Mumbai: The Tata group’s financial services arm Tata Capital Ltd is entering an all-new business segment by funding hospital costs for needy patients. The initiative is the first of its kind in India by a non-banking finance company.
Tata Capital has tied up with newly formed healthcare facilitation and credit analysis company MYA Health Credit for the new venture.
Tata Capital will finance patients for non-emergency treatments including knee replacements, dental care, maternity care and orthopedic surgery at concessional rates. Tata Capital, which currently offers housing finance, personal loans and other retail lending, has created a new vertical for the new business under its retail lending unit, Tata Capital Housing Finance Ltd.
“The lending rate will be in the range of 5% to 11% according to the nature of treatment and the credit profile of the patient,” R. Vaithianathan, managing director, Tata Capital Housing Finance, said in an interview on Wednesday.
Indian healthcare demand is substantial in terms of value, but less than 15% of the population is covered by medical insurance cover and costs are rising. A finance option tailored to Indian patient needs will make a big difference in the market, said a healthcare adviser at a global consultancy firm.
MYA Healthcare, which has tied up with healthcare providers, will facilitate the processing of the treatment options, costing, etc., on request from the patients.
Tata Capital will undertake credit verification and disperse the loan directly to the healthcare provider.
“Healthcare financing as a specific product by a lending company is new in India, though it is comparatively more common in the US and the UK, and normally these loans are given at a concessional rate as compared with normal lending,” said the healthcare adviser cited earlier.
Vaithianathan said the company will mainly target middle and lower middle class patients who need treatment, but can’t afford it immediately due to financial constraints.
“At an average loan disbursal of Rs.1 lakh to Rs.1.5 lakh per procedure, we aim to create a loan book of about Rs.90-100 crore in the first two to three years,” he added.
“The main criteria that we look at in processing the loan, will be the intention of the borrower to repay these short-term loans, typically with a tenure of one year or less,” Vaithianathan said. “And another business advantage that we would like to explore through this concessional loans are the loyalty of these customers to grow our other financial products.”
The Tata Capital-MYA Health Credit combine has positioned the new business to avoid clashing with medical insurance.
“We focus on treatments which are not emergencies and often not covered by insurance, and we target to process about 5,000 to 6,000 applications a year,” said Manish Menda, founder and director of MYA Health Credit.
“To start with, we have joined hands with a few healthcare providers including Hinduja Hospital in Mumbai, and Nova Speciality Surgery, Smile Care and Global for this initiative, and we aim to expand the reach to most of the key cities soon with more healthcare providers in the network,” Menda said.