‘Want to leave behind a legacy of a successful institution’

First quarter of last year was one of our worst periods. If things normalise, 60-75 per cent of the NPA provided would get reversed. As we closed March 2022, we reversed more than 100 per cent of provisioning. Then again, we said by 2025, we will double our balance sheet; our gross NPA will be below 6 per cent; ROA will go to 2.5 per cent; operating costs will come down to 2.5 per cent. We are tracking extremely well around that. ROA has come to 2 per cent. NPA have gone to sub 6 per cent. We are still maintaining our 60 per cent coverage ratio and, therefore, our net NPA has gone to 2.5 per cent. During 2010-2014 we had one set of growth and that’s coming back for us.

Models are not built on repossession, but repossession is a must for a business like us. There are intentional and circumstantial default. For circumstantial defaulters, we don’t want to repossess; we will partner with them. With intentional defaulters, we don’t want to delay. When we repossessed around 2,000 vehicles a month, it impacted us because people thought they don’t have to repay us. Now that it is opened, it will help settle with extreme defaulting customers. But the market conditions are also so good from a cash flow perspective that many of the customers do not want their assets to be taken away.

NBFCs like ours with deeper penetration bring business to dealerships, and the real value proposition is how much business do I bring to dealership. We have a very large customer base, and some of our customers are repeat and some bring references. We are not a single product company, and the geographies that we represent are deeply penetrated. You take any product in rural markets, we are almost the number one finance company.

In 1998 we opened two golden branches in Kerala, and wanted to test against the local competition. We learned many things of that business — like you cannot run the business from your existing branches. You need a specialist who understands gold. So, we gave up saying that unless we seriously want to grow this business, we shouldn’t get into it. But it’s a good product and opportunity to be in. Now that we have entered small ticket loans, if you ask me whether gold loan is a good product to add, my answer is yes. But we are not looking at it now.

The model has completely re-established itself and proved to the ground that it is doing exactly the way we believed it will do. Also, as you know, I will superannuate next year. So, the biggest thing is that the incoming person is well settled into this role. That is why the announcement was made 15 months in advance. For someone who virtually started the business to take it to where it is today, I would like to leave behind a legacy of a very successful institution.