‘Business was at a standstill during lockdown; but bounce back was sharp

Suryoday Small Finance Bank has the second highest three-year AUM growth rate of 64 per cent in fiscal 2020, as per the company ’s DRHP. It has a loan book size of Rs 4,000 crore. As of July 31, 2020, it operated 482 banking outlets spread across 12 states and union territories in India. The bank has a growth plan in place and to support this, an IPO will soon be floated.

In an interview, R Bhaskar Babu, MD and CEO of Suryoday Small Finance Bank shared with FPJ ’s Jescilia Karayamparambil and R N Bhaskar the journey of the financial institution. Edited excerpts:

• How big are you now?

In terms of loan asset size, we are Rs 4,000 crore.

• How many people do you employ?

We employ around 4,500 people as of December end 2020.

• What are the services the bank offers?

We have started micro home loan, with upper limit of Rs 10 lakh.

We also offer legal advice to home buyers. By providing legal advice, we are making the whole process easy which is a value add that we offer.

In the whole process, the customers should not feel that they are short changed and should instead feel confident. We encourage our customers to take Pradhan Mantri Jeevan Jyoti Bima Yojan. We do not get any payouts for that but it is more or less like a cost that we incur. We do this mainly because as per our historical data we found that 1 per cent or less of our customers or their family members especially spouses die. Out of the 10 lakh customers, we process close to 7,000-8,000 claims every year. Thus, we encourage them to take the insurance and process the claim and credit their account with Rs 2 lakh. While you cannot mitigate what they have gone through, the financial benefit means a lot to these households.

We are also putting out natural calamity’s insurance for as low as Rs 50. The insurance companies do not give us any payouts for this task but we still do it. The intention is to give all these solutions under one umbrella. So, the customer feels confident.

• How many zero-balance accounts or Jan Dhan accounts have the bank opened?

It is a zero-balance account for which we give OD facility and a debit card. We call it the sunrise account. It is around Rs 3.5 lakh as of December. So, it is a Jan Dhan account from a minimum balance account point of view.

• What is cost in terms of customer acquisition for the bank?

Our operating ratio to our value of asset size is 5 to 6 per cent (historical number). But given the unit size of servicing our customer, it will be more per unit of loan or saving. This is because the balance of these customers are far less in terms of account.

To meaningful service these customers, we offer doorstep service. This makes the process a lot more expensive compared to doing it through digital means.

Along with this, the BC network is getting wider and wider. There are around 10 lakh CSPs and at that point people can walk in at any point of time.

• What has the impact of COVID-19 been?

Business was at a standstill for a period of six months from April to September. After that, it started opening up. At the overall level, the customers did get impacted. Maharashtra which is our core market did get impacted as people were unable to travel for work. But the bounce back was pretty sharp.

During this time, we realised that for contactless opening of an account, we cannot use biometrics. So, we started opening accounts using iris. These accounts were opened in a matter of minutes and not hours. During this time, over one lakh of our customers paid us through digital means. But later it tapered off.

• How much are you planning to raise via IPO?

As per our DRHP, the shares on issuance is 2 crore shares — part will be pre IPO.

This IPO will not only enhance our net worth but also support our growth plans.