Essel Finance Business Loans Limited: catering to the financial needs of Underserved

Most of the new businesses and start-ups do not get the financial patronage of big players. Businesses are either bootstrapped or avail loans from the financial institutions to get started. The financial services were started to penetrate and serve the retail community of the country. Essel Finance, a registered Non-Banking Finance Company (NBFC) with the Reserve Bank of India, provides innovative financial services to Micro, Small and Medium Enterprises (MSME). The group has the vision to cater to the underserved population of the country. Essel Finance offers a diverse range of services across corporate finance and retail sectors. The company strives to build sustainable wealth and relationships for its clients and stakeholders by investing in prudent human capital, extensive research and leveraging its vast global networks. The firm's foresightedness into client solutions is redefining the financial services and promoting expansion. The firm is promoted by the Essel Group, a USD 10-billion conglomerate with a strong foothold within entertainment, media, packaging, infrastructure, education, precious metals, and technology sectors. The group with its 10,000 plus employees, has had first-mover advantage in almost every sector and is growing in strength each day. In a true tone, Essel Group has rooted itself as a Global brand with an integrated management system that speaks volume about its quality and dexterity.

To gain more insights, we reached out to Sabyasachi Rath, Executive Director & Chief Executive Officer- the dynamic leader who hails more than 20 years of experience in the entire spectrum of lending to Large Corporate, Small &Medium Enterprises (SME), Real Estate (Debt & Equity Funding), Retail Assets (Mortgages, Vehicle, Personal Loans) from Business development, Policy formulation, Process automation to Credit underwriting and Monitoring of portfolios. In his last assignment, Mr Rath was associated with Maybank Indonesia as Country Risk Officer and Executive Vice President. A start-up specialist, he has spearheaded businesses from scratch in various capacities in organizations like Maybank, CRISIL, Dhanlaxmi Bank, Centurion bank of Punjab, Fullerton and Citigroup.

Edited Excerpts

Essel Finance needs no introduction. What has been the secret behind such treasured endeavour?

Our emphasis on the MSME sector lauded as the 'engines of growth' for India — makes us stand apart in the business lending space. Government initiatives like 'Make in India' have created a lot of commotion in the industry. However, the access to finance in this segment has often been limited. We aim to cater to this underserved segment with highly specialized financial solutions with the focus on greenfield micro-entrepreneurs, small and mid-segment growth-oriented enterprises.  Under the micro enterprises, the 'Non-Corporate Business Segment' lies at the bottom of the pyramid. These are individuals who run household businesses and do not have access to formal banking credit. We specialize in understanding and assessing their credit need based on non-documented income. We are contributing to society and nation by the financial inclusion of informal segment.

What is your current business model?

We provide business loans tailored to the needs of the client for a commercial property purchase or investment in plant and machinery, corporate-backed supply chain solutions, or that requires discounting on receivables or lease rentals. We help enterprises reach their true potential by ensuring a steady flow of funds. We currently operate on a branch network model and are gradually integrating technology platforms to ensures a secure lending space.

With such a fast-growing team, how do you make sure everybody stays motivated and how do you support the corporate culture?

We are growing exponentially in every aspect with enough growth opportunities within the organization. This also provides us with an opportunity to learn, innovate, accept challenges and prepare for bigger things. Additionally, incentive, phantom stocks, and R&R programs keep the employees motivated.

Who are your peers?

Capri Global, Magma Fincorp, HDB Financial Services, Capital Float, Intelligrow

What are the big achievements?

Our firm is a pioneer in small tickets loan against property and catering to the informal income segment. Our growth story has been phenomenal in this segment, and competitors have copied our products.

What are the challenges that the brand currently faces?

We are facing a major challenge in the distribution model. Our target audience resides in Tier 2 and Tier 3 cities, so we require an open brick-and-mortar structure to pressurize further the market penetration along with Digital distribution. A perfect model is an integration of both to a cost-efficient and value-based financial services company. We are working towards more adaptive technology which can perfectly blend with the touch and feel and give a world-class experience to our customer.

The road ahead?

We are growing at a pace of 50%. We plan to be within the top ten financial conglomerates in the next five years catering to the retail space and launch at least four to five technologically enabled innovative products to propel the growth to the next level. We aim to grow three-fold and be a 1000 crore NBFC by differentiating and adopting disruptive technology and products. We are coming up with new and innovative products under the secured space to help customers in customizing their financial needs. NBFCs are taking care of the credit needs of the Industry, while the PSU banks are going slow. As per a recent report by CRISIL, the NBFCs, which had a share of 13% in overall credit in the country, will grow to 19% by 2020. The fastest growing in the NBFC segment will be Housing Finance Companies followed by retail NBFCs like us.

Tell me about when you failed. How did you overcome?

My idea of overcoming challenges is through team building, trust, effective sharing of resources, building a team with right capabilities, learning from failures and quickly build onto it, and having multiple contingency plans.

What was your journey like to get where you are?

In exciting journey as an NBFC, we learned and changed our approach towards product and customer segments that we catered to. This gave us the first mover advantage under a controlled environment and managing the portfolio risk with growth.

Tell me how you've approached change.

I firmly believe in Geeta's quote that ' Change is the only constant in life.' Change can come in any form. The important thing is managing. Let's consider the technological disruptions that are happening in Banking and Financial space. You have to constantly innovate and upgrade to be with your customers, give superior service, be risk compliant, adapt to the highest level of regulatory and corporate governance. We, at Essel Finance, manage the change through dynamic teams, adoptive teams, being proactive in anticipating changes, brainstorming, encouraging ideas and debates, challenging the norms.

What advice can you give entrepreneurs who want to venture into the same domain in the future?

NBFC and HFC is a heated space. There are many companies, including big corporate houses, who have ventured into this space. The amount of capital commitment is very critical for the growth of any start-up. Additionally, technological spend, robust policy and processes, strong collection mechanism, innovative product ideas and finding a niche for yourself is the key success factor.