“My vision is to make IIFL the most respected financial services company in India and for business to keep growing, whether we become a (full-service) bank or not,” Nirmal Jain, Chairman, IIFL Holdings, told BusinessLine . The diversified financial services company is focusing more on its NBFC business now and believes the government needs to go after low-hanging fruit to get the economy going.

What do you make of 18 months of the Modi Government? What is the sentiment in the market?

Things are moving in the right direction with the new government but they are moving at a pace slower than what anybody expected. Nobody thought things would change overnight, but everybody thought one year — 18 months is a reasonable time (to turn things around).

Unfortunately, nobody could have foreseen the quantity of problems that would arise — with Parliament not functioning, Ministers caught in scams, etc. The government is moving in the right direction but at a slow pace. But India is a large complex country, with complex democratic and judicial systems.

Would you say the government is losing focus on the economy then?

We’re in a good macro situation now, with oil prices coming down and the monsoon reasonably good. There is reason to be optimistic. I think stalled projects must move fast, especially those that don’t require parliamentary approval. Credit offtake needs to grow as well. If large companies get orders for ₹2,000-5,000 crore, then the cascading effect will start.

When do you see corporate results improving? Which sectors do you think are improving?

At least two more quarters; so, either end of this fiscal or early next fiscal. Sectors, such as road, power, transport, are already getting orders and they are starting to look up. Once the dust settles on China, India has an opportunity to attract money. Pharma, IT, key private banks are sectors worth looking at, but investors must select stocks carefully.

Why have you reduced exposure to gold loans in your NBFC arm? What is the update on the banking licence?

Gold loans are a volatile product and vulnerable to gold prices. Strategically, we want to reduce exposure to that. We see commercial vehicle and SME lending growing faster. We are cutting exposure in all lending segments to a maximum of 20 per cent each, so even if one segment suffers, the rest can prop up business.

Most large NBFCs would like to become universal banks. And it is high time to increase the number of private sector banks. The economy is growing, but the banking sector is not. This is not a scarce resource which needs to be auctioned. If the RBI’s complaint is that it can’t regulate too many banks, then its operations need to be scaled up.

What do you make of SEBI implementing upfront commissions on distributors of mutual funds?

Any private entrepreneur runs a financial service business for profit. If the regulator wants investments in the mutual fund business to grow, then the distribution channel must be encouraged. Would anybody accept trailing salaries that come long after work is done? If the regulator wants to fix too much churn in investments, this is the wrong approach. They don’t realise what the side effects are.

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