In the gold loan category, which accounts for 87% of the standalone portfolio at Manappuram Finance, over 90% customers are servicing their dues without opting for the moratorium, said MD & CEO VP Nandakumar in an interview with Hariprasad Radhakrishnan. He further said physical distancing is here to stay, which would lead to increased adoption of digital and phygital modes of business, adding that the company disbursed loans worth Rs 200 crore online during the lockdown to existing customers whose gold is already pledged with the company. Edited excerpts:
How do you think lockdown 3.0 will be different for your business?
I believe this phase is more like a reboot than a lockdown as most businesses are now allowed to resume operations, albeit with some restrictions on staffing. We started reopening our branches from April 20 and about 80% of our branches are working now. We expect our gold loan business to revert to normalcy once public transport resumes and local travel becomes easier.
What is your assessment of the business impact over the past two months?
In the first phase of the lockdown, all our branches remained closed and therefore, no new customers could be acquired. However, we were able to keep the momentum going with repayments and renewal of gold loan pledges taking place through our various digital channels, including the online gold loan platform. We succeeded in increasing our gold loan portfolio by over Rs 200 crore during the lockdown by relying on existing customers using our online gold loan platform to increase their borrowings against gold already pledged with us. Of course, we were also helped by the sharp increase in gold price that allowed customers room to borrow more against their existing pledges.
What share of your borrowers have opted for the moratorium?
Most of our customers have preferred not to opt for the moratorium as they realise deferment of repayments without waiver of interest would add to their interest outflow. In the gold loan category, which accounts for 87% of our standalone portfolio, more than 90% are servicing their dues. In vehicle finance and other smaller verticals, collections are improving day by day and currently amount to over 40% of the billing. We expect significant improvements once economic activities resume in full swing.
How many of your branches have resumed operations, and are the customer footfalls rising?
About 80% of our branches are now operational. Customer footfalls are still low as public transport is yet to normalise.
Have there been fresh disbursements in the past two months, and when do you expect the credit demand to pick up?
As I mentioned earlier, during the period of lockdown, we were actually able to increase our gold loan portfolio by over `200 crore. It came about because our existing customers made use of the online gold loan platform to increase their borrowings against gold already pledged with us. Going forward, we expect demand to rise further once all restrictions come off and stalled businesses, especially micro and small enterprises, get back on their feet.
With customer behaviour expected to change in the post-lockdown scenario, how are you gearing up for the new business environment?
Physical distancing is here to stay, and the pace of adoption of digital and phygital modes of business is likely to increase significantly. In recent years, especially after the demonetisation experience, we have been investing heavily in deploying technology across the organisation, from recruitment to training, to new products and services. In fact, during the lockdown we could service our customers through various digital modes only because of our strong IT backbone.
