In conversation with HP Singh, Chairman and Managing Director of Satin Creditcare Network Limited

We remain committed to optimizing our operations and delivering value to our stakeholders while ensuring sustainable growth, states HP Singh, Chairman cum Managing Director of Satin Creditcare Network Limited.

In Q2FY24, the company reported an 87 per cent jump in net profit on a YoY basis to Rs 107 crore. What were the significant contributing factors to the company’s stellar performance? 

There have been multiple factors involved, ranging from the internal efficiency of the organisation as well the positive external factors. Firstly, the income-generating capacity due to the upward economic environment in the rural space has seen a substantial boost, thereby, witnessing strong traction in demand. Furthermore, our continuous efforts to increase operational efficiencies have yielded positive results. This, in turn, is gradually reducing our operational expenses (OpEx). Our strategic deep dive into our existing geography has also rewarded us. We remain committed to optimizing our operations and delivering value to our stakeholders while ensuring sustainable growth.

What is your view on RBI’s cautionary remarks regarding personal loans, going forward how will this affect credit growth?

Regarding the RBI's cautionary remarks on personal loans, I believe they are a prudent measure to ensure financial stability. I don't anticipate a significant impact on microfinance credit growth as the industry's portfolio remains robust, and underwriting standards are stringent. While some MFI players have raised lending rates, it's important to note that the cost of borrowing has also increased, and lenders are maintaining a slight risk margin to manage their portfolios. Additionally, Self-Regulatory Organizations (SROs) are actively guiding industry players to adhere to regulatory norms, ensuring responsible lending practices continue in the microfinance sector.

Could you give us an outlook on the microfinance industry and what are the key developments going on in the same?

The microfinance industry is experiencing a remarkable surge, driven by strong demand from the rural market of India. As of June 2023, the sector demonstrated an impressive 21 per cent portfolio growth at Rs 3,58,700 crore, compared to Rs 2,96,487 crore in June 2022. This substantial and positive portfolio growth reflects the industry's strong performance, signalling a favourable outlook. The RBI's regulatory framework has also played a pivotal role in supporting the industry's success. Notably, the sector's positive growth has attracted heightened attention from lenders and investors, underlining the increasing interest and confidence in the microfinance sector.

Could you elaborate on the performance of the MSME and housing finance business segments?

Our MSME and Housing Finance business segments are thriving, due to the exceptional performance of our subsidiaries. They play a crucial role in expanding our outreach and addressing the needs of individuals through affordable housing and retail MSME loans. As of June, the Profit After Tax (PAT) for SHFL stood at Rs 1.9 crore, and for SFL, it's at Rs 1.4 crore.

This robust financial performance demonstrates our sincere dedication to providing accessible financial solutions to both the housing and MSME sectors, contributing to our overall success in fostering financial inclusion and sustainable growth.