DSIJ Interview With Jugal Kataria CFO , Satin Creditcare

"Keeping operational cost under control is essential for growth"

Jugal Kataria CFO , Satin Creditcare




We know that as a CFO you have numerous priorities, but which are the most demanding areas that deserve your attention?

Satin Creditcare, along-with its three wholly-owned subsidiaries, is becoming a differentiated financial services group serving the unserved/underserved. Besides microfinance, the company is venturing into financing affordable housing, MSMEs, cross-selling, digital lending through “LoanDost” and business corresponding services. In today’s challenging external environment for financial services, the three main strategic priorities are as under:

1. Raising funds for all businesses at reasonable cost. Satin Creditcare has been able to raise required funding for growth of microfinance business at competitive rates. We have also raised funds for our housing finance and MSME business. Still, in the current scenario, raising long-term funds is a challenge.

2. Digitisation: Using state-of-the-art technology helps us do cashless transactions at all our microfinance branches. We have also successfully completed the pilot for cashless collection and are in the process of scaling the same. Our microfinance clients may take some time to adapt the change.

3. Operational efficiency: There is margin cap of 10% over and above the cost of funds and hence keeping operational cost under control is essential for growth of the business. We are expanding our geographical reach, expanding our product offering beyond microfinance, investing in technology and processes. These initiatives will bring lot of operational efficiency over a period of time. During this period of change; we are keeping a close eye on cost and keeping the same under control.

Is the liquidity crisis here to stay? How is it affecting your company?

Liquidity is a concern for financial services since last 6-8 months. Raising long terms resources is a challenge. The steps proposed in the budget will help to address some of these issues. The well-managed companies will continue to get funding.

The company was not affected by the liquidity crisis. We have a long list of diversified lenders (both domestic and foreign) who have reposed their faith in us and provided us the required money for growth of the business. There is no ALM mismatch in any of our businesses. We have comfortable capital adequacy ratio and liquidity position. Besides this, we have good amount of undrawn sanctions. We are confident that with the new initiatives in the budget, the liquidity position will improve for the industry.

What are the key growth challenges faced by your company and as a CFO how do contribute towards company's growth?

The overall sentiment for NBFCs is impacted thus taking time to improve. In this scenario, some stakeholders have a wait and watch strategy. This is affecting even the well-managed NBFCs. We are in constant touch with all stakeholders and informing them about the progress of business. We are taking necessary steps to de-risk our business by diversifying product offering, using technology, improving processes and keeping cost under control. The focus is on quality over quantity. We are sure that these steps will help us to achieve our budgeted growth.

What is your outlook for the micro-financing sector in India?

The microfinance sector in India has come a long way. Today, this is one of the well-managed and regulated sector in financial services with minimum NPAs. In line with the government’s policy of financial inclusion (Sabka Sath, Sabka Vikas), micro finance industry is serving a large population at the bottom of the pyramid in some of the most backward districts of the country. With regulations, technology, digitisation, credit bureau, industry association and responsible lending practices followed by industry participants, the microfinance industry will serve even a larger population in future.

What is your outlook on the Indian economy?

With a lot of structural reforms and policy initiatives taken by the government during last five years and in the current budget, the Indian economy will grow faster than most peers. The target of 5 trillion dollar economy is challenging, but not impossible. I am positive that the government and industry will work together to achieve this goal.