Mahindra Finance, the financial services arm of the Mahindra Group, is undergoing a strategic transformation as part of a three-year turnaround plan, with about 65–70 percent of the planned technology changes having been completed, group managing director and CEO Anish Shah told Moneycontrol in an exclusive interaction.
Mahindra Finance, a non-banking financial company (NBFC), was incorporated in 1991. M&M, the majority shareholder, owns around 52 percent in Mahindra Finance, which ranks among the larger NBFCs in India with gross loan assets of Rs 97,048 crore as on December 31, 2023.
“The company has made substantial strides in improving asset quality, a key focus area of the turnaround plan. Delinquencies, which were a significant concern in the past, have been brought down to under 4 percent," Shah said. “ This reflects the effectiveness of improved risk management practices, better credit monitoring systems and a more streamlined collection process.”
The NBFC finances consumer purchases of UVs, LCVs, tractors, cars and other assets. Recently, it started offering products such as SME loans, loan against property ( LAP) and leasing.
Mahindra Finance has also invested heavily in technology to drive efficiency and enhance customer experience. Shah highlighted that about 65–70 percent of the planned technology transformation has been completed, underscoring the importance of leveraging data and digital tools in a competitive financial landscape.
Another critical component of the turnaround plan, according to Shah, has been the diversification of the business portfolio. Mahindra Finance has expanded its offerings to cater to a broader customer base and reduce reliance on traditional segments, he said.
Mahindra Finance wants to sustain the momentum of its transformation. The company has established specific timelines, down to the week, for implementing various initiatives, Shah said.
“By May, Mahindra Finance plans to release a refined three-year roadmap that will focus on critical metrics such as return on assets and asset quality,” he said. The progress made, so far, has given the leadership confidence in meeting its targets and delivering consistent performance, Shah said.
According to a report by credit rating agency Crisil, Mahindra Finance’s asset quality, though exhibiting sequential improvement, remains modest.
The improvement was primarily driven by revision in the Expected Credit Loss (ECL) calculation model used by the company, apart from organic increase in resolution and recoveries across buckets stemming from the company's efforts to strengthen underwriting and risk management.
The company has also written off Rs 1,113 crore during 9M 2024 as compared to Rs 2,213 crore worth of write-offs done in FY23.
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