Gurugram-based Satin Creditcare to apply for on-tap small finance bank

SCNL is waiting for RBI to come out with its on-tap norms by end-August

Gurugram-based Satin Creditcare Network (SCNL) plans to set up a small finance bank (SFB), and is waiting for the Reserve Bank of India (RBI) to come out with its on-tap norms for such banks by end-August.

“We have 1,163 branches and a headcount of 11,831 across 22 states and Union territories serving 3.5 million clients and a strong presence throughout Uttar Pradesh, Bihar, the north-east, and Madhya Pradesh. We are well positioned to be an SFB,” said H P Singh, chairman and managing director of SCNL, a micro-finance institution (MFI). SCNL is the first MFI to publicly state that it will apply for an on-tap SFB licence. Set up in 1990 as a vendor of loans to individuals and small businesses, it was registered as a non-banking financial company (NBFC) with the RBI in 1998 and convert to an NBFC-MFI in November 2013. It has three subsidiaries — Satin Finserv Ltd (SFL), Satin Housing Finance Ltd (SHFL), and Taraashna Services Ltd (TSL). 

The promoter-group led by Singh holds 27.94 per cent in SCNL with Nordic Microfinance Initiative having 6.89 per cent stake, SBI FMO Emerging Asia Financial Sector Fund Pte at 6.78 per cent, Kora Cap at 4.88 per cent and ADB at 3.16 per cent. Singh’s bet is that “SCNL with its wide footprint and customer base along with its subsidiaries can cross-sell across platforms”. In recent times, the MFI has also introduced psychometric tools as part of an onboarding verification. Psychometric assessment helps to identify specific personality traits suited for specific roles. These can take the shape of questionnaires, and tests on leadership, motivation and situational awareness. It can be used to profile both clients and staffers. SFL — an NBFC — received the central bank’s nod in January this year and targets micro, small and medium enterprises. Its focus is on small businesses in the manufacturing, trading and services sectors with an annual turnover of less than Rs  2 crore. It claims to have a unique credit underwriting and assessment model to service customers, most of whom do not maintain standard books of accounts or even warrant financial auditing. This includes loans against property in the range of  Rs 1 lakh to Rs 15 lakh.

SHFL, set up in April 2017 and operational since February 2018, caters mainly to customers belonging to the middle- and low-income groups across urban, semi-urban and the rural. The housing finance company’s portfolio stood at Rs 79.01 crore at close of FY19; and 85 per cent of its loan disbursements are retail home loans with the remaining 15 per cent in loans-against-property. TSL was acquired in 2016 and has entered into business correspondent partnership with IndusInd Bank in FY18; its assets under management stood at Rs 633 crore at end of FY19.

TSL’s board has approved the proposal to convert into an NBFC to explore opportunities in co-lending space, and other financial products not offered within the group. It was pointed out that SCNL’s two subsidiaries —SFL and SHFL — will tap the parent’s customers who have completed multiple relationships with it and now seek a bigger loan.In the first round for SFBs licences, there were 72 applications, and ten were waved in.

The upcoming on-tap licensing of SFBs comes even as the banking regulator has not officially said it has closed the window for on-tap universal banking licences.

The shift towards on-tap for SFBs is not sudden - Mint Road had made it clear in August 2015 that it intends to use the learning from the first round of licensing to revise the guidelines and move towards on-tap.