Lender Plans Workforce Growth and New Loan Products

Poonawalla Fincorp Ltd., under CEO Arvind Kapil, has unveiled an ambitious plan to double its workforce and expand into new lending areas over the next five years. The company aims to grow its assets to ₹1.5 trillion ($17.7 billion) by diversifying its product offerings and significantly increasing its branch network. Despite facing challenges like slowing credit growth and tighter regulations, this strategy aims to solidify its market position and meet growing customer needs.

Expanding Loan Offerings

The company plans to launch six new retail-focused lending products within the next four to six quarters. These include loans for gold, used cars, shopkeepers, and education, targeting salaried employees from India’s top 300 companies. This diverse portfolio is expected to spread risk and provide stability to the business.

Poonawalla Fincorp CEO, who joined in June, has brought in an experienced management team to lead the transformation. He emphasized that having multiple retail products catering to different segments is essential for creating a solid and resilient business foundation.

Growing Physical Presence

A key aspect of the expansion is the addition of 400 new branches, taking the total count to 500 by next year. These branches will cater to customers across small towns and cities, complementing digital offerings to enhance accessibility. Loans against gold are expected to drive much of the demand in these regions.

This hybrid approach combines physical infrastructure with technology to ensure better customer reach while optimizing operational efficiency.

Challenges and Recovery

The company’s expansion plans come amidst slowing credit growth and increased scrutiny by the Reserve Bank of India on shadow banks. In October, the lender’s stock took a hit after reporting higher provisions for bad loans and rising operating costs. However, Kapil remains confident that operating costs will stabilize by the end of the fiscal year as the company scales its operations.

Market analysts, while acknowledging the aggressive pace of change, have praised the management’s steps as necessary for building a stronger financial franchise. Short-term challenges like margin compression and elevated costs are expected to give way to long-term gains.

Capitalizing on Trust

Kapil highlighted the opportunity to build on the trust associated with the company’s brand, which gained significant recognition during the pandemic. This trust serves as a strong foundation for expanding into retail lending, which remains the primary focus of the current strategy.

The lender is also exploring a wealth management business. Initially, it will distribute third-party investment products through its network and may later develop its own offerings.

Plans for Sustainable Growth

While the company is prioritizing organic growth in the short to medium term, it is also open to acquisitions if suitable opportunities arise. The firm’s rebranding in 2021 marked the beginning of its transformation into a retail-focused financial institution, and its current plans build on that foundation.

Building for the Future

With a target of doubling its workforce from 2,500 employees in the next three quarters, the lender is positioning itself for rapid growth. Kapil’s leadership and his team of seasoned professionals are central to implementing this ambitious strategy.

Despite the challenges facing the shadow banking sector, the lender’s focus on diversification, retail lending, and trust-building positions it well for sustainable success. As Kapil noted, “Meeting customer needs across diverse segments is key to creating a strong, reliable financial institution.”

This bold vision reflects the company’s commitment to adapting to market dynamics while prioritizing customer needs and operational efficiency. The lender’s strategic moves are set to make it a significant player in India’s evolving financial landscape.