AION Capital-backed CLIX Capital which recently expressed interest to pick up stake in the South-based Lakshmi Vilas Bank sees the opportunity as strategic. In an exclusive conversation with BusinessToday.In, CLIX founders Pramod Bhasin and Anil Chawla laid out the future plans. Here is an excerpt from the conversation.
Business Today: How are you viewing the Lakshmi Vilas Bank opportunity and what are the strengths that you see in the deal?
Pramod Bhasin: It has a variety of strategic strengths that are very interesting, clearly subject to regulatory approval, due diligence. The fact is the bank has a terrific deposit base and a terrific set of community base that have been with them for a very long time. For a bank that has been in news for loans that haven't worked out, its deposit base and branch network remains very strong. For us that's a clear advantage and we think our digital platform and ability to lend digitally brings to them very significant strength because that is something that they really need. What they clearly need is some very good lending and our underwriting and lending capabilities are excellent. Even in today's time the resilience is coming through, in terms of how these capabilities will work out. I think if we bring these together, we have an opportunity to create something big. It's not very complicated, it's quite simple.
Business Today: What are the synergies that you think currently exist in the deal?
Anil Chawla: It gives us the liabilities and franchise. With our digital and strong liabilities franchise and that the banking model continues to be the way it is, this deal will help us complete the circle much better and serve more customers in much more efficient and faster model.
Business Today: At what stage are the talks currently in and has the due diligence process begun?
Anil Chawla: Right now it is in a very early stage. Just two weeks back, we have given a letter of interest to the bank and the bank has started sharing information with us. But the due diligence is going on. Let's see what are findings. Then we will sit on the table with them and take it forward .
Business Today: What is the amount of capital infusion that you may be looking at?
Anil Chawla: It is very difficult to predict the capital that we will infuse, since the due diligence is going on. We need to know what exactly is the true net worth of the bank. We know our net worth and then depending on how we have to club, then whatever is capital adequacy is required, we will infuse accordingly.
Business Today: Are you interested in roping in other players as well?
Anil Chawla: So depending on the opportunity, a lot of people are approaching us and that makes sense because you need to have a bank which is very well capitalised, and we need support from other lenders - then why not.
Business Today: What is your own sense of where India's private sector banking is headed given recent happenings and also the large PSU mergers that have happened?
Pramod Bhasin: The opportunity is fantastic. Unfortunately, the PSU banks are going to be absorbed by consolidation. It will not make them nimbler, it doesn't make you faster. It unfortunately solves an NPA problem but makes you slower perhaps in many ways. This country needs more banks and I welcome competition. I really think we should open that up as much as we can and I hope they do it. That's why we are seeing a few people making an enormous amount of money in banking and that only happens when you don't have enough competition. If there were 20 more private banks fighting for customers, watch what would happen to service.
Business Today: How do you see new age entrepreneurs taking to banking, we recently saw Sachin Bansal apply for universal banking licence?
Pramod Bhasin: There are new players who definitely want to get into the market which is wonderful. So be it Sachin Bansal with all that he has done with Flipkart or Vijay Shekar Sharma at Paytm who we work with very closely for instance. The key is to have core competence in what you do. Either you do it yourself or hire the best in the business to do it for you. But, yes, it will create some spectacular failures. In the last 5 years everyone wanted to be a NBFC. Lending is a high risk business and for every hundred loans, you just need two bad loans and it wipes out the merit of the entire good loans. The new players will discover this. But these are some very sharp people and I welcome competition.