What has been the impact of the Reserve Bank of India's (RBI's) decision to restrict cash transactions to Rs 20,000?
Indications that the government and the RBI are keen to reduce the role of cash in financial transactions have been there for some years now. Accordingly, the RBI has been taking proactive measures to speed up the pace of digitisation and we fully support it. Over the past two years, we have also been preparing ourselves for a cashless (or less-cash) environment. That is why, even before demonetisation, we had put in place alternative channels for payment of interest and principal, like net banking, debit cards and e-wallets, among others.
On a broader level, the push towards a cashless economy is likely to set off a long-term trend of shift in business away from the informal and unorganised players and towards the organised sector. This will certainly help banks and NBFCs.
In fact, NBFCs
may stand to gain more as they have greater last-mile reach and better connect with the low-income groups.
What is the business outlook for the financial year 2017-18?
The business outlook for this financial year envisages growth in AUM for gold loans in the range of 15 to 20 per cent. Of course, the microfinance, home finance and commercial vehicles loans businesses are expected to grow much faster considering that their base is smaller. The target for growth in consolidated AUM is also in the 15 to 20 per cent range.
How has your diversification into the non-gold business been doing? What is the outlook?
The acquisition of Asirvad in February 2015 was a milestone for us. More importantly, having taken over the company, we also succeeded in turning it around. When we took over, the company had an AUM of less than Rs 300 crore. In little more than a year, the AUM had gone up three times. The Asirvad acquisition has helped us diversify our portfolio away from our exclusive focus on gold loans. Today, our vision is to emerge as a diversified, multi-product NBFC. Furthermore, non-gold businesses such as microfinance, home loans and commercial vehicle finance already contribute about 16 per cent of our total business, which we hope will increase to 25 per cent by the end of 2017-18.
Currently, our gold loan business operates through more than 3,000 branches across India. Our view is that this gives us adequate reach into our target markets and, therefore, we are not contemplating further expansion of our branch network. Going forward, our larger focus will be to ensure that per-branch business levels pick up and to turn around the marginal branches.
How is the online gold loan business doing? What are the future prospects for this business?
Online gold loan is indeed a breakthrough in the sector and particularly apt as we head towards a cashless economy. We had launched our online gold loan (OGL) product in 2015 and it is designed to be totally cashless at our end. A customer has to come to our branch only once to deposit his gold and execute necessary documents. After that, he can avail a loan up to eligibility anytime from anywhere using a smart phone and the loan amount gets transferred to his bank account instantaneously. The OGL business has picked up well in recent days and it now accounts for more than 10 per cent of total gold loans. Our new television advertisement campaign promotes OGL in a big way and we hope this will contribute to higher volumes.
There were reports that you are planning to sell some of your shares in the company. What is your response?
We have already issued an official denial in respect of these reports. We stand by it.