Tata Capital Financial Services to double commercial loan book to Rs 500 bn

Company launches online platform for SMEs to boost financing activities, attract new clients

Tata Capital Financial Services (TCFS), buoyed by a strong growth from its channel finance activity for Small-Medium Enterprise (SME) customers, plans to double its commercial lending book to Rs 500 billion over the next four years.

The company recently launched an online platform for its SME customers to avail of loans up to Rs 20 million. The idea is to provide working-capital finance to existing SME customers and leverage the seamless  mechanism to attract new clients.

Kusal Roy, the managing director at TCFS, told Business Standard, "We will grow very steadily through this platform in excess of 20 to 25 per cent and aim to grow our overall lending book to Rs 500 billion over the next four years.”

As of June 2018, the total value of tits commercial finance loan book stands at Rs 225 billion, and the channel finance comprises around 40 per cent of the book, at around Rs 90 billion. Around 8 per cent of the channel finance book goes to small enterprises. 

The total loan book of Tata Capital Group as of FY2018 stood at Rs 610 billion, growing at an annual rate of 19 per cent, of which SMEs contribute 25 per cent, followed by retail and housing finance together contributing 60 per cent to the lending book.

“This is a breakthrough product as our customers can apply for a loan at anytime from anywhere. We have also introduced various useful APIs (Application Programming Interfaces) for the verification and screening aspects of the platform," Roy said.

SMEs can avail working-capital finance worth Rs 1 million up to Rs 20 million on the platform, and TCFS aims to grow their channel finance activity by around 50 per cent by the end of the current fiscal year.

At the end of FY2018, the company reported a net profit of Rs 4.82 billion against a net profit of Rs 2.16 billion in FY2017.

According to a report by rating agency ICRA, “TCFS' access to Tata Capital's infrastructure, the wider-Tata ecosystem, and the marketing and loans origination teams has enabled the company to grow its business volumes.”

TCFS has built a score-based automated trade decision-making platform, and expects to disburse loans amounting to a total of Rs 2.5 billion in the next three months on its new digital lending portal for clients.

Biz2Credit, a US-based lending Fintech, had partnered with TCFS to develop the online loan portal. “The platform has built-in APIs for Know-Your-Customer verification and also has a rule-based credit engine which runs at the background,” says Roy.

Last October, TCFS partnered with Capital Float to offer loans to SMEs on the latter's digital platform.