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BW Businessworld

Banking On The Yellow Metal

How Nandakumar changed the contours of the gold loan business and is now set to make it big in the world of microfinance

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What rings in your mind when  you hear of Manappuram Finance? The humble yet effective TV ad featuring actor Akshay Kumar. The Kerala-based Manappuram Finance was one of the first companies to start offering loan against gold. And their target audience has been clearly the less well-to-do customers, who in times of need have to fall back on moneylenders.

“My long-term plan is to see Manappuram Finance emerge as a well- diversified financial services company driven by technology and catering to the credit requirements of the less well-off sections of the society,” says V.P. Nandakumar, MD & CEO of the company.

Under the aegis of Nanadakumar, the company in 1998 entered the gold loan business, which was hitherto dominated by the unorganised sector including money lenders and local jewellers. Prior to this, the company, founded by Nandakumar’s father V.C. Padmanabhan, was focused on leasing, hire purchase and general finance.

Nandakumar, for the first time, injected technology, innovation and modern management practices to this business, which went on to change contours of the gold loan business.

The company has grown from being niche south India- based small outfit to a full blown company with pan India presence. It has over 4,185 branches across 23 States and four Union Territories with assets under management (AUM) of Rs 146.50 billion and an employee count of over 20,000.

Recently, the company forayed into microfinance, vehicle and housing finance, and SME lending.  The move into microfinance was followed by the acquisition of the Chennai-based Asirvad Microfinance in February 2015. In 2013, the going had become tough for Manappuram with a sharp fall in gold price. This  accelerated defaults leading to erosion in profitability. For Nandakumar, the rough patch was an eye opener and he realised that exclusive focus on gold loans would make the company vulnerable to gold price fluctuations and other volatility specific to the industry such as changes in regulatory norms.

That is when Nandakumar decided to diversify and get into new businesses such as microfinance, home loans, vehicle loans and SME lending. Nandakumar has won several laurels and awards for his achievements. He is a managing committee member of industry bodies such as Assocham, Ficci and FIDC.

Gold loans were for long sold as a “one-size- fits-all”

product. The company has been a pioneer in introducing customised offers.  Interestingly, it came up with “one-day interest” where borrowers could to settle their loan at their earliest convenience, even within a day at a time when the norm was to recover a minimum interest of seven days or even a month.

All gold loan customers borrow against gold, but their needs and compulsions can differ. Today, within the broader category of gold loans, Manappuram offers many products with differing maturities and interest rates.

Nandakumar is now gearing up for the future. With the brick and mortar branches becoming less relevant in today’s world, Manappuram even launched Online Gold Loan (OGL) where customers with access to an internet enabled device could avail a loan against the yellow metal anytime from anywhere in the world.

“As of today, we have already travelled quite some distance on this road. Till about four years ago, we were almost exclusively a gold loan company. Today, we have diversified into microfinance, home and vehicle loans, SME lending among others and non-gold businesses contribute nearly a fourth of our total business,” says Nandakumar.

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