We Can Start a Bank in 12 Months: VS Radhakrishnan

Image: Jyothy Karat for Forbes India

VS Radhakrishnan, MD & CEO of Janalakshmi Financial Services

We are very clear about our customer focus and want to serve our target customers with a full product range. Our customer research shows that these customers need a much broader array of financial products than just the credit products that we offer today. Most critically, they need savings and payment products, which we cannot offer with our current model. 

Transforming to a banking model, thus, is critical to serve our customers fully.

We will be a fundamentally different bank, which will not be comparable with any of the existing banks. Our key differentiators are: Focus primarily on inclusion and inclusion adjacencies. We will also be starting with a significantly advanced technology platform (core banking solution, CRM solution, Aadhaar-enabled platform), top class management team (that is already in place) with deep experience in financial services, and an established large customer base (over a million customers) that we have served successfully for many years.

Our significant advantage is that we shall have a large customer base but a relatively small balance sheet (around Rs 4,000 crore) when we convert into a bank. We are also raising a significant amount of capital, much more than the minimum required by the RBI.  For us, therefore, this will not be a significant challenge.

We are already well capitalised and have some of the world’s leading institutional capital providers. We are confident that with our business model we will be able to continue to leverage our existing relationships and raise additional capital as and when needed from similar investors.

Our business in primarily inclusion-focussed.  In fact, in the first five to 10 years, we aim to address primarily our core customers and adjacencies that are relevant to our core customers.  

Out detailed operational plan has a 12-month roadmap, from the grant of in-principle licence to commencement of the banking business. Of course, this may get modified, depending on pre-conditions that the RBI may impose along with the grant of licence. We are confident that we will be able to start the bank within 12 months of getting the licence, given that about 80 percent of the key components—technology, operations, and management team—are already in place for us.

(As told to NS Ramanth)

(Janalakshmi Financial offers microcredit to the urban poor in nine states)