Financial Inclusion is an Opportunity: BR Shetty

BR Shetty, Chairman of the UAE Exchange

The Indian banking industry has seen consistent double-digit growth during the last 10 years. But there are several unmet customer needs—including financial inclusion, product innovation, low-cost innovative delivery models, leveraging technology and communication, improving efficiency, building long-term relationships with customers, etc—which the banking industry has to resolve. These challenges make way for opportunities, some of which are easy to capture. But there are many that require significant innovation or specialised skills. Probably this is the space where new players like the UAE Exchange could make a difference.

I ventured into healthcare way back in 1975 by starting NMC Health, realising that, until then, quality healthcare facilities were unexplored in the UAE. From those early beginnings, NMC Health has now grown into a group with two principal divisions—NMC Healthcare, which is the largest healthcare provider in the private sector with a pan-UAE presence; and NMC Trading, which is a leading pharmaceuticals distribution business in the UAE. This makes it one of the largest integrated private sector healthcare companies in the region. Today, it is listed in the premium segment of the London Stock Exchange (LSE) and is part of FTSE-250 index.

I ventured into remittance and foreign exchange with the UAE Exchange during the 1980s at a time when organised fund transfer mechanisms in the UAE were inadequate to cater to the burgeoning needs of a growing expatriate population and an expanding corporate sector. I felt the need to establish an organised funds transfer facility for expatriate Indians, who were finding it difficult to remit their hard earned money back home, cost effectively, through established banking channels.

For over three decades, we have been a leading brand in the financial realm, specialising in remittances, loans against jewellery, foreign exchange, etc. We have earned the trust of millions of customers by handling their hard-earned money with utmost care. Added to these, our rich infrastructure, technological prowess, branch network and subject expertise make us a strong contender for a banking licence. Above all, (there) is our experience in working closely with the bottom-of-the-economic-pyramid segment, which sends money in the range of Rs 15,000 to Rs 18,000. Working with this segment of customers and bringing them into the formal financial system is our biggest strength.

RBI guidelines stipulate a minimum capital requirement of Rs 500 crore to start with. We have planned much above that. Also, with the kind of network (we have) in India and our global reach, we have good NRI connections, which should enable us to raise a good amount of deposits in all the branches of the bank when we commence operations. Based on a financial plan, our initial capital will be sufficient to meet the SLR/CRR requirement, considering our existing NBFC (non-bank financial company) activity.

The funds will be raised through a combination of offering shares to the public through preferential allotment and from resident entities/relatives of the promoter group. The promoter group is worth Rs 3,800 crore.

We see the challenge of financial inclusion as an opportunity. As a leading global remittance brand, we have been dealing with a huge population, which belongs to the bottom of the economic pyramid. Most of them still go without a bank account. We are good at initiating workshops and other means to create awareness and improve financial literacy in the said population. Once we become a bank, we will work on the same principles. We will be focusing especially on opening branches in unbanked areas and on designing innovative products for this segment.

Also, the branches we set up in these areas will pay special attention to educate people about the need for financial savings and planning, thereby gaining their trust. We have considered commencing ultra small branches to reach out to a wider (population) cost effectively.

Currently, we have strong infrastructure in place with over 330 branches across India, including small towns and rural areas, of which over 145 branches are in Tier 2 to Tier 6 centres. Further, we have good number of branches in the under-banked districts and states.

(As told to Vivek Kaul)

(BR Shetty runs a healthcare business in the UAE, and ventured into the remittance space in the 1980s)