Interview with TruCap Finance Ltd

NBFCs like us have a big role to play in addressing the credit gap for MSMEs through speedy disbursals of gold loans at affordable prices, states Rohan Juneja, MD and CEO, TruCap Finance Ltd. 

What is your perspective on the gold loan market in India?

Over the last few decades, the gold loans industry has grown significantly to become an essential part of the organised lending ecosystem. The value of bank loans secured by gold jewellery has increased from around Rs 34,000 crore at the end of March 2020 to nearly Rs 61,000 crore in 2020-21 - the pandemic's first year. It then increased by another 20% to approximately Rs 74,000 crore by the end of March 2022. These numbers show that in these two years, the gold loan market in India has expanded five times faster than the total personal loans granted by all banks combined.

NBFCs like us have a big role to play in addressing the credit gap for MSMEs through speedy disbursals of gold loans at affordable prices. There is still enormous room for expansion in formal gold lending in multiple markets across the country.

What are the top three strategic objectives of TruCap Finance?

 Financial inclusion: We aim at achieving last-mile financial inclusion through the deployment of technology and capital to power the growth of MSMEs. Our products are aligned with consumer preference and intend to make credit accessible in minimum turnaround time while being aligned to the credit needs of small business entrepreneurs who are not served by traditional lenders. Further, the company prides itself on the highest standards of corporate governance and transparency, which should benefit our borrowers.

Capital efficiency: Our lending strategy is centred on capital preservation, so we evolved a strong risk management framework comprising active participation from business teams, credit, internal risk and collections teams to ensure profitable growth. We signed a substantial co-lending arrangement with the Central Bank of India to disburse gold-backed MSME loans. We are in the process of building similar relationships with other participants in the ecosystem to achieve financial inclusion and make capital more efficient in the service of business owners.

Tech-enabled ‘borrower-first’ lending institution: To this, we have adopted technology solutions and addressed an ever-changing business environment through our progressive customer-centric onmi-channel customer acquisition stack. This includes our sourcing and distribution assets such as Dhansetu and Dhanvarsha complemented by products suited to meet the needs of businesspersons of Bharat.

What are the top 3 growth triggers that have worked well for TruCap Finance?

To begin, our Lending as a Service (L-a-a-S) approach, which results in capital-light growth, is the company's primary growth driver. TruCap Finance has an L-a-a-S relationship with CBOI which is now live across almost all our branches, leading to better earnings and access to cost-efficient capital. TruCap manages to earn higher returns through its L-a-a-S model by deploying specialized skills, deep sectoral expertise and market knowledge to lend underserved MSME customers.

Secondly, our distribution strategy through a multi-channel approach powered with technology ensures last-mile credit coverage, access to new product lines, speed of execution, and strength in collections. Currently, we have 60 experiential centres, a captive sales team of ~200+people in addition to direct selling agent partnerships. These are all well supported by Technology Assets that are differentiated to organically scale customer acquisition and reduce turnaround time.

Lastly, consistent income growth is led by interest-earning quality assets. Our loan book building is strictly within the comprehensive risk management framework resulting in higher collection efficiency and lower NPAs. We have an experienced in-house collection management team comprising specialized legal resources and tele-callers supported by a wide network of arbitrators and empanelled lawyers with expertise in loan recovery.

What is your earnings outlook for the upcoming quarters?

The overall business outlook appears to be very positive. We anticipate a strong business cycle in the coming quarters. The last few months have also provided a significant amount of market opportunity across the products that we have identified, and our business has responded well to these market opportunities.