We Want To Become A Complete Banking Partner: R Baskar Babu, Suryoday Small Finance Bank

Tell us a bit about Suryoday Small Finance Bank. How do you intend to differentiate its offerings from your competition?
Suryoday Small finance bank has completed 2 years as a bank and 10 years as an institution. We currently have 375 points of presence including 162 branches and 213 microfinance doorstep centres. Our asset portfolio as on 28th Feb 2019 was around Rs 2700 crore and our deposit base was around Rs 1250 crs. The last two years as a bank has been about laying the foundation to become a world class financial institution

In the banking sector, product specifications are not major differentiators. It is generally the service which makes a difference. Suryoday from Day One has focussed on customer experience as the centre of all product and process developments. Our digital initiatives, corporate internet banking and mobile and net-banking platforms are testimony to our continued focus on customer experience.

Tell us a little bit about your partnership-led outlet model, under which you are tying up with ex-bankers.
A Business Correspondent led Banking Outlet by partnering with Ex-Bankers, is a model which fosters partnership and entrepreneurship. At Suryoday, strong governance, transparency and superior customer experience are non-negotiables and we believe that these partners, who have been ex-bankers; would help bring in more ideas on servicing and understanding the customer needs. This is a unique business model and we see opportunity and growth through this. However, we are very selective in choosing the right partners.

How much capital have you raised so far? In which areas are you deploying it?
Suryoday’s net worth is Rs 637 crs and we are in the process of raising around Rs 250 crores of additional capital. This will enable the bank to continue maintain a healthy capital adequacy. We will invest in technology and network expansion as well.

Tell us about your new product pipeline. What are Vikas Loans and Shopkeeper Loans?
In FY19 we launched various loan products like commercial vehicle and equipment loans with and without OD facility, secured business loans, loan against card receivables, shopkeeper loans and SME loans. On the deposits side, we launched Non-Resident FD and Corporate Salary accounts, government schemes like NPS and third-party insurance products such as flight delay insurance, hospitalisation insurance for MFI customers, beyond the usual products like life and general insurance.

The product in immediate pipeline is a self-operated deposit account for minors, which we should be rolling out in the Q1- FY20.

Vikas loans is a focussed loan product, designed to assist in upscaling the business activities and operations of our microfinance customers who have been with us for two or more loan cycles, by providing higher loan amount towards working capital with both disbursement and monthly repayments being in cashless bank transfer mode whereas the shopkeeper/small business loans are targeted towards small retailers looking for a quick working capital to be deployed in expansion of an existing business.

What are the key risks to the industry, and to your business at this stage What pre-emptive measures are you taking to tackle them?
One of key risks for the industry is credit risk, since the market continues to be influenced by aggressive players amidst growing demand. These factors may lead to incremental easing of underwriting parameters and thus possibly become huge risk to the sector itself. At Suryoday we are being cautious in retail lending with a stringent credit mechanism in place even if that means losing out on a few good deals. A strong compliance and credit culture is a must for creating a strong and respectable banking institution.

Lastly, do tell us about some of your business goals for the upcoming fiscal.
The highest priority for the next financial year is to mobilize savings from most of the existing 1+ Million microfinance customers followed by diversification of the overall loan portfolio with the share of microfinance loans going down to around 60% from the current levels of 85%.
We want to become a complete banking partner in our inclusive finance customer segment while diversifying into specific segments for retail assets and deposits.