Adani Group makes investment of Rs 500 crore in lending arm

MUMBAI: Adani Group has committed initial capital of Rs 500 crore to its lending arm Adani Capital. The Gujarat-based conglomerate is looking to expand financial services business at a time when burgeoning bad loans have made state-run banks picky in bankrolling projects.

Privately funded by the promoter group, the company has started full-fledged operations with 200 employees in 19 branches spread across Gujarat and Maharashtra. These branches are in rural and semi-urban locations such as Himmatnagar, Mehsana, Kolhapur and Nashik.

“Our aim is to provide customised solutions to entrepreneurs, be it a farmer or a small businessman, by leveraging technology,” Gaurav Gupta, chief executive at Adani Capital, told ET. “Entrepreneurs are the backbone of the economic growth and they are our target customers markets. We find a void in the existing scheme of things, which would be a customised solution for entrepreneurs.”

Adani Capital aims to finance Rs 1 lakh to Rs 50 crore across farm, commercial vehicle and business loan segments. It has also launched an all-digital channel finance product with over 100 live customers.

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The company has appointed RM Malla, past chairman and managing director of IDBI BankNSE -0.81 %, and Sunil Gulati, former top executive with RBL and Yes bank, as independent directors. Gupta, a former head of Macquarie Group’s investment banking business in India, joined Adani in October 2016 to spearhead the financial services foray.

One of the youngest rainmakers on Deal Street, Gupta decided to move on from a 20-year-old consulting-turned-investment banking career to a more “entrepreneurial” assignment in the conglomerate. He has built a team of senior banking professionals from organisations like Fullerton, L&T Finance, Nomura, and Macquarie.

Adani Group’s move is in line with many other conglomerates such as the Aditya Birla Group, Bajaj, L&T, Piramal Group and Reliance Group. Many others like Kotak and Piramal also joined hands with large institutional investors like Canada Pension Plan Investment Board for rolling out various products.

NBFCs are better placed in rural and semi-urban regions in terms of lending business, Investec Securities said in a note on April 17. “Our channel checks suggest banks continue to rely on direct sale agents or dealers to source business in semi-urban/rural areas, with DSAs typically helping banks in resolving collection issues,” the note said. “NBFCs, though, have a strong reach in semi-urban and rural regions which helps them connect better with customers.

Amongst top players in banks and NBFCs, the difference in yield is minimal.” The share of non-banking financiers in the overall loan market will go up to 19% by fiscal 2020 from 16% last fiscal, thanks to strong play in the wholesale segment, according to rating agency Crisil.

“Owing to changing demographics, coupled with increasing disposable income, the new-age customer is demanding credit facilities like never before. However, the consumers of today prefer instant gratification—they want their demands to be met instantaneously,” PwC and Assocham said in January.

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