Poonavara Fintech Ltd. Ltd. aims to double headcount in Indian companies shadow banking Expand new product lines to increase assets to 1.5 trillion rupees ($17.7 billion) over the next five years.
this non-bank financial companies controlled by billionaires Adar PoonawallaCEO Arvind Kapil said it plans to add six retail-focused lending businesses to its existing portfolio in the next four to six quarters.
According to Kapil, who took over the top job in June, the new business includes loans for buying gold, second-hand cars, shop owners and education. The company plans to add nearly 400 branches next year, up from about 100.
Poonawalla Fincorp is expanding despite slowing credit growth and the Reserve Bank of India stepping up scrutiny of the shadow banking sector by raising provisions to reduce risks. Poonawalla shares plunged in October after it reported higher provisions for bad loans and higher operating costs in the latest quarter.
India’s credit growth slows sharply this year |
Kapil expects operating costs to fall by the end of the financial year, especially relative to assets, as the bank expands into new markets. A wider reach would also reduce risk, he added.
“If you want to create a solid franchise with a solid foundation, I think it’s very important to have nine to 10 retail products that target a diverse customer base so that you can really mitigate risk,” Kapil said. The company will focus on Loans are provided to salaried employees of top 300 companies in India.
Kapil, who most recently headed the mortgage business at HDFC Bank Ltd., has spent the past six months assembling his core management team, which includes unit heads from his previous bank as well as Yes Bank Ltd. and others.
“The experienced team has the experience of building and running large businesses,” Kapil said, adding that he expects headcount to double from 2,500 in the next three quarters as the bank implements its new strategy.
Shadow banking stocks underperform indices this year
Poonawalla shares have largely recovered from an earnings hit that Motilal Oswal Financial Services Ltd. described as a “kitchen sink” quarter under a new management team.
Analysts said the pace of change was “too fast and too violent” and the bank could see profit margins fall and operating costs rise in the coming quarters. Still, Motilal Oswal said the measures are “in the right direction to make the franchise stronger” and maintained a buy rating on the stock.
Kapil said shadow banks are also evaluating building wealth operations. Kapil added that Poonawalla will first consider distributing third-party investment products through its network and then explore producing its own investment products.
The company, which changed its name after Poonawalla acquired Magma Fincorp Ltd. in 2021, is open to more acquisitions, he added. “However, in the short and medium term, we plan to grow the business organically,” he said.
During the pandemic, Poonawalla became a household name in India. Their company, the Serum Institute of India, is the world’s largest vaccine maker and emerged as one of the top manufacturers of the AstraZeneca vaccine and a supplier to Covax, the World Health Organization-backed effort to ensure fairness around the world. promotion initiative.
“Today, the name Poonawalla may be synonymous with life-saving trust, in which almost every household believes,” said Kapil. “As a financial company, we have a great opportunity to build that trust and exploit it at a fine-grained level, especially in retail loans side.
