'Execution, large customer base are our strengths': P N Vasudevan

Interview with Managing director, Equitas Holdings

The Reserve Bank of India (RBI) has granted ‘in-principle’ approval to 10 companies to set up small finance banks. The list includes Equitas Holdings, which is in the microfinance, and vehicle and housing finance segments. P N Vasudevan, the company’s managing director, tells T E Narasimhan Equitas will merge all the three segments, adding the small bank licence will help it extend its portfolio to liability-based products. Edited excerpts:

What is your view on small finance banks?

The concept of small finance banks, combined with payment banks announced earlier, will promote inclusion in a substantial way. We will go to the market in a different way. We will target the segments that aren’t fully serviced by existing banks. Most associates will be strong on technology from day one, which means ease and convenience for customers to access accounts should be high.

What is Equitas’s focus and strength?

We want to leverage existing clients.

Equitas is known for adopting technology; this segment will be given a thrust. Execution is our strength. Among MFIs (microfinance institutions), we are the only one with a range of credit products. We have proven capability in lending to informal clients and management of the portfolio.

We already offer a range of credit products for the under- and un-served segments, such as microfinance, used commercial vehicle finance, micro enterprise loans in the range of Rs 50,000 and Rs 10 lakh, micro housing finance of up to Rs 5 lakh and affordable housing finance of up to Rs 25 lakh. Conversion into a bank will enable us to add further products such as agricultural finance. Primarily, it will enable us to offer a full range of savings and liability products.

The company already has a large customer base and liability services will initially be offered to them, before these are rolled out to other customers.

Generally, Equitas is listed among the best MFIs, in terms of leveraging technology. We will pursue it further to ensure it is used to provide high-quality service, which makes it easy and convenient for people to move money into and out of the account.

How will you leverage your existing customer base?

As of March 2015, Equitas has a customer base of 2.5 million customers with good presence in rural and urban areas and a fair amount of goodwill in the community we serve. It will help us extend our services to agri-based lending also in a big way.

The focus, however, will be on liability-based customers who are now placing the money with informal institutions.

Will you be looking for any fresh funds for the small bank foray?

As of now, no. But when required, our board will take the call.

Will you be looking partner, in technology for example?

Too early to comment on it.

When will the Bank commence operations? Going by regulations, it needs to be listed in three years. When will you list the bank?

The time given by RBI was 18 months to start and three years to list (from the time operations commence). We will definitely meet the compliance.

What are the challenges you foresee?

Actual roll out and convenience to the client. Execution calls for lot of plans.