Hyderabad-based Margadarsi Chit Fund Ltd has indicated that it is in the early stages of evaluating opportunities to become a small finance bank (SFB) or a non-banking finance company (NBFC).

“We are still debating the opportunity among ourselves. But we know how to run a financial institution, and recover and manage public money,” said Sailaja Kiron, Managing Director, at a press conference here on Monday.

High recovery rate

Margadarsi, founded by Ramoji Rao in 1962, has operated at thin margins over the years. It enjoys a recovery rate of over 95 per cent and has a network of 105 branches across Andhra Pradesh, Telangana, Tamil Nadu and Karnataka.

It has an employee force of 4,300, of which 700 are located in the head office.

Its client base is more than 50 lakh and the company sees an opportunity to double its current turnover of ₹10,000 crore by 2025. These aspects make it a good fit for an SFB, says Margadarsi.

Explaining the parameters that helped Margadarsi stay healthy over the decades, Kiron said about 60 per cent of the payments were disbursed in the same month and almost 30 per cent were made within 15 days. “We are the best when it comes to disbursing payments by any standard,” she said.

Kiron said Margadarsi plans to add more branches and introduce a ₹1-crore chit fund scheme. “About 20 per cent of the turnover is in bigger value trades. Also, we have a huge subscriber base in ₹5-20 lakh chit groups,” she added. On expanding to other regions, she said the four southern States presented enough growth opportunity for the next few years.

Demonetisation challenge

While subscribers faced challenges during the demonetisation phase, most of them got accustomed to it shortly and moved to cheque payments, recalled Kiron.

“Our cheque collection has been rising since demonetisation. It rose to 60-70 per cent from the earlier 45 per cent. In Tamil Nadu itself, we have 80-90 per cent cheque collection,” she said.

Published on June 25, 2018