V.P. NANDAKUMAR :  INNOVATOR PAR EXCELLENCE        

Foresaw the rise of technology

It’s not widely known but the fact is, Manappuram was one of the earliest to adopt the core banking style platform for its network of branches. This was no mean achievement considering that unlike the banking sector there were no ready-made software solutions for gold loans. It could come about only because Nandakumar was quick to realise the potential and invested money and effort in developing his own proprietary solutions. Today Manappuram’s technology platform is one of its core strengths. The investment in technology paid off in many ways, for instance, in streamlining procedures to reduce turnaround times in gold loan disbursal and in implementing advanced risk management practices, without which the gold loan business could not have been scaled up. For example, the gold loan business believes in lending against household used jewellery to which borrowers would have an emotional connect. When a branch accepts multiple numbers of the same ornament for pledge, it is more likely to be a local jeweller or pawnbroker, and the system automatically flags the transaction for verification by internal auditors.

In keeping with the record of technology led innovations, Nandakumar’s company launched ‘Online Gold Loans’ in 2015. A customer who has completed the initial formalities can now avail a gold loan 24X7, from anywhere in the world, even from the comfort of his home. The loan proceeds are immediately transferred to his bank account and later he can continue to make repayments of interest and principal without stirring from his home.

Nandakumar was also an early mover in putting technology to use in managing the company’s security systems for the safe custody of all the gold it holds. A comprehensive video surveillance system with high resolution IP cameras was set up at the branches to bring them under continuous remote surveillance. A team at head office works 24X7 to constantly monitor the video footage. Besides surveillance cameras, advanced intrusion alert sensors like contact sensors, IR-based proximity sensors, and vibration sensors have been installed at all the potential entry points within the branches as part of an automatic intrusion alert management system.

Product innovations: No more ‘one size fits all’

Gold loans were for long sold as a ‘one-size-fits-all’ product. Nandakumar was a pioneer in introducing variety to it, for instance, by offering progressively higher loan amounts at higher price points. Manappuram was also the first to come up with “one-day interest” where borrowers have the option to settle a gold loan at their earliest convenience, even before the day is out, at a time when the norm was to recover a minimum interest of seven days, or even a month. Most recently, in keeping with its tagline ‘make life easy’, Manappuram has introduced ‘gold loans at your doorstep.’ Made available for now in Chennai and Bengaluru , this is a gold loan where a team from the branch calls on the customer at his home to appraise and take custody of the gold, while disbursing the eligible loan amount on the spot.

Earlier, it was in 2014 that Nandakumar went decisively against long established industry norms to launch short tenured gold loans. Historically, all gold loans were sanctioned for one year and bullet repayments of both interest and principal were the norm. After the sharp correction in gold prices in 2013, gold loan companies were faced with higher defaults and profitability took a hit. Manappuram Finance Ltd. launched short term gold loans of three and six months tenure and today almost its entire gold loan portfolio has been shifted to the short term buckets. This has minimised price risk which otherwise is a major concern for gold loan lenders.  Importantly, notwithstanding the abbreviated tenure, customers can continue the loan for the long term by remitting the interest regularly.

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