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Equitas in Latin word means fair and transparent, and Equitas Small Finance Bank (SFB) that draws its name from, wants to live it. One of its key agendas is the upliftment of society through the creation of social capital.
No wonder, 90 per cent of the customers are first-time bankers, says Murali Vaidyanathan, Senior President and Country Head – Branch Banking, Liabilities, Products and Wealth.
This is quite unlike a traditional bank where 70 to 75 per cent is of repeat customers, said Vaidyanathan, who was in Thiruvananthapuram recently on the occasion of the opening of the SFB’s first branch in Kerala.
“This means we create a lot of new banking customers. SFBs do play a very instrumental role in expanding the customer profile,” he told BusinessLine.
Social capital, an imperative
Just like financial capital, social capital, too, has become imperative these days, he said. So the SFB has created a business model in such a way it becomes ‘hope spreader and hope enhancer’. It has now been able to consolidate the liability segment much faster than earlier.
“Because we’re now telling customers that your money is well-deployed and it’s not as if they’re giving me money at a discount. We’re paying a higher interest because I’m lending at a higher but competitive rate,” Vaidyanathan explained.
Large field staff
The SFB not only lends but also monitors customers. That’s why it has a large field staff, a model that Vaidyanathan says is not easy to replicate. The field staff sits with customers, making them pore through the cashflow trends to adjust better.
“We call this advisory touch as relationship management. This applies to our liability customers too. The mission is the upliftment of society through a banking opportunity by handling two different strata of society and most importantly pumping back the profit in the form of CSR,” Vaidyanathan said.
Higher CSR outlay
“In fact, we set apart as much as five per cent of our quarterly profits for CSR. This requires high performance at our end to be able to lend to the underprivileged as envisaged during Independence and reaffirmed through bank nationalisation. We want to cater to that segment whose unmet demand adds up to close to ₹25-lakh crore,” Vaidyanathan said.
It is also the vision of Founder and ex-CEO PN Vasudevan who feels giving back to society is the purpose of business and ‘banking beyond’ is the future. Branches such as in Thiruvananthapuram will look to raise resources through relationship management by leveraging digital products that compare with the best, and on-lend to institutions and individuals or as microloans, the bank said.
Women skill development
Another major societal intervention is skill development for women. The SFB has so far skilled six lakh women, imparted cottage industry skills, and provided money to set up small businesses. It also runs eight schools in Tamil Nadu where fees are subsidised and admission is limited to those whose parent’s annual income is below ₹2 lakh.
The SFB is even building a 350-bed (may go up to 500) cancer hospital in Chennai, close to Tambaram. It runs an initiative for the sake of those languishing on pavements. The bank claims that it has so far conducted 20,000 job fairs to provide jobs at no cost for the underprivileged.
Rediscovering banking
On the liability side, the SFB has close to three million customers and on the asset side, 3.5 million. Two million customers on the asset are women from rural and semi-urban areas. This entire journey is rediscovering banking with the original mission that the Indian banking industry was set up for.
So much so, the portfolio that used to be skewed towards 60 per cent unsecured and 40 per cent secured has turned over in the last three years to 82-83 per cent secured, Vaidyanathan said. The six-year-old SFB has 830 branches with a pan-India presence across 17 States. Overall growth has been pretty decent, with the SFB now boasting one of the best CASA ratios, not just good net-interest margins.
Credit, an assessment model
“I keep saying credit is an assessment model. It is not a product or programme. That’s the model that what we want to spread so that financial inclusion, women empowerment and social capital creation turn into a reality. But it also becomes imperative to invest in people with an understanding of the local market and culture,” Vaidyanathan said.
He added, out of the 18,000 employees, 13,000-14,000 are on the field with 10,000 deployed on the assets side and the rest for liabilities. Equitas SFB has a developed fantastic artificial intelligence and machine learning methodology to serve these business needs.
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