UAE Exchange India revamping business model

Non-banking financial company (NBFC) UAE Exchange India, hoping to get a banking licence in the next round, has begun changing its business model.

Earlier, it had focused the entire business on remittances and foreign exchange services. It is now expanding the reach to focus on small-size loans, to target financial inclusion.

This shift was after the company failed to secure a banking licence last year. In that round, IDFC and Bandhan were granted 'in principle' approval by the Reserve Bank of India (RBI) to set up a bank.

V George Antony, managing director of UAE Exchange India, said after that failure, the company decided an important parameter they were not meeting was financial inclusion. So, it has begun offering small-size personal loans and two-wheeler loans.

"The idea of giving personal loans is only for financial inclusion. We have moved into the domestic loan business and are very focused on it. We realised that if you really want to be in the financial sector, you have to be in the credit business. The maximum amount we are offering is Rs 50,000 and there is a lot of demand for it. As of now, our total loan book size, including gold loans, is around Rs 450 crore," said Antony.

The plan is to double the loan book size by 2015. Before starting the loan vertical, the revenue mix was 50 per cent from the foreign exchange business, 30 per cent from money transfer and 20 per cent from the travel and tour business. With the new focus on loan disbursement, this contributes to about 35 per cent of total revenue. Forex is 35 per cent and the money transfer business has come down to 20 per cent. Travel contributes only 10 per cent.

RBI is expected to issue final guidelines for 'on tap' new banking licences this financial year.

To strengthen the financial inclusion drive, apart from offering loans, the company is looking at getting into the e-wallet space. Antony said they'd started the ground work.

The NBFC has 355 branches and is planning to add 75 this year. In 2013-14, it had Rs 23 crore in net profit. It is aiming at Rs 30 crore this year.

Unlike many other companies, UAE Exchange is not interested in applying for a small bank or a payment bank. It will, instead, apply only for a universal banking licence.

"We should not look at anything less. We have a full financial supermarket and we believe we can get a licence. We are compliant with all the rules and there is no question of anything less than universal space," said Antony.