Financial Daily from THE HINDU group of publications
Sunday, Nov 16, 2003
Financial Daily from THE HINDU group of publications Sunday, Nov 16, 2003 |
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Money & Banking
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Events `Finance cos must focus on asset management' Our Bureau
Kolkata , Nov 15 THE exit of a large number of non-banking financial companies (NBFCs) is primarily because of their inability to convert the challenges into opportunities, and not able to change track fast. Speaking at the technical session on `Challenges and opportunities for non-banking financial intermediaries (NBFIs)' at the 19th National Convention of Federation of Indian Hire Purchase Associations (FIHPA) here, Mr Sanjay Chamria, Managing Director of Magma Leasing and former president of HPLA, said each challenge brings with it an opportunity, especially if one was a serious long-term player, and the NBFIs should do what they are good at; asset management. Banks were good at liability-risk management, but for the NBFCs liability was not so much an issue, as the biggest challenge for the finance companies today was to strive for growth in a competitive environment through quality asset management. Urging the serious players to introspect on the urgent need for effective risk controls through installation of proper systems, Mr Chamria said "we need to reorganise ourselves, if competition from global companies has to be met, as this is the only way to grow". Pointing out that retail financing was today a booming business of over Rs 40,000 crore, and which was also being eyed by banks, he said the biggest challenge for NBFIs was how to retain customers. He said the bane of the industry today was zero innovation and only commoditisation, with little or no attempts at financial engineering According to Mr V. Ravi, CFO, Mahindra & Mahindra Finance, the risks involved in retail asset financing was almost like the "mother of all risks". Huge opportunities existed in the vast rural markets which perforce have to be penetrated. He also stressed on the importance of creation of large customer database across different product groups, if customer side of the business has to look up. Such a database, he felt, besides networking with customers could also be leveraged by way of a fee-based income. Mr T.T. Srinivasaraghavan, Managing Director of Sundaram Finance, said the future was the smaller NBFCs, and the key was to put in place an effective credit delivery system across customer segments and geographical boundaries. Citing the huge success achieved by the housing finance companies, he said the NBFC sector today was confident of facing up to the challenges through "empathy and understanding".
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