How has been Chola’s journey so far?
We started with vehicle finance and then went on with loan against property in 2005 and housing loan in 2011. Till covid, these three large businesses were driving the growth of the company and in the last 15 years the company has been growing at a compounded annual growth rate of over 20 per cent in terms of asset and profit and disbursement. Post Covid we started five more businesses including consumer and small enterprises loan, secured business and personal loan and gold loan. We have eight businesses in total.
What is your target segment?
The customers at the bottom of the pyramid may be taking loans from the unorganised sector or they are the micro finance customer. When they progress in life, we offer them finance. They are at the middle layer of the pyramid. We serve them for a few years, and then they progress further up and become capable of taking loans from banks. Our offices stretch from Leh Ladakh to Andaman and Nicobar. Also, there are many small towns where the potential is growing and we need to open up. And that is our target.
How linked is Chola’s growth with economic growth?
In good times, our asset under management growth is around 25-30 per cent. In bad times it comes down to 20 per cent. We have planned AUM growth of 20-25 per cent for the next ten years. So that is the range we look to maintain. Each business is in different stages. For instance, vehicle finance is over 2500 branches, loan against property is over 800 branches, home loan is over 750 branches and gold loan is 120 branches.
Gold loan is one segment which has done well? What is Chola’s game plan?
We have reached Rs 2000 crore of average assets. Currently, we are almost reaching Rs 11 crore per branch. It is interesting to see that there are some companies who are working for many years are at the same level as us. That shows gold loan business is solid. An important aspect is to ensure that the process is stable and robust to avoid any theft and fraud. If that can be done, it is fantastic business. And as we expand into the business, it will increase our customer base. And once the gold loan customer comes inside Chola, then we have a series of products.
Any support needed from regulators for the sector?
The regulator has been supportive. There are some processes which are very specific to NBFC, which can help us to do more business. However, deposit-taking licences have not been issued for many years. We were previously a deposit-taking NBFC but surrendered the licence after entering a joint venture with DBS Bank in 2005. Since then, the Reserve Bank of India has not granted fresh deposit-taking licences. If this policy is reconsidered, it would diversify our funding sources. As an Upper Layer NBFC, we operate in a segment where some peers hold deposit-taking licences while others do not. Establishing a level playing field would help improve competitiveness and bring greater balance to borrowing costs across the sector.