NBFCs step up hunt for top-level executives
With business models of NBFCs changing, the demands on top hires are also changing
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New Delhi: Non-banking financial companies (NBFCs) that are lightly regulated and face fewer bad loans are filling their corner suites fast as they expand into the smaller towns and cities in India.
In December, BOBCards, a subsidiary of Bank of Baroda, named Manoj Piplani, managing director at Barclaycard UK, as its managing director and chief executive officer. In July, Avendus Capital Pvt. Ltd hired Sandeep Thapliyal, head of commercial banking and investment banking, RBL Bank, as MD & CEO of its NBFC called Avendus Finance Pvt. Ltd.
In November 2016, Magma Fincorp appointed Kaushik Banerjee, who was president of asset finance at Cholamandalam Investments & Finance Co. Ltd as president and CEO of its asset finance unit, in February 2017, Muthoot Capital Services hired Madhu Alexiouse who was National Sales Head, Used Commercial Vehicle Company at India Infoline Finance Ltd (IIFL Finance), anNBFC and unit of financial services firm IIFL Holdings Ltd as chief operating officer, and in October 2016, Mortgage firm DHFL hired Rajinder Mehta, who was global chief people officer at Zee Entertainment Enterprise Ltd as chief people officer.
“I see a minimum of 25-plus new CXO hires within next eight to 10 months in NBFCs. Within that, demand for younger CEOs will be higher and hence, I expect many of these to be first-time CEOs,” said Puneet Pratap Singh, partner-in-charge, New Delhi, at headhunting firm Heidrick & Struggles.
NBFCs are learning from banks on processes, cross-selling, analytics, and investing in digital and technology to drive efficiencies. Hence, we will see more bankers moving to NBFCs and bring complementary skill sets to the existing teams at NBFCs, Singh said.
So, Avendus Capital, which plans to disburse $300 million in loans in 18 months, has entrusted Thapliyal with the task to build a team to get the deals done. “Sandeep (Thapliyal) brings in an interesting combination of investment banking and corporate banking, key expertise areas for doing well in the area of structured credit,” Kaushal Aggarwal, co-founder and managing director of Avendus Capital, told Mint.
Three experts Mint spoke to said NBFCs have a greater advantage to benefit from growth in the tier II-III cities due to their business model which has fewer restrictions than that of banks.
“There is a growing demand for leaders who can lead strategically by integrating technology into the growth model - product development, customer experience and operations design at NBFCs,” said Preety Kumar, managing partner at executive search firm Amrop India. “Equally, there is greater demand for leaders who can build operations balancing profitability, growth and governance goals.”
With changing business models, the demands on top hires are also changing.
“The hiring choices for CEOs or CxOs for any industry are reflective of the need of the hour at the time when the hiring is been done,” said Sonal Agrawal, managing partner at executive search firm Accord India. “New hires today are particularly focused on risk and credit strategies, and expanding into adjacent area, as well as people who have the ability to build out a digital presence.”
NBFCs offer substantial fixed pay and stock options that tempt many professionals to shift to this sector, said Roopank Chaudhary, associate partner at Aon Hewitt company, McLagan and head of financial institutions practice at the human resource consulting firm of Aon Plc., Aon Hewitt.
“In the past four years, NBFCs have seen the highest salary increase in the Banking, Financial services and Insurance (BFSI) segment, in the 10% and above range. MNC banks particularly have down scaled and closed branches and businesses on the retail side. Not surprisingly, salary rise across MNC banks has seen a consistent dip since 2012-13 and now stands in the range of 6-7%. The private sector banks in India have seen 8.5-9% salary increase,” Chaudhary added.
Demonetisation hurt NBFCs involved in rural, agriculture and microfinance. As a result, projected salary increases have dipped to 8.5% for 2017, according to Aon Hewitt figures.
“This drop should be temporary, and is likely to bounce back next year,” Chaudhary said.
Within multinational banks, apart from mainstay wholesale business and treasury operations, people at top management don’t have many opportunities, Roopank Chaudhary. As Chaudhary said, “People are either moving into NBFCs or other BFSI sectors like insurance and asset management and MFI-turned banks. Earlier, they had the option to move to regional/ global roles. But, with the global economy slowing down and MNC banks under pressure globally, their options are limited now.”