Things are beginning to look up for Jana Small Finance Bank, with the launch of its banking operations last month.
After letting go of over 2,300 employees last year, the Bengaluru-based micro lender is now planning to recruit more than 500 employees.
Its headcount has fallen to about 14,000 employees, from 16,357, at the end of March 2017.
“Our employee count did go down… We did not recruit in those positions given the stress we faced post demonetisation,” said Ajay Kanwal, CEO and Managing Director of Jana Small Finance Bank, in a recent interaction with Moneycontrol.
He added that the company is adding 500 employees in April. “It’s in process,” he added.
Janalakhsmi Financial Services had got the Reserve Bank of India’s in-principle nod to set up a bank in September 2015. It got the final licence in April last year. But the Ramesh Ramanathan-promoted company waited for nearly a year for the launch due to high percentage of stressed loans on its balance sheet, sources said.
Banking on better collections
The Ramesh Ramanathan-founded microfinance institution (MFI), along with nine other micro lending entities had received a licence to set up a small finance bank under its differentiated banking concept to push credit to smaller borrowers and induce financial inclusion.
Though Janalakshmi Financial Services was the last MFI to launch operations, when it opened shop on March 28, Kanwal is confident to grow his business given the collections are back to 98 percent rate, from below 50 per cent during the demonetisation days.
Kanwal is also leveraging on the company’s reach across over 20 states, and a customer base of 50 lakh. “And digitisation will help us help keep costs low,” he added.
So far, the bank has opened about 20 branches and will extend the tally to 200 by June. It aims to have up to 600 branches by next year. Of these, 25 percent will be in un-banked rural areas, as per RBI’s mandate for small finance banks.
To build its liability book, the bank has launched savings account, current account and, fixed deposits products.
“Next is the affordable mortgage product, followed by consumer durable and two-wheeler loans… We were waiting for the banking license focus on business from SMEs. This will help our customers meet all his needs under one umbrella,” Kanwal said.
He added that the company is also working on products to service its customers looking for home and gold loans. “Only 2 percent of my customers have houses, so 98 percent of my customers will need home loans,” Kanwal added.
Kanwal, who was previously the head of Asean and South Asia operations at Standard Chartered Bank, joined Jana Bank in August last year.
“In a foreign bank, when I worked on the SME (small and medium enterprise) business, the cost was the key. We had to make it affordable for the customer. It’s somewhat similar here. My 8 months you tell me the behaviour and thought process of customers is the same. We need to treat them as consumers and not target for sale,” he said.
Since September, Janalakshmi Financial Services has raised about Rs 1,700 crore capital to grow its business, and also to cover the losses.
Given its large book size, the company – it’s one of the largest MFIs in the country – was severely hit post the withdrawal of 1000 and 500 rupee denomination notes. Due to the cash-driven nature of business, the MFI industry in general suffered huge repayment losses.
Its loan outstanding was about Rs 8,000 crore at the end of February this year, which had shrunk from Rs 12,808 crore as on March 2017.
The new bank is also focusing on familiarising the hithertho MFI staff with banking rules.