Manappuram Strategy Shift

Sunday, August 14, 2016
Gold loan provider Manappuram Finance is looking to ramp up its non-gold portfolio even as it looks to strengthen its core business through short-term products.

The Kerala-based non-banking finance company (NBFC) - which has diversified into microfinance, affordable housing for mid- and low-income groups and commercial vehicle loans - expects these non-gold businesses to contribute around 25 per cent to its assets under management (AUM), or loans outstanding, in three years.

The company has now set its eyes firmly on the universal banking licence.

Nandakumar: New road map

While it is keen on a banking licence, the proposal has not yet been discussed with the board, V.P. Nandakumar, managing director and CEO of Manappuram Finance, told The Telegraph.

The plan may come up for discussion after a road map has been prepared for the next three to five years. An external consultancy may be brought in to prepare this road map.

Earlier this month, the RBI had announced final guidelines for on-tap licensing of universal banks.
Existing NBFCs, which are controlled by resident Indians and have a successful track record of at least 10 years, are eligible to apply.

The company's non-gold business accounts for about 12 per cent of its assets. It is planning to leverage its strong retail customer base, an expanding network and brand equity to grow its new businesses.

In February 2015, Manappuram had acquired an 85 per cent stake in Asirvad Microfinance Pvt Ltd, one of the leading microfinance institutions in Tamil Nadu.

The loan portfolio has increased to over Rs 1,200 crore as on June 30 from Rs 300 crore at the time of acquisition. By the end of this fiscal, the size of this portfolio is expected to exceed Rs 2,000 crore.

Asirvad, which had its operations mostly in Tamil Nadu, Kerala and Karnataka, has now expanded to at least 13 states, including Bengal, Madhya Pradesh and Uttar Pradesh. Another 100 branches are expected to be added this year, taking the total number to over 550.

In the core gold loan business, the decision to shift to short-term loan products (three, six and nine months) against 12 months earlier has paid off. This business has disbursed loans over Rs 13,755 crore during the April-June quarter.