The travails of Sachin Bansal's Navi, a fintech that wanted to be a bank

Earlier this week, Bansal stepped away from the CEO post pf the finserv and tech verticals to focus on the group's long-term vision, expansion and M&A efforts

The past few months have been fairly uneventful for fintech firm Navi. On February 15, however the firm's founder and former Flipkart veteran Sachin Bansal announced he was stepping away from his role as chief executive officer. He will now be the Bengaluru-based group's executive chairman while appointing two new CEOs for its companies. 

Many who were aware of the development later said that this was along expected lines as Bansal wanted to focus on the group's long-term vision and also keep the Navi Technologies and finserv businesses separate. 

The appointment of two new CEOs - Rajiv Naresh for Navi Technologies and Abhishek Dwivedi for Navi Finserv - will come as a breather to Bansal who oversaw most of the businesses' operational arrangements until last week. 

With the rejig in place, Bansal will now work on expansion opportunities, fundraising, and merger and acquisition (M&A) efforts for both businesses.  “Holding the position of executive chairman also allows me to dedicate my efforts to guiding the overall vision of Navi Group, while Rajiv and Abhishek will lead their respective businesses with a continued commitment to innovation and excellence," he said in a company statement. 

The leadership reorganisation also comes at a time when the six-year-old company faced turbulence from India’s banking regulator in October of last year. The RBI had barred the company, along with three others in October, from sanctioning and disbursing loans on account of charging exorbitant interest rates from borrowers. 

A day after the regulatory embargo, its non-banking financial company (NBFC) arm Navi Finserv called off its Rs 100 crore bond issuance. 

Although the market saw it as a direct implication of the RBI action, the company claimed there was ‘no immediate need for external funding’ at that point in October, leading to the decision. 

However, just over a month after the regulatory restrictions were announced, the RBI lifted them after several rounds of discussions with the company to rectify deficiencies. 

Last month, its non-lending business Navi Technologies was hit by a cyber fraud resulting in losses of over Rs 14 crore. The company release also said that Bansal would also be involved in driving Navi’s tech org by leveraging innovations happening in tech and data science. 

Way back in 2022, the year when the firm got a nod from the Securities and Exchange Board of India (Sebi) to launch a Rs 3,350 crore initial public offering (IPO), the firm’s then wholly-owned subsidiary Chaitanya India Fin Credit was declined a banking licence from the RBI. 

The acquisition of Chaitanya, coupled with the potential approval of a universal banking license, would have enabled Bansal’s fintech firm to collect public deposits and channel them into its core lending business in compliance with regulatory requirements, thereby adding an engine for growth to the topline. 

However, in the year that followed, Bansal sold Chaitanya to Ananya Birla-led Svatantra Microfin for Rs 1,479 crore after having acquired it in 2019 for Rs 150 crore.

 

A healthy balance-sheet

 

Despite its bank ambitions not fructifying, the firm reported healthy financials in the past year. At the end of financial year 2024 (FY24), the company posted net profit of Rs 668.8 crore, a nearly four-fold jump from Rs 171.9 crore in FY23. The firm’s total income nearly doubled from Rs 1,377 crore in FY23 to Rs 2,614.2 crore in FY24, according to data from its latest annual report.

Since FY22, the fintech has seen healthy growth in terms of its disbursements, too. It extended loans worth only Rs 3,702 crore in FY22, but more than tripled to Rs 12,630 crore in FY23, which further grew to Rs 16,006 crore in FY24. 

Of this, it disbursed 2.2 million personal loans in FY24 alone, cornering a chunk of its total disbursement value at Rs 15,375 crore. The average ticket size of such loans was pegged at Rs 71,334. 

It also disbursed 1,232 home loans in FY24 with an average ticket size of Rs 69 lakh. The gross sanctioned amount of such loans towards its customers was recorded at Rs 851 crore. 

Navi claimed to have a repeat rate of around 56 per cent, with 46 per cent of its total borrowers being first time-Navi personal loan borrowers.