Financial services firm IFMR Holdings plans to widen range of offerings
IFMR CEO Sucharita Mukherjee says will embark on a major expansion drive in 2017, IFMR Rural Channels targets to reach bottom 600 million people in India
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Mumbai: Financial inclusion services provider IFMR Holdings, which will complete a decade this year, will embark on a major expansion drive, said a senior executive of the firm.
The group, founded by former ICICI Bank Ltd executives Bindu Ananth and Nachiket Mor, was set up in 2007 and today runs various businesses, including IFMR Rural Channels, a rural wealth management network that offers a range of financial products and services to individuals and small enterprises; IFMR Capital, which offers financial inclusion-focused financial institutions with access to debt capital markets; IFMR Investment Managers, an asset management firm; and IFMR Rural Finance, a fin-tech platform.
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“IFMR Holdings was started with a mission to provide complete access to finance for every individual and every enterprise. It was about making all sorts of markets—insurance markets, credit markets, etc.—work for the poor," said Sucharita Mukherjee, managing director and chief executive officer at IFMR Holdings.
Today, IFMR Rural Channels has 1,000 wealth managers working across 236 branches in Tamil Nadu, Uttarakhand and Odisha, serving customers with financial products such as credit, savings, insurance, pension and payments. The rural wealth management network today serves around 700,000 customers in almost 6,000 villages. IFMR Rural Channels had opened its first branch in 2008.
IFMR Capital has enabled over 110 financial inclusion-focused institutions raise debt financing of more than Rs40,000 crore from the capital market. IFMR Investments has so far raised around $90 million across three debt funds.
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For IFMR Capital, expansion through the development of offshore credit markets is a big strategic imperative, said Mukherjee.
“There is a deep investor base sitting offshore and the equity markets are a testament to that. We have to make that real in the debt and the mezzanine space. We think that is a huge strategic imperative and we believe it is a big opportunity," she said.
The offshore credit market development will also take a fund approach, Mukherjee added. “We could launch funds specifically tailored for offshore investors. We want to take the assets under management on the funds side to at least $1 billion in four-to-five years and we can clearly see offshore credit markets will be a part of that," she said.
The debt funds of IFMR invest in businesses such as microfinance, affordable housing finance, agri-business finance, small business loans and vehicle finance.
“We have a confluence of trends today that has never happened before. We are entering that phase in the banking sector where there is a lot of competition and the costs are plummeting. There is Aadhaar and there is e-KYC, which have made the costs of authenticating customers almost nil. And you have feature phones usage being almost 100% and literacy rates are going up," said Mukherjee, adding that the confluence of these trends means that one can deliver bite size transactions which are viable and profitable at a scale.
IFMR’s target is to reach the bottom 600 million people in India, she said. “At IFMR Rural Channels, we are serving around 700,000 people today. We want to grow that by at least five times over in 4-5 years. We also want to make sure all our customers are experiencing digital, cashless transactions as far as possible."
The next phase of growth at IFMR will also see the group bringing out new product innovations to meet the financial needs of the customers at the bottom of the pyramid.
The group is working on a new insurance product to protect households and small businesses against losses from natural disasters. “When a cyclone hits and damages your house, or small plant and machinery, it damages your livelihood and you just have to take the equity hit. It may make you slip below the poverty line. Given that these are rare events but with massive costs, they lend themselves well to an insurance product. Hence, catastrophe risk insurance is a new product we are developing," Mukherjee said.
The group is also developing health insurance products.
“We like to solve big customer problems. We like to keep a lot of new initiatives going, because we feel innovation is in our DNA. It is not in our DNA to be a ‘me too’ financial services firm," added Mukherjee.
The group has also incubated and taken to market a fin-tech platform, IFMR Rural Finance, which designs financial products for institutions to tap the rural markets.
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