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YS Chakravarti, MD & CEO, Shriram City Union Finance Ltd, talks about the newly launched AI Platform for express two-wheeler loans, the trend in two-wheelers and EVs disbursement, collection efficiency, restructuring of accounts, capital raising plans and segments that are looking good from a growth perspective among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:
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Q: You have recently launched a new AI Platform for express two-wheeler loans. Explain it and how can a customer apply? What is the maximum loan that can be applied?
A: This platform that we have launched is an end-to-end paperless loan process for two-wheelers. Simply anyone who wishes to buy a two-wheeler all that he has to do is to go to the website of Shriram City or download the MyShriramCity app from the play store. Then they have to do is to take a photograph of their KYC and a photograph of their bank statement and upload it. This is all that is needed from them. We have built-in a business sole engine on various parameters and while this business engine will calculate the amount eligible for the customer, we also do the KYC check in real-time and probably within 4-5 minutes the customer will be able to see what is his loan eligibility and he can choose whatever vehicle he wants to buy. The upper limit basically depends on his income profile and the loan amount will be decided and communicated to him, so he can actually go to the nearest dealer, show the approval, which we term as token and will have a QR code and show it to the dealer and take the vehicle.
Q: In two-wheelers, we are seeing a growing trend in the electric vehicle segment. Are you seeing the same trend in terms of demand from customers for two-wheeler loans, if yes, have you worked something on that front? Overall, how the credit demand is looking ahead of the festive season?
A: As far as two-wheelers are concerned, it is subdued, so, we will have to see probably as we near the Navratri, till then I expect to see it to be subdued. As far as the electric vehicle is concerned, we have tied up with almost all the major manufacturers. One thing surprisingly, we are seeing demand across segments, it is just not for the urban or middle class or upper-middle-class segment, it is not so, even self-employed like plumber and electrician are now also looking at buying an electric two-wheeler. Of course, the fuel cost is also one factor, why they are looking at electric two-wheeler. So, I think there is a bright future in this country for electric vehicles and we are geared and waiting for that demand.
Q: How much have the disbursements grown since Q1 and what's the outlook going ahead? Also, tell us about AUM Growth this time and what is your outlook on it?
A: In Q1, we did around Rs 4,500 crore of disbursement. In Q2, we expect to probably close with upwards of Rs 6,000 crore and we have already disbursed close to Rs 4,200 crore in the first two months of Q2, so in one more month, I think, we will get to around Rs 6,300 crore or so, versus Rs 4,500 crore of disbursement. We will end up the year with around 10% of AUM growth. The first quarter was a washout, so, we expect that the rest of the three quarters to contribute 10-12% of AUM.
Q: How the asset quality has been? Also, how the collection efficiency has been in July and August and what is your outlook on it?
A: The collection efficiency was around 93% in Q1 which has moved to 100% plus on both July and August, so, we expect it to continue or slightly improve over August. In both July and August, the collection efficiency was 100%.
Q: How many accounts were restructured this time? What's the restructured Book now?
A: The total restructured book is about Rs 170 crore, probably, which is less than 1% of our AUM. And, the book is performing quite well, we have few deep restructurings in four to five accounts but that is nothing to worry about.
Q: Update us on capital infusion and capital raising plans for FY22?
A: Shriram City doesn’t need any new capital and we are not looking at any new capital for at least the next 24 to 36 months. Currently, we are close to 27-28% of the capital adequacy now and I think, we have enough capital to grow for the next two to three years comfortably.
Q: Give us some sense for Q2 numbers. What can we expect in terms of Provisions, NII and Spreads? Will you require additional provisions on the front?
A: As of now, we don’t anticipate any bump in provisions, we don’t see any need to create an additional provision. So, as I told you that we have 100% collection efficiency in July and August and expect it to continue in September, so, no additional provision is needed that is what I strongly believe as of now. The spreads are steady, there would not be much of a difference in Q1 and Q2 numbers on the spread side.
Q: Which is the segment that is providing more optimism from the growth point of view this year and which is the segment that seems to be an area of concern?
A: The gold loan is one where we think that we will be able to do much better as compared to the last couple of years because we have seen good traction for gold loans, now. We are also taking products across the country, we are actually present in only six states as of today, so we are planning that by the end of the year we are taking it across the country through our branches. SME is picking up nicely but we are still conscious of it. I would not call it an issue but we are still a little cautious on SME disbursement, which is about 47% of our book. Seven sectors, we are still avoiding and we will go slow for another quarter or so and then we will look at some of the sectors we have been avoiding for the last one year.
Q: What is an update on the merger of Shriram Capital, SHTF and SCUF?
A: I have no updates on that because nothing has been set as of now, discussions are going on but there is nothing has reached a stage where I can give a definite answer