“Despite slowdown, growth of Micro Finance sector to remain strong” Vivek Tiwari, Managing Director, SATYA MicroCapital

 The Microfinance industry is among the few sectors that have remained un-affected amid the economic slowdown. In the current fiscal also, the industry is expected to grow at 30-35%. One of the reasons of the high growth rate is – the industry caters to the underserved and rural households, where the effects of economic changes take time to reach, opined Mr. Vivek Tiwari, Managing Director of SATYA MicroCapital Limited. In an exclusive interaction with Biznextindia.com, he said that Satya is looking forward to raise more funds from the market in the forthcoming FY 2020-21 to scale up its operational base to new territories.

 The growth of the microfinance industry has been robust in the last few years, despite a dim economic scenario. What are your views on this? What’ll be the industry growth rate in the current financial year?

The Indian Economy is going through a phase of economic slowdown, with the GDP growth registering one of the lowest rates of 5.8% in the last quarter of FY19. Any change in the economy whether positive or negative takes time to reach the underserved section of the society. In the same way, devil of economic regression does not immediately affect the poor. Rural households with less than Rs 1 lakh annual income form a major portion of MFIs’ customer-base, economic slowdown directly optimizes the demand which in turn increases the growth rate of the MFI Industry.

As the nature of the loan tenure is short-term and our maximum business comes from provision of financial services, targeting individuals and small businesses who lack access to conventional banking and related services on a recurring basis, we are expecting 30 – 35% growth in the current FY.

What is the current size of micro-loan market in India? Where does ‘SATYA MicroCapital’ stand in this market?

India’s MFI sector has grown at a CAGR of 23% over the past 10 years to reach Rs 2.63 lakh crore at the end of March 2019, despite disruptions such as demonetization, floods & other natural calamities in various states and elections.

SATYA MicroCapital has been successful in creating micro-entrepreneurial opportunities for 4 lakh active clients. With a portfolio of Rs 1000 crore, SATYA has set an exceptional benchmark of being fastest growing MFI within three years of its inception.

What are the challenges you see before the Micro-finance industry? Has growing use of technology made the industry vulnerable or it is an opportunity?

The growth of Indian Micro-Finance Industry has been remarkable, but as an Industry, we fail to either articulate the good deeds on our own or they do not get the fair portion of recognition across existing portfolio of Industries.
The structure of grants’ acceptation needs to be framed deliberately. A well-defined and adopted grants acceptation model will not only help in minimalizing cost of outreach but will certainly boosts the efficiency of the process. No doubt, microfinance institutions have shown impressive growth and have been instrumental in the cause of financial inclusion, but a lot remains to be achieved with these challenges.

Technology has become the key driver of economic growth today. A broad scan, across many industry verticals, suggests that much of the economic growth of the last decade has been facilitated by the existence of strong technology platforms.

As part of the growth stage, Micro-Finance in India is undergoing rapid changes and discovering new challenges. Collecting money from scattered, remote clients, the cost of service delivery transactions in the “last mile”, effective information exchange at the institutional level, and efficient growth management are just a few of the many challenges confronting MFIs. The advent of technology has maximized the speed of information flow and capital, automated transactions, controlled and data analytics, improved customer experience, reduced transactional costs, and increased efficiency and customer outreach. This has, therefore, led Micro-Finance stakeholders to believe that technology can have a profound impact on their operations.

SATYA MicroCapital has been successful in creating micro-entrepreneurial opportunities for 4 lakh active clients. With a portfolio of Rs 1000 crore, SATYA has set an exceptional benchmark of being fastest growing MFI within three years of its inception.

What is the loan growth and client growth ‘SATYA MicroCapital’ eying in the current financial year? 

Having achieved tremendous growth since the previous financial year, we at SATYA MicroCapital Limited are looking forward to achieving 45 – 50% loan growth year on year.

By the end of the forthcoming FY 2020 – 2021 year, we aim to give a socio-economic boost to 8 Lakh households in both rural and semi-urban markets.

You have opened branches in 113 districts in 20 states including Odisha? Any plans to cover the remaining states?

At present having built our presence across 135 Branches in 21 States, we are at a very vital phase in our growth circuit. India being a diverse nation, we are also looking forward to marking our presence in the same diversified manner in every state of the country.

How many of your branches are in rural areas? What is your strategy to reach more unbanked areas?

Currently, we are nationally present across 135 Branches in 21 States, out of which 85% of the total branches originate from rural areas.
For the population that has never used the MFI’s services, that is, the untapped market, key concerns are as listed. The untapped market which comprises of unbanked or underserved segment of the population presents the greatest potential for the MFIs. Identifying the financial needs of this market segment, how are these needs currently being met, what financial services does the segment use, why don’t they use the MFIs services are some of the primary key points which need to figured out in the very first place. Once this is done, we can proceed with connecting with them on ground basis, making them aware of our product portfolio & possible benefits that can be drawn from the same.
Also, among 85% of our existing rural branches serve the unbanked segment of the society, out of which 30-35% of them are the new & unique clients.

In the last two years you have raised funds through NCDs. Any plans to raise more funds from the market in 2020 also? Any plans for an IPO?

We have recently received a funding of INR 30 million which will be utilised in scaling up our operational base to new territories while continuing to develop innovative credit offerings and complete end-to-end business processes.

To channelize the capital infusion towards further expansion across the country and strengthening our lending portfolio, we are looking forward to raising more funds from the market in the forthcoming FY 2020-21, howsoever IPO funding might take 3 – 4 years probably.