. |JULY 2017

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• Personal Finance or Retail Investment Services: Fintech companies are also growing around the need to provide customized financial information and services to individuals, that is, how to save, manage, and invest one's personal finances based on one's specific needs. Examples are FundsIndia.com, PolicyBazaar, BankBazaarand Scripbox.

• Funding Services: This includes crowdfunding platforms that enable the funding of a project or business venture by raising funds from a large number of people. Such internet-mediated platforms are gaining popularity across the world as access to venture capital is often difficult to secure. These services are particularly targeted at the early stage of a businesses’ operation. Examples include: Ketto, Wishberry, and Start51.

• Cryptocurrency: India being a more conservative market where cash transactions still dominate, usage of digital financial currency such as ‘bitcoin’ has not seen much traction when compared to international markets. There are, however, a few bitcoin exchange start-ups present in India – Unocoin, Coinsecure, and Zebpay.

The future of payment is undergoing a transformation, as new entrants are enabling the market with new technologies such as contactless payment, NFC enabled smartphones, cloud-based PoS and digital wallets. Existing players should opt for strategic collaboration across sectors to increase customer acceptance, penetration of digital payments and create a lucrative model for each participant.

Hence, instead of clamouring about lack of regulatory supervision on fintech firms, existing banks could capitalize on their existing customer relationship and trust, and adopt products that allow for continuing these relationships via digital means as well. The growth of fintech presents an opportunity for them to not only reduce costs substantially, but also to modernize and attract those customer bases that are hitherto uncovered. Recognizing this potential, HDFC and Axis banks have launched mobile phone applications to ease handling of digital money for consumers. Federal Bank has partnered with Startup Village to support selected start-ups in developing innovative products for the bank.

Following initiatives have been taken by Govt recently to improve the banking services :• Apart from PPIs, another exciting development in the payments space is the so-called Payment Banks - new, stripped-down versions of banks conceptualized by the RBI.Approval to 11 entities for setting up Payments Bank • Introduction of “Unified Payment Interface” with NPCI,which holds the potential to revolutionize digital payments and take India closer to objective of “LessCash” society Source : Website

• Approval to 10 entities for setting upSmall Finance Banksthat can significantly run in favour of cause for Financial Inclusion.

• Release of a consultation paper on regulating P2Plending market in India and putting emphasis for Fintech firms and financial institutions to understand the potential of blockchain.

At the end of the day, FinTech is here to stay and start-ups are leading the way. According to a report by an analytics company, Tracxn, there were 750 registered FinTech companies in India in 2015 of which 174 launched that year alone.

Banking regulations are becoming more inclusive and banks are investing in FinTech start-ups. It’s yet to be seen which ones will emerge as winners but for now the momentum is on in this space.

The potential for FinTech start-ups to disrupt traditional financial services and banks in particular, has been recognised for some time now. In part, with the loss of confidence in banks following the financial crisis, some of this talk has taken the form of hope more than reasoned expectation. The start-up businesses we tend to refer to when we say’FinTech’ have certainly played up their difference to banks (and fair play to them), by marketing themselves as being able to provide a better service for less money thanks to new technologies.

But the question of whether they will replace banking and usher in a new era of finance without large banking institutions remains to be seen.

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JULY 2017|

Business Things

Asset FinancingA Flexible Approach to Funding

he financial sector of India is experiencing rapid expansion, both in terms of the durable evolution of existing financial services firms and novel entities entering the market. The segment comprises commercial banks, insurance businesses, non-banking financial firms, co-operatives, mutual funds, pension funds and other smaller financial entities. The lending regulator has permitted new entities such as payments banks to be formed recently thereby adding to the types of entities operating in the sector. However, the financial sector in India is mostly a banking sector with commercial banks accounting for the total assets held by the financial system.

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Agency (MUDRA). With a pooled push by both private sector and the government sectors, India is definitely one of the world’s most exciting capital markets.

Implementing financial needs Asset financing is an agile methodology in funding that contributes your business access to the equipment, plant, vehicles and technology it desires to perform, without compromising cash flow. These commercial finance options can be used for different assets, or as a mechanism for emancipating value from those you already own.

Asset finance is ideal for SMEs that are beholding to capitalize on industry growth through commercial finance.

In India, the administration has introduced several reforms It is a collective predicament for SMEs; you can understand to liberalize, regulate and enhance the several industries. the impending growth in your business, but there’s not The Government and Reserve Bank of India (RBI) have enough readily accessible working capital to hunt the engaged in many actions to expedite easy access to finance opportunities. And yet, the top way to create more occupied for Micro, Small and Medium Enterprises (MSMEs). These capital is through growth. Whether you need to change existing assets or upgrade it, asset finance flawless that measures include the launch of Credit Guarantee Fund takes businesses looking for the tractability which cultivates Scheme for Small and Micro Enterprises, dispensing guideline to banks concerning collateral requirements and it in the way they want to. setting up a Micro Units Development and Refinance

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JULY 2017|

manufacturing sector. Even as liquidity returns to the financial services sector; it seems that asset finance is set to endure to make gains in popularity for Asset financing allows taking benefit equipment and goods finance. This is of your current equipment to fund Although some regions of the world, probably because it provides a cradle everything from paying a deposit on have seen no surge in the proportion new tools to solving working capital to equipment acquired using asset finance of finance that is distinct and diverse from traditional borrowing, stabilizing ease the cash flow. There are a number over the last two years, the repressed the lines of credit for tactical business of products under the banner of asset craving to capitalize in more requirements. finance, like Hire Purchase that aids productive equipment is foreseen to you to gain an asset while paying for it advance strongly over the upcoming Lastly, asset finance is now in installments over a decided time. At years. progressively available from specialist the end of the term, you have the financiers with a deep expertise in choice to obtain the asset outright.

In India, movable progress is being every technology. These dedicated Finance Lease lets you use the made on the front, and is having high financiers use their in-depth equipment you need without having to rates of growth in the use of asset buy it outright. You pay the funder the finance are as projected. Although this acquaintance of markets, technologies rent for the full use of it. Refinancing is must be understood as constructing on and how those technologies can be a function, to form flexible financing a quick way to access the value of a much lower base than in the more packages for any company that is not assets on your present balance sheet mature markets of different sectors generally available from generalist and reorganize that value elsewhere would yield better results. The financiers. within your business. Sale and HP projected financial areas of India for Back work with the funder acquiring solid growth in asset finance include the asset and financing it back to a some unexpected economic business. This option smears whether enhancements, notably in the Different Benefitting ways in Asset Financing

|JULY 2017

you previously own the asset or are spending it under a finance deal with another provider.

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CXO Standpoint

Managing User Expectations in Rapidly Changing Technology Market

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oday, Information Technology Market is changing at a rapid pace. The market has seen too many new entrants without a compelling offering. In addition, user expectations have been rapidly evolving due to extensive use of social media.

Collaborative Approach In the current market environment, no one company can address all the problems faced by the user. Hence, it is critical for enterprises to collaborate with each other, leveraging mutual strengths and complementing their offerings. This approach has been extremely successful in The younger generation (Gen Y or the Millennial western markets, where even large technology companies Generation) has set the acceptability bar very high for all collaborate with smaller companies and establish a viable information technology products – be it the hardware or the eco system in the market. software. This has resulted in many failed launches of products by leading IT companies world-wide. This Given the pace of technology changes occurring in the generation is extremely fast in adopting to various form market in the form of IoT, Cloud and Mobile devices, every factors of the devices and the nuances in using mobile apps enterprise will be looking for radically new solutions based or web based subscription services (SaaS). Deeper on these platforms. No one vendor will be able to offer understanding of the millennial generation is one of the products in each of these areas. Hence, a collaboration critical success factors. amongst technology vendors in interfacing their products with each other and providing a comprehensive integrated In this article, we will explore some of the factors which solution will be the key to success. will drive the industry forward in meeting increased expectations from end users.

Market Changes The cloud has been disruptive in many ways. Software Customer Centric Design companies who enjoyed large license fee for their products Many companies would develop products in isolation, are today looking for subscription based revenue. without really understanding the needs of the customer.

Subscription revenues dwarf the license revenue. This is This is more relevant in B2B market, where Enterprise evident by looking at the constant decrease in total revenue Segment is always difficult to penetrate compared to B2C for Software Product companies. market. In India, it is difficult to get a true feedback from initial sample set of enterprises. Hence, it is always prudent It takes a lot of effort in terms of time and money to keep to get the end customer involved during the development the cloud going. Round the clock availability of phase of the product. Software products, today are far more infrastructure comes at a price. With the increased expense complex and needs to interface with a variety of other on a recurring basis and reduced revenue, Software product existing systems in an Enterprise. companies have entered a new era of reduced income.

Going forward, this will be the norm rather than the Hence, involve the user early in the product development exception, since most of the end users are looking at process. Technology, many a times may not be a good Subscription based access to software. Gone are the good indicator of what the user wants. Deeper understanding of old days of fat license revenue at the time of installation of customer behavior and their needs are key to a successful the product. product.

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JULY 2017|

About the author R. Gurumurthy is the Founder of Processware Systems and serves as its Chief Executive Officer. He has over 20 years of expertise in managing technology projects for complex business applications. He has successfully managed the ‘customer’ expectations for clients large and small and applications ranging from advanced avionic simulators and aircraft ‘in-dash’ applications to helping traditional ‘brick and mortar’ companies develop a competitive edge by adopting the effectiveness led e-business models. Gurumurthy has extensive experiences in helping big companies and several start-up software products companies has helped to develop an application delivery model that can deliver predictable and high quality results consistently. He has Masters Degree in Engineering Mechanics and a Masters Degree in Computer Science from University of Missouri- Rolla.

The cloud computing era is here to stay and will dictate the future innovations in information technology. The sad truth to this is very few companies in each sector can survive, since it does require a critical mass of customers to support the costs involved in making applications available round the clock. The Cloud also increases the responsibilities for the vendor to manage the data in a secured manner and archive them as per regulatory norms. All these increased activities results in additional expenses.

Challenges ahead There are many challenges ahead for Information Technology companies. The future solutions will all invariably consists of both hardware and software. The |JULY 2017

dawn of IoT devices will result in increased interaction between the hardware and software. This will force many new relationships in the market place between traditional hardware players and software vendors.

The increased use of IoT in all aspects of business and life will need a completely new set of solutions which are all real time making it attractive for the millennial population, who loves instant results. The amount of data being collected by IoT devices will run into petabytes. Companies who develop deep skills in mining these vast packets of data and transforming them into intelligence, will see huge success in the market place.

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THE

10MOST VALUABLE

NON-BANKING

FINANCIAL C O M P A N I E S

Shikhar Microfinance Pvt. Ltd.: Delivering Best-in-class Financial Services § § § § § § §

Urban Cashless Monthly repayment Social Performance Debt Redemption Product Family Product Client Protection

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icrofinance has grown to be one of the most demanded financial services. Like other counterparts in developed markets, the population of emerging markets demands a range of financial services, including savings, remittance and insurance. Established in 2007, Shikhar initiated its journey with the objective of delivering innovative microcredit, insurance and other ‘livelihood augmenting financial products and services’ to the ultra-poor urban population.

Microfinance was prevalent in rural areas but the need was felt to cater to the urban population with such services.

Thus, the foundation of urban microfinance was laid by Shikhar, who pioneered urban microfinance in the country.

The company has established sound standards and processes which is different from the industry trends. It introduced and facilitated the practice of monthly repayments as per the need of a large section of customers as against the clacical microfinance weekly repayments.

Since the company’s inception, they introduced client protection policies, which were later enforced by RBI’s Malegam Committee across the Microfinance Industry.

Shikhar initiated the disbursement of loan to their customers using NEFT into the client’s bank accounts and stopped disbursing loans by cash. Shikhar is living true on its vision of empowering communities by financial services and livelihood opportunities by being a pioneer of innovative domestic social equality.

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The Genesis Satyavir Chakrapani, Chief Executive Officer & Managing Director of Shikhar, is a law graduate and undertook his post graduate studies from EDII, Ahmedabad.

Mr. Chakrapani has to his credit, successful implementation of projects on microfinance, microinsurance, Panchayati Raj, tele-medicine and developing knowledge networks.

Satyavir has designed programmes on tele-medicine and satellite clinics, community-based health and HIV/AIDS care, sustainable community-based project implementation, community-based microfinance, microfinance institution, a network of faith-based organizations for knowledge sharing and collaboration for addressing human suffering.

Satyavir has developed advanced awareness material and mediums for information and knowledge sharing. He has also implemented various campaign based programmes and has been efficacious in raising funds for various small and large programmes.

Satyavir’s motivational insights: A Training Manual cum Information booklet “Pragati Ka Dwar- Panchayati Raj”, Published by Population Foundation of India, 2004.

Wrote a paper on “Faith & MDGs: A Global Reconciliation” for ARM 2006 at Agra.

Presented paper on “New horizons of human development: Interfaith Collaboration in Achieving Millennium Development Goals” during International Conference on.”

“New horizons of human development and social transformation: Towards a Multiverse of Dialogue and Learning”, in Chennai on February 09, 2006 Distinctive Services with a Unique Serving Style Shikhar provides microcredit products through the Joint Liability Group Model. Apart from the income generating loans, Shikhar, in collaboration with Samsung, offers lowcost mobile phones to its customers in easy affordable

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Engage and Enable

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monthly installment method thereby promoting digitalization among the masses. It also provides water purification systems in collaboration with Hindustan Unilever, thus educating and ensuring a habit of clean drinking water.

Shikhar has introduced the underprivileged masses to cashless financial transactions through transfer of loans to their bank accounts. It was the first and only one in the industry to achieve 100% cashless disbursement successfully. This effort greatly helped the company during the demonization drive towards the latter part of 2016.

Shikhar continues to focus on active “client engagement” whereby clients are facilitated and assisted on issues related to livelihood and business.

Certain aspects covered under this includes viz. assistance to clients for various kinds of insurance including their business assets, making them aware of basic health, hygiene and drinking habits.

Smartly Ruling the Financial Market With a dream to pioneer urban microfinance, raising initial capital was the biggest challenge. However, a breakthrough was achieved by private equity investment.

Another challenge emerged when Shikhar decided to establish itself as an entity that was driven by client centric demand against the conventional microfinance model that was prevalent then. But this challenge was converted into a favorable situation through constant focus on client behavior and active engagement with

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Satyavir Chakrapani CEO & Managing Director Shikhar Microfinance Private Limited

them in order to understand their needs, preferences and also their ability to repay loans. This helped Shikhar to outline the products and processes that were commensurate with their needs and abilities.

Believe in Customer Satisfaction Clients, who have been served by Shikhar, are entrepreneurs today who have not only established their own source of earning and created a respectable standard of living for themselves but also are in turn creating new jobs in their community.

Apart from the size into which it has grown, the JLG model in which it operates has made a deep impact in caste and religion based barriers.

Encouraging heterogeneity and learning among its clients, Shikhar has invented a fruitful approach in overcoming depressive and hierarchal social system. With JLG groups that include people from different religious and caste backgrounds, Shikhar has helped in slowly but steadily eliminating such elements from at least among its 42000 clients which has and is surely to leave a lasting impact on the society in times to come.

Goal: Next 1 to 3 years - Touch the 500 cr. portfolio mark and 100 cr. capital net worth with complete paper less operations in over 10 states.

3 to 5 years – to be listed in stock exchange with business reaching approximately 1000 cr. Mark and 200 cr. capital net worth. Gaining eligibility for obtaining small finance bank license.

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THE

10MOST VALUABLE

NON-BANKING

FINANCIAL C O M P A N I E S

SREI: Together We Make Tomorrow Happen

T

he IT industry has been a significant driver of economic development for India over the last two decades, and it continues to be so. The industry has weathered many global storms over the years and has emerged stronger each time. While stages of evolution are typical for most industries, it is particularly severe in the case of the technology industry in which cycles are more frequent and more disruptive. As a mature industry with some of the best talent in the world, the Indian IT industry will doubtless prevail over the challenges it faces at present.

The continued success of India’s IT industry is critical not only for the industry and the countless support services that it has spawned but for the entire country. As a provider of physical infrastructure in the form of Special Economic Zones and other industrial and business zones, Attivo has taken the lead in re-evaluating the evolving requirements of the IT industry so that specific infrastructure solutions can be developed to enable the industry to compete effectively with its global peers.

Even as the industry goes back to the drawing board to reconfigure itself, they believe that supporting sectors should similarly introspect and re-examine their specific roles in each context.

The backbone of Attivo Economic Zones Indranil Dasgupta serves as CEO of Attivo Economic Zones (A Srei initiative). He served as Managing Director of Indian Operation at IDIADA Automotive Technology S.A, of Spain in 2006. Indranil is associated with SREI Group. He has over 20 years of experience in Corporate Finance. He started his career as an Executive Trainee in

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Hindustan Lever Ltd from 1991 to 1992. He worked as a Whole-Time Director at Kalpena Industries Limited since August 2011, until November 2012. He studied BE Chemical Engineering from Jadavpur University.

Advancement with Intelligence The evolution of the industry from the mainframe era to the PC era, and now to the mobile and cloud era have each come with tremendous new opportunities that enterprising companies have benefited from.

Each stage brought digitization to new levels, and exponentially increased the amount of digital data generated and consumed. Obviously, this has had a tremendous impact on workplace practices and requirements, leading to the current scenario of a highly distributed digital workplace with a very floating workforce that the industry and its infrastructure partners must urgently address.

The advent of the combination of mobile and cloud has been particularly disruptive for the IT industry. With the bulk of computing power and data storage located remotely, physical infrastructure needs of the IT industry have evolved from mostly ‘people centric’ to both ‘people and machine-centric’. This shift needs to be addressed by infrastructure providers by developing locations tailored for setting up large data centers apart from flexible human workspaces.

In the context of the human workplace, flexibility and speed become ever more important with companies needing to be ‘agile’ enough to respond to change, and even to impending

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Our passion for excellence is instrumental in driving us to be innovative, solutions - focused and impactful

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change. This includes co-locating and relocating multiple functions as needed, the ability to scale quickly at will and to redistribute teams across locations. These requirements, albeit having always existed, have become ever more relevant for success in today’s scenario where external geopolitical factors are aggravating the internal challenges that the industry faces. Attivo has committed to working closely with the IT industry as an infrastructure partner to deliver workplace solutions that are relevant to current business needs.

Indranil Dasgupta CEO of Attivo Economic Zones (A Srei initiative)

power distribution company with operations in various parts of the country, AMRL is well set to provide stable and reliable 24x7 powers to its IT consumers.

AMRL enables IT companies to become operational at speed from a highly cost-competitive location that, while being remote, still boasts of world-class connectivity at its doorstep. It is located in Tirunelveli district in southern Tamil Nadu, a traditional IT powerhouse of India.

Boosting Technology by aiding Finance Attivo’s AMRL Special Economic Zone - financed by SREI Infrastructure Finance Ltd, one of India’s largest infrastructure focused NBFCs - is an ideal platform that can host large data centers as well as IT and business centers. AMRL offers all the benefits of the SEZ policy, the platform that has played a key role in the growth of the industry over the last decade, together with the infrastructure expertise of Attivo and the SREI Group. With a co-development agreement in place with India Power Corporation Ltd, a large

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With a major International airport at Trivandrum in Kerala about an hour’s drive away, and smaller regional airports at Tuticorin and Madurai close by, AMRL is well connected by air. By virtue of its location along NH7, just minutes away from Tirunelveli town, AMRL is also well connected by road and rail. Being in a region dubbed the ‘Oxford of South India’ for its educational credentials, AMRL enables access to quality IT talent locally, a critical requirement for the industry.

Despite these advantages, it needs to be stated that the value that AMRL, and on a broader scale, Attivo, brings to the IT industry goes way beyond location, connectivity, and cost. With the financial strength and expertise of the SREI Group in the infrastructure sector backing it, the IT industry will find AMRL (and Attivo) a willing partner that is genuinely interested in finding innovative infrastructure solutions that provide the foundation for Indian IT's next wave of growth.

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CXO Standpoint

Digital Remonetization of Indian Economy

Ra Arjunamurthy Founder & Chairman YELDI Softcom Private Limited

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recent government initiative of making our country a ‘Cashless Economy’, has raised thousands of questions like, will this Cashless Economy sustain in India? What will be the consequences of it? What will be the better options when we will go cashless?

To get some insights on the same, Insights Success has interviewed one of the master minds of the field, Mr. Ra Arjunamurthy, Founder & Chairman, YELDI Softcom Private Limited, Chennai. Here are some of the of the insights of the interview: Will Cashless economy sustain in India?

That to me is quite debatable. From the looks of it customers' adoption to cashless transaction looks like more a force than a choice, primarily due to lack of cash availability in banks. However, with continued support and protection for this move from our government, India has every possibility to emerge as a cashless economy. For quicker implementation of a cashless economy for a country as dense and diverse as India, Digitization can be a saving grace.

Can we relate cashless transaction to the IT world somehow?

Of course. This cashless move would have least impacted this sector. What with all salary, reimbursements and meal passes credited onto the corporate accounts of the respected employees and with better salary brackets it is so much easier to gain eligibility for credit cards, I assume already 80% of the IT population has gone cashless!

Can you imagine “India a cashless country”?

Why not? Historically, India has a great sense of adoption.

The best example is the mobile phone.

Do you think prepaid digital wallets are the best options available today? Why? If you ask me from a consumer perspective, my answer is YES. Prepaid will provide multi-utility benefit and convenience to end users.

usages like metro & toll access, parking, condominium, ID cards for institutions and hospitals. I feel, digital wallet in NFC form factor goes beyond a customer’s usage compared to mobile wallets, debit and credit cards. Hence my mantra is “One card does it all!”

What is the future of prepaid digital wallets in India from your point of view?

There is a fantastic opportunity for prepaid digital wallets in India. When a man’s everyday life from entertainment to unwinding with a book has all gone to the digital platform, it is only natural for payments to also go the same route.

Do you think there is any connection in between going cashless and corruption in the country?

Directly No. However, our government has targeted and unravelled the highest black money till date using the demonetization initiative, which in turn has converted to cashless economy, one seems to wonder if maybe there is a connection.

What kind of role YELDI is playing on the cashless ground?

Apart from usually helping consumer on transactions, our serious core objective of the product has been and will continue to be “Connecting consumer and their neighbourhood merchant”.

The Yeldi NFC ecosystem was built with a clear conscience - to empower other business houses to sell, to service and we at Yeldi continuously ensure to make our business partners more powerful than Yeldi. Yeldi aims to help small/medium businesses compete with much bigger and more organized businesses of the world. By empowering merchants to seamlessly adopt the cashless model using Yeldi ecosystem, we are doing our bit in making India a successful cashless economy.

Issence of this interview drew us to the conclusion that, surely India has a potential to become a cashless country and that is too with the help of digitization only!

YELDI FOLKS in particular caters specifically to this end user requirement. By removing the need for an existing bank account & smart phone, any Indian with a working mobile number and above the age of 18, can go instantly cashless! With the added advantage of NFC technology, a user/business house can explore this card for a plethora of

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