HP Singh, Chairman -; Managing Director, Satin Creditcare Network Limited

25 Mar 2022 , 05:04 PM

In an interaction with Mamta Maity, indiainfoline.com, Mr. HP Singh, Chairman & Managing Director, Satin Creditcare Network Limited (SCNL) said “Satin also offers a range of business loans to small- and medium-sized enterprises as well as customized loans to facilitate clean energy, better mobility, safe water and sanitation facilities — all geared to make a positive difference in the quality of the lives of our clients.”

Please tell us about Satin Creditcare Network and how it is helping the common man/women?

Satin Creditcare Network Limited (SCNL) was incorporated in 1990. At the start, we provided finance to shopkeepers and retailers. Today, after three decades, we are one of the leading and trusted Indian microfinance companies in India providing collateral free microcredit facilities to around 3 million economically driven women throughout the country.

SCNL promotes growth by making financial tools available to the sections of society that cannot source funds from regular sources of finance. In this manner, it enables access to finance to the unserved and the underserved sections of the society in both rural and semi-urban areas. Additionally, Satin also offers a range of business loans to small- and medium-sized enterprises as well as customized loans to facilitate clean energy, better mobility, safe water and sanitation facilities — all geared to make a positive difference in the quality of the lives of our clients.

What is the business model that Satin Creditcare follows?

The business model deployed by the company for its operations is the Joint Liability Group (JLG) model of microfinance, where a group of women come together and avail credit while giving social collateral on each other’s behalf. Clients are slotted in customized groups and are then provided with a training programme covering product details, rules and regulations, and policies and procedures. Post training, a Group Recognition Test (GRT) is conducted to test the group’s understanding of the SCNL’s microfinance programme. The successful completion of the GRT results in credit extension.

How did you manage collection during the pandemic and how do you plan to make it robust going forward?

During the lockdown owing to the pandemic, business was initially presented with new challenges and risks in the form of reduced repayment and collection efficiency, since the loan collections are cash based in the rural areas where we source 75% of our books, and collected via physical center meetings. Hence, ours is a high touch business, which naturally saw a hit. However, in order to successfully navigate through the challenges, we opted for several proactive measures, which helped us in increasing the efficiency of collections. We enabled the modes for contactless repayments via popular apps like Google pay, Paytm, Phonepe etc.

We launched our Customer Service Application, developed in-house, to give option of ease of digital repayment to our customers and to connect them with brand Satin.  As the lockdown came to an end and economic activity was revived, the numbers reached pre-COVID levels in terms of both collection and disbursement efficiency. SCNL reported a Profit After Tax (PAT) of Rs34 crore in the quarter ended December, as against a loss of Rs80 crore in this period a year ago. Our Net Interest Income (NII) grew to Rs194 crore in the December quarter as against Rs164 crore in the same period of the previous fiscal. Microfinance disbursements slightly dipped to Rs1,224 crore as compared to Rs1,742 crore in the same quarter of the previous fiscal. This was on account of the fears of the Omicron wave, hence we consciously tightened the on-lending.  Asset Under Management (AUM was at Rs7,218 crore.

We believe that the worst is behind us now. Lockdowns have been lifted across the country, and the economy is fast returning to normal. We expect our outstanding dues to be collected slowly, with a simultaneous increase in our assets under management or AUM, and improved asset quality.

What is the role of digitization in your business?

At SCNL, we believe that digitization is imperative. The proactive use of digital and other technology offerings plays a critical role in every aspect of our business — from strengthening our ability to compete, better supervision, improving client management, reducing operating costs and increasing efficiencies. We are continually investing in and developing our in-house technology and digital finance domains.

You have recently raised about Rs225 crore via preferential shares. How do you plan to utilise these funds?

We will use the proceeds for growth, as now we are past the pandemic led crisis. In this period, technically, growth was almost flattish, due to frequent lockdowns, as well as a decline in the activities of the unorganised sector. We are now looking at the pent-up demand, and the growth it can bring with it. So, this capital will be looked at just as growth capital, and we are targeting close to a 15-20% growth for the next financial year, i.e., FY2023.

How is the industry in terms of growth?

The microfinance industry has witnessed enormous growth in the last few decades, and we believe that it will continue to do so, going forward. Despite facing a clutter of headwinds in the last decade - such as AP crisis, demonetisation, GST, Assam crisis, and business coming to a grinding halt because of Covid-induced lockdowns — the industry has emerged stronger, with drives like financial inclusion and overall awareness gaining steam. We have also devised innovative methods to cater to the marginalized sector.

What are the challenges that you have faced while building the company?

The single biggest challenge has been — as with other companies in the segment - training and capacity development. Another major hurdle was caused by the demonetisation drive in 2016. The bulk of our business at that point in time was concentrated in UP and Bihar, making our portfolio highly risky as those geographies were worst hit. However, we then diversified our business to other states.  We also added secured asset class as all of our book was unsecured, making it a riskier proposition. We also increased the use of digitization, making our business cashless and decentralised across the board.

Any other aspect of the company that you would like to highlight?

SCNL has built a great franchise over the year with its distribution outreach, where we are present in 84,000 villages, in 400 districts and 23 states across India, touching 3 million households in rural India. This is where real India lies, in terms of contribution to economic activity and aspiration value. We touchbase with our clients twice a month, making us well ingrained in the social fabric and the future harbingers of change. This gives us a ready vehicle to launch any product or service of essence or aspiration value.