Jana SFB upbeat on ‘collection efficiency’ backed by steady improvement in repayments

Jana Small Finance Bank expects its collection efficiency to improve to 97-98 per cent by November this year backed by a steady improvement in repayments.

According to Ajay Kanwal, MD & CEO, Jana SFB, the collection efficiency was close to 87 per cent in September and is expected to improve to 90-92 per cent in October.

“Covid has proved to be a challenge for all of us, and now the main task would be to stabilise the book, and by that, I mean taking collection efficiency back to 99 per cent. On the overall book level, we have reached a collection efficiency of 87 per cent till September and hope to be 90-92 per cent by October and 97-98 per cent by November. By the year-end we will be back to normal (around 99 per cent),” Kanwal told BusinessLine .

Jana, which has close to 70 per cent of its business coming from the microfinance segment, does not expect huge demand for restructuring from its customers.

The demand for restructuring would be negligible in the microfinance segment though there might be some demand from small businesses. The overall need for restructuring would be around two-to-three per cent of its customer base, which stands at close to 40 lakh as in October.

Business Growth

The microfinance industry, which had got challenged post demonetisation with its collection efficiency dropping down, however, witnessed a revival and had brought its NPAs to close to 1.2-1.4 per cent on an industry level. However, while the advances were growing, MFIs and SFBs had to face a lot of challenge on the liability front mainly post the IL&FS crisis.

But despite being a new SFB, Jana, which commenced operations in March 2018, managed to garner deposits to the tune of Rs 10,000 crore in the first two years of its operations.

Even during the pandemic, Jana has witnessed a “high single-digit growth” in deposits over the last six months as Covid has induced saving habit among consumers. The bank is expecting a 10-15 per cent growth in business, both advances and deposits this fiscal.

“Even while we have seen a high single-digit growth on deposits, on the asset side, we have remained flat. In the next six months we expect both our advances and deposits to grow by 10-15 per cent,” he said.

The microfinance industry is seeing a pick-up in credit demand, however, the pace of growth is still low. Things should go back to “normal” in terms of disbursement in the MFI segment by December.

The SFB is comfortable on the liquidity front and is adequately funded to take care of its growth needs, he added.

Jana is planning to convert around 100 of its asset centres into bank branches, thereby taking the total network to 600 by March 2021. This apart, it also plans to open around 10-15 additional branches in new geographies including some in the Northeast and Gujarat.

The bank, which has already launched affordable housing loan, small business loan and gold loan to facilitate its customers who are primarily from the middle to bottom end of the pyramid, is looking to launch a two-wheeler loan to enhance its bouquet of offerings. It also plans to add consumer durable loan moving forward.

“We wanted to be a full services bank for the middle to the bottom end of the pyramid. In the last two years, roughly around 30 per cent of our book is in the non-microfinance business which is fully secure. If we diversify it works very well when there are challenges,” he added.

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