Magma Housing Finance, which has been growing at nearly 17-18 per cent during the pandemic, is looking to grow by nearly 20-25 per cent in 2021-22, backed by a steady rise in demand.

The company, which is a wholly-owned subsidiary of Magma Fincorp Ltd, is looking to ramp up distribution and introduce a slew of digital initiatives, including artificial intelligence and machine learning, to improve efficiency in terms of customer acquisition and enhance productivity while bringing down costs.

According to Manish Jaiswal, MD and CEO, Magma Housing Finance, the company has reached the pre-pandemic levels of normalcy, both in terms of disbursals and collections. It expects its growth rate to be accelerated moving forward.

“Looking at our track record even in pandemic times we have grown by 18 per cent, so we are looking to grow substantially higher. We will close this year on a strong note and the momentum for next year; given the economic reforms announced by the Finance Minister and with the GDP growth, we expect to grow by around 20-25 per cent,” Jaiswal told BusinessLine .

Magma Housing, which operates in the low-ticket segment of around ₹10-12 lakh, has been witnessing an improvement in collection efficiency. The collection efficiency in bucket 0 is back to pre-pandemic levels at 98.8 per cent in January. Overall collection efficiency, which used to be 97-98 per cent, is currently around 95-96 per cent. The company is hopeful of improving its collection efficiency to 97-98 per cent in the next three-to-six months.

“The segment is on revival path so we are positive about the growth,” he said.

The Adar Poonawalla-controlled Rising Sun Holdings had recently announced that it would take a 60 per cent stake in Magma Fincorp by subscribing to a preferential issue for ₹3,456 crore, triggering an open offer for 26 per cent.

Even before Poonawala’s investment was announced, Magma Housing had informed the stock exchanges and had circulated a memorandum through merchant bankers for a capital raise of ₹400-500 crore.

Digital initiatives

The company, which went completely digital during the pandemic, is now betting big on AI and machine learning to use the data points to stress test its customers and analyse the data structure to get an overview of the customer across the loan lifecycle.

Nearly 87 per cent of the company’s files are now processed digitally. This not only helps it to to get business, but also be asset light as there is no need to push people to come to office or branch every morning.

“We have embarked on our journey on AI and tied up with a Bangalore-based company. The initiative will help improve the ability of field team to serve customers efficiently, take prompt decisions, and get even more efficient and productive, so we can take higher quality decision at a faster convenience rate both for customers and employees,” he said.

On the cost front, the company’s OPEX (operating expenses) to AUM, which was at 3.6 per cent, has already come down to 3.2 per cent. The company aims to bring it down further to 2.8-2.5 per cent in the next two to three years by deploying these tools and technology.

“Our productivity right now is 2.3 customers per frontline officer per month; this can further improve by 10-20 per cent in the next two to three years once we are able to put to use this AI and ML,” he said.