Hyderabad-based Sub-K Impact Solutions has been partnering with banks and financial institutions to bridge the gap between financial service providers and customers by leveraging technology. The company is operational in 27 States and serves a customer base of over six million with a range of financial services.
Sasidhar N Thumuluri, CEO & MD of Sub-K tells Telangana Today how the company is ensuring financial inclusion to people mainly in the rural and semi-urban areas of the country.
Sub-K has built its digital lending platform that connects banks to offer relevant products by designing and co-creating products including creating bank accounts for people in rural India and servicing these accounts through business correspondents.
The company along with banks offers district-level microfinance services to provide loans, with end-to-end services from acquisition to the collection. We also share data and data insights with the banks on their specific products and services. We are now building a customer-facing app, which will be introduced in the June-July period this year. We will foray into housing, personal, and vehicle loans and expand ties for gold loans.
We offer agent banking and micro-enterprise loans in Telangana. We have 400-500 agents in the State. We offer micro-enterprise loans in Hyderabad, Nizamabad and Warangal where there is Rs 1-10 lakh loan demand. We disburse on an average loan of Rs 25-30 crore every year. We are negotiating with banks to even bring microfinance into the State. We also introduced gold loans, insurance distribution and mutual funds in the State and the potential is high. We are expanding fast.
Sub-K today, which has been profitable for the last seven years, has partnerships with 12 financial entities- three in microfinance, 3-4 in MSME lending, and six in payment/agent banking. We are filling gaps in technology, distribution, risk-sharing with low-cost structures. The payment business has seen steady growth in India since 2014 because of several Central government schemes, with transactions growing almost 10-fold by 2020. On the credit side, the company operates in microfinance in 10 States, with business growing 25-30 percent every year due to continued demand from rural markets. Credit business took some hit due to the pandemic. We also share risk with banks.
Managing bad loans
We create local communities under the ‘social collateral’ approach to keep bad loans / non-performing assets under check. We have encouraged credit discipline in microfinance. Intentional defaults are minimal. It is often circumstantial. We also provide a lot of financial advice to the borrowers and discourage them from taking loans when they cannot absorb it. The business correspondents who are constantly engaged with the customers can understand and evaluate when the repayment will come.
In agent business, 90 per cent of our business is rural while it is 65-70 per cent in credit business. We have seen that the ticket sizes are lower in rural areas ranging between Rs 30,000 and Rs 40,000. In the urban market, the ticket size is usually between Rs 40,000 and Rs 3 lakh. In rural India we have seen, people are less prone to economic shocks, unlike urban markets.
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