In 2022, Tata Capital reported its highest-ever net profit, and crossed the coveted Rs 1 lakh crore loan book milestone (currently it is at ~ Rs 1.35 lakh crore). It is the latest triumph in a long list of wins for this 15-year-old company, which is now India’s third largest diversified non-banking financial company (NBFC) with a pan-India presence, offering a portfolio of 25+ products and services.

“Despite significant headwinds over the past few years, we have held our ground and grown steadily,” says Rajiv Sabharwal, Managing Director and Chief Executive Officer, Tata Capital. “FY23 was a banner year in terms of our financial performance. We reported multiple ‘highest evers’, such as our disbursements (Rs 75,099 crore, up by 42% YoY) and our PAT (Rs 2,975 crore, up by 80% YoY), along with a healthy ROA of 2.9%. At the same time, we have ensured that we adhere to strong risk-management practices that have allowed us to retain superior asset quality. As of March 2023, our asset quality was among the lowest in the industry with net non-performing assets at 0.4% and total credit costs at 0.5%.”

Tata Capital has also strengthened its geographical footprint across the country, crossing 500 branches in July 2023, with 171 branches added in FY23 alone. The company’s ambitions have been driven by its investments in building a risk culture across the organisation, the use of data and analytics for decision-making across the lending value chain, investments in creating a strong technology architecture and building best in class digital capabilities.

Fulfilling India’s aspirations

The Indian economy is set to become the world’s third largest economy in the next five years and the country’s financial services sector is preparing itself to support the exponential growth. There is significant room to grow when it comes to India’s consumer lending space, given that credit penetration in the country is still well below ~30% (as per TransUnion CIBIL). “Efforts by the Indian government and regulators have led to a steady improvement in access to credit across regions and income segments,” says Mr Sabharwal. “I expect this trend to continue driving double-digit growth in retail lending in the coming years. And Tata Capital is well-positioned to act as a trusted partner to enable this growth.”

Tata Capital is one of the few pan-India, diversified players in the industry to have products across the spectrum — from personal loans, two-wheeler loans, and used car loans to business loans and microfinance loans, among others. “Our focus is to continue nurturing our high-margin, sustainable business lines and grow them at an industry-leading pace to maximise profitability and shareholder returns,” says Mr Sabharwal. “We balance this with healthy growth in our secured product portfolio, in products such as home loans and loans against property, with an aim to maintain our secured book at over 70% going forward.”

“Our focus is to continue nurturing our high-margin, sustainable business lines and grow them at an industry-leading pace to maximise profitability and shareholder returns. We balance this with healthy growth in our secured product portfolio, in products such as home loans and loans against property, with an aim to maintain our secured book at over 70% going forward.”—Rajiv Sabharwal, Managing Director and Chief Executive Officer, Tata Capital

The company taps into new opportunities through product expansions to target newer segments, introducing new products or widening access to products in deeper markets. For instance, “we have ventured into low-ticket personal loans and business loans on direct online channels, enabling seamless disbursals at industry-leading turnaround times,” says Mr Sabharwal. The company has expanded its unsecured and vehicle finance segments by entering into more ecosystem partnerships. The company is also working on launching education loan offerings this financial year, with an eye on making higher education accessible across income groups.

“Our two-pronged phygital model, with a focus on branch expansion and enhanced digital journeys across products, positions us strongly to further capitalise on the India opportunity in the coming years,” says Mr Sabharwal.

Customised enterprise offerings

Tata Capital has offered enterprise lending products since inception, so it is no surprise that it has a significant presence of more than 15% of its book in the segment. While the company started with traditional products like term loans and construction finance, it has evolved to offer a more tailored approach in relationship and risk management.

Given the rising capital expenditure and the government’s push for investments and infrastructure development, the company is well poised to tap into the corporate and SME lending opportunity in the country. “Companies are responding to heightened demand and increased capital-raising activity for both capacity augmentation as well as working capital,” says Mr Sabharwal. “This will be further supported by the government’s commitment to investment in infrastructure projects forming 3.3% of the FY24 Union Budget, as well as to attract private and foreign investments by way of production-linked incentive schemes with an outlay of ~ Rs 2 lakh crore across 14 key sectors.” Over the next few years, Tata Capital plans to tap into existing clients’ cross-sell opportunities and acquire new clients within sectors with established cashflows.

In the corporate sphere, Tata Capital’s cleantech finance business is one of its unique offerings. “We are one of the few large players in India focused solely on financing green projects and were the first Indian entity to join the global Green Bank Network,” says Mr Sabharwal. “Growing our cleantech finance portfolio is a focus area as it will help us support national Sustainable Development Goals.”