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Cover Story

“Our Lending Programmes have not been Standardised”
Ramesh Iyer, MD, M&M Financial Services, talks to Mona Mehta of B&E on The Company’s results and how they Plan to Enhance The Scale and Scope of Their Services
Issue Date - 26/05/2011
After a rich experience in Ashok Leyland, Ramesh Iyer has been instrumental in driving the vision and growth of M&M Financial Services since inception. He is also working on the policy end as a member of the core committee on the finance industry development council. He talks to mona mehta on the company’s strategies for enhancing its value proposition in India.

B&E: M&M Financial Services has achieved a 123.65% growth in mcap for the fiscal year. What have been the main drivers and how far have you taken your penetration into the rural market?
Ramesh Iyer (RI): The company has been focusing its growth capitalizing on the trends emerging in the semi-urban / rural markets. The rural cash flows have been very buoyant, which have helped the company to improve its disbursements. Besides that, we have been able to substantially improve the quality of our assets and bring down the NPAs. During the year FY 2010-11, we have added close to 88 branches, thereby increasing our penetration into deeper pockets. In order to be able to provide improved service standards, we have also added close to 2,000 employees during the year. With our current strength of 547 branches in our network coupled with the 1.5 million customers that we have serviced so far, we are very optimistic about our growth.

B&E: What are the new growth areas that you are looking into in order to expand your business?
RI: In FY 2010-11, we have enhanced our focus towards financing of commercial vehicles, construction equipments, as well as, pre-owned vehicles. We will continue to focus on these products while improving our market share in the UV segment, tractors, as well as, in the cars segment.

B&E: What changes do you see in the demand for utility vehicles, tractors and cars in rural India? How is M&M Financial Services looking at tackling the challenge?
RI: The rural cash flow has been very buoyant with flows coming from multiple streams through better deployment of asset and labour in infrastructure projects, higher yields and higher crop prices have all contributed to continuing demand for UV, tractors, cars, et al. We are a significant player already in these segments and with our reach and customer friendly financial product designs, we are hopeful of increasing our market share.

B&E: Differentiation in terms of customer service is becoming exceedingly important in rural markets. How is M&M Financial Services looking at enhancing its customer service strategies for vehicle financing?
RS: We have introduced innovative technology solutions so as to increase customer service and comfort. The handheld device which is one such introduction through which customer servicing is provided at the customer door steps. With our increased reach and increase in number of employees we have also been fully geared to enhance customer service standards.

B&E: There is a greater concern about minimising costs in rural lending, reducing the defaults and also maintaining credit profiles. What is your experience in this regard?
RI: The difference (in cost of borrowing with respect to the urban market) is about 1% to 2%, which is mainly to accommodate the operating costs. Our credit officers and business executives meet the customers in their place of residence or business and understand their requirements of credit, as well as explain the various operational aspects of the product. Customer cash flows are drawn by our executives and based on the internal matrix, which has been developed by us over a period of experience. Our lending programmes are based on customer profiles, product application and rural cash flows. Our finance products therefore are not necessarily standardized, but are many a times designed to suit the customer requirement.

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