True North-backed Fedbank Financial Services (Fedfina), at a board meet on Monday, has elevated its chief executive officer Anil Kothuri to the board of the company and designated him the managing director (MD) of the firm. Kothuri will also hold his current designation as CEO.
Prior to joining Fedfina, Kothuri was with Edelweiss Retail Finance as president and chief executive officer where he spearheaded mortgage loans, small and medium enterprises (SME) finance, small ticket home loans and rural finance divisions.
Apart from Kothuri, Fedfina board will now consist of six members. It will consist of two directors from Federal Bank, one from True North and two independent directors.
It was first reported in May that Federal Bank will sell up to 26% stake in Fedfina to a fund managed by True North. In October, the bank indicated True North can further acquire a stake up to 45% of the share capital of the firm. In November, the board of Fedfina approved the allotment of over four crore shares corresponding to 17.40% of the share capital to True North Fund VI.
Kothuri told FE that Fedfina had drawn up the plan for the next five years and was looking to take the portfolio size of the firm from around Rs 1,500 crore to Rs 15,000 crore in the next five years. The firm will also consolidate its existing products and will add two new products — home loans and unsecured lending.
“We will increase the branch strength from the current 120 to about 500. Currently, we are present in the four southern states of Andhra Pradesh, Telangana, Tamil Nadu and Karnataka, and we will further deepen our presence there as well as foray into western India and parts of northern India,” he said.
“If you look at most of the lending that has happened in the Indian retail space, it caters to prime borrowers and salaried borrowers in the metropolitan regions. That segment is more than adequately served. Just below that is the hugely under-served segment of customers who are in productive jobs or are entrepreneurs but don’t have the ability to evidence their income with profit and loss (P&L), balance sheet or the conventional way that large non-banking finance companies (NBFCs) would like. That is the segment to which we extend gold loans, loan against property and that is also the segment to which we want to start extending home loans.”
Fedfina, a wholly-owned subsidiary of Federal Bank, is looking to introduce home loans from January 2019 and to commence its unsecured lending from the next financial year. Currently, its average ticket size for gold loans is Rs 60,000 and for loan against property, it stands at Rs 15 lakh.
It is present in seven states and is looking to expand to three more. It claims its gross non-performing assets are below 1%. “In fiscal year 2018, we made a net profit of Rs 38 crore and in the first six months of FY19, we are at about Rs 18-crore net profit. The net profit for FY19 will grow as there has been an increase in equity and this extra equity will make more money,” Kothuri said.