Indian arm of global remittance and foreign exchange company UAE Exchange has built a loan portfolio of R500 crore in three years on aggressive growth, hoping an entry into the banking space.
The non-banking finance company is one of the 72 applicants for small finance banks and is confident its remittance business gives it an edge to build a strong deposit base and cater to small borrowers.
“The most challenging thing for a bank is getting low-cost deposits and for us that is the biggest strength,” V Goerge Anthony, the managing director of UAE Exchange India, told FE.
In 2012, the NBFC had changed its business model to include credit disbursals along with remittances and foreign exchange services. “We have R500-crore loan portfolio as of March end. The portfolio is growing over 100%. Our remittances base is complementing the loan portfolio,” said Anthony. The company plans to grow profits by 20% every year. Anthony added the company already has 400 branches and committed to open 150 branches in unbanked areas if RBI gives licence to start small finance bank operations. “Right now, we have 400 branches and 5,000 agents working for us,” said Anthony.
In 2014, RBI had invited applications for setting up payments banks and small finance banks, and listed out guidelines for the same.
For payments bank licence, about 41 entities applied while for small finance bank applicants totalled 72.
The central bank had stressed that the cornerstone for setting up a small finance bank would be financial inclusion and entrants will have to compulsorily open branches in unbanked areas, meet priority sector norms and take deposits only up to R1 lakh.
Anthony said that given the remittances and payment business, the company has an edge over other existing banks and applicants in terms of technology.
UAE Exchange, the parent company, facilitated a total remittance of $8 billion to India in 2014. The country accounts for less than 10% of the company’s total remittance business.