Chola bets on fintech tie-ups to drive credit growth in SMEs, consumers

Cholamandalam Investment and Finance Company (Chola), the financial services arm of over Rs 41,000-crore Murugappa Group, is betting big on fintech firms to drive credit growth to SMEs and consumer borrowers. The company has entered into strategic partnerships with BankBazaar, Kreditbee and Paytail and is in discussion with another 10 fintech firms.

Vellayan Subbiah, chairman and non-executive director, told a recent earnings call meet that in the last quarter, the company had announced new digital business divisions and digital partnerships, targeted at the consumer and SME ecosystem.

“One is consumer and small enterprise loans, and this division will offer personal, professional and micro and small enterprise loans through traditional direct-to-customer and digital partnership channels. To that end, we’ve entered into three strategic partnerships with leading fintech companies – BankBazaar, Kreditbee and Paytail to scale up this business vertical,” he said.

Chola has made an equity investment in Payswiff, acquiring up to about 72% of the equity capital for Rs 450 crore and Payswiff will consequently become a subsidiary of the company. Payswiff is an omni-channel payment transaction solutions provider that lets business owners accept payments from customers in-store at home deliveries online and on the go using their product offerings.

“The relationship is expected to add value to the existing Chola ecosystem by providing a platform to build new-age SME offering at scale, access to the SME network across the country, and an opportunity to be one of the preferred SME financiers,” Subbiah said.

Ravindra K Kundu, executive director, Chola, said it will be easy for the company to expand fast and use the traditional channel and then move to the partnership channel where the three partners have already been on-boarded and discussions are on with around 10 others.

“Mostly, we are getting into digital lending being done on the market. We and our partners will be working on three types of tie-ups, one is being collected by them or loan originated by then, collected by us and end-to-end collection and underwriting will be done and they will be doing origination,” he said.

The management said the company continues to hold a strong liquidity position with Rs 6,317 crore in cash at the end of December 2021, including Rs 1,500 crore invested in GSec. It has total liquidity position of Rs 10,671 crore, including undrawn sanction lines.

from Banking & Finance – The Financial Express https://ift.tt/76NL5nC