File photo of Ashneer Grover, co-founder & MD of BharatPe
The Reserve Bank of India (RBI) on October 12 finally awarded a small finance bank licence to a consortium of fintech firm BharatPe and Centrum Financial Services. The new entity — Unity Small Finance Bank — will take over the assets and liabilities of Punjab and Maharashtra Co-operative (PMC) Bank.
The new firm appointed former State Bank of India (SBI) head Rajnish Kumar as chairman of the board.
In an interview with Moneycontrol, Ashneer Grover, co-founder and managing director of BharatPe, a recently minted unicorn, talks about the company’s journey so far and the road ahead. Edited Excerpts:
Now that you have the license, what is the plan?
At BharatPe, we keep talking about all the new businesses we are launching. Because of regulatory issues, we decided to keep quiet till we got the final thing in hand and today we got this letter in the evening and it feels great. More importantly, because our team has done a great job of closing this in time. No one has gone from in-principle approval to final license in a matter of four months like the way we have done.
In June you said that the bank will be up and running by Q4FY21. How does it look like now?
The first stage for us was to become a bank ourselves and to do this we had to incorporate the bank, name the bank, had to do business transfer agreements, and shareholder agreements. The past two to three months were taken up by that. We also had to operationalise one branch and we had to go through audits by the RBI. So we have done all that and therefore RBI has granted us the licence now. We have been able to operationalise the bank in the fastest time ever in India.
Now we are working very closely with RBI on the second step but given the sensitivity around it, I would not divulge any detail on that.
How soon can we expect a resolution for high-value depositors?
On PMC, resolutions, timeline, I am not at liberty to give any detail.
How did you manage to get former SBI chief Rajnish Kumar on board? What are your expectations from the man who has run the country's largest public sector lender?
We always wanted to report into very good people, not only the team below but even on the board level. When I looked around, especially given the fact that we are forming a bank and we will be a much more regulated entity going forward, it was imperative for me to get someone from the banking industry on board. I just went to him and told him what my vision was with respect to BharatPe and he loved the way we were adopting digital. He is a supremely smart guy. He understands that the world is going forward with digital. He wanted to be a part of what we are doing. It helps us because in our journey of forming a bank and making it stand from scratch, we could always do with a lot of expertise.
In some sense it is also a validation because the biggest banker in the country chose to be your chairman. There must be a few things that we are doing right.
What are some of the key things you will keep in mind while you go and lend to your customers now that you have the licence?
We want to be technology first. People should get loans basis their numbers. The same philosophy we would like to translate into the bank as well.
Recently, the RBI governor hinted that it is time to hike rates now finally after a year and a half of the COVID-19 onset. What will a change in the interest rate scenario mean for the bank once it's up and running?
I am a small guy, just starting off, wouldn't want to give macro-economic perspectives right now.
BharatPe recently launched a lot of new products with some like PostPe being consumer facing. How are these products doing?
Within 40 days of launch now we have more than Rs 150 crore invested in peer-to-peer (P2P) investments through the 12% Club app. We have also given loans of Rs 7.5 crore through the 12% Club app itself to consumers. PostPe has been launched hardly a week back and the initial signs are great. We are already at an Rs 10 crore disbursal rate for this month in terms of credit.