This company is reaching out to low-income population of India to provide loans (microcredit), life insurance and health insurance
Even now, varying estimates say that about 35% of households in India do not have formal access to credit and other financial services.
Centrum Microcredit is on a mission to create a positive, social and economic impact in the lives of low-income households by providing microcredit and other relevant financial services. They provide Credit (loans), life and health insurance to low-income households who are often not unserved or under served by the formal financial sector. In the future they will also launch other products as well related to savings, transfers, investments etc.
The Centrum Group wanted to explore this market area and they got together to launch Centrum Microcredit Limited. Centrum had the capital therefore they started off by acquiring the Microcredit business of First Rand Bank in India. On the first day of business, they started out with having 110 crs of loan book, 25 branches and 300 people taken over as acquisition.
Prashant Thakker, Executive Director and CEO, has been in the financial services industry for over 2 decades now. Personally, he has been involved with financial inclusion and impact investing for a long time; first with Standard Chartered Bank as its global business head for Microfinance and then having launched ProGro Ventures & Advisors. The Centrum Group was just launching its lending businesses into various verticals. Prashant helped them map out the strategy and execute it and later formally joined them as the CEO and Board Director.
Centrum Group was going through a metamorphosis – Re-aligning its various business, selling some and at the same time launching new business. He had the background and industry insight. This story is slightly different from the usual start-ups. Here an aspiring entrepreneur and a listed financial services company came together to launch the start-up and did so by making an acquisition and growing it quickly.
We received our RBI NBFC MFI license in October 2017. On 1 December 2017, we acquired and launched the business with the acquisition of First Rand Bank’s Microfinance business giving them an added entry advantage into the industry. In November 2019, we then acquired another MFI, Altura which gave them a deep rural footprint totalling to 467 crs in loan book, 800 people with 130 branches across 9 states with a profitable business model.
The key challenge was to align all resources and partners to the vision. Acquiring two businesses and managing those resources (human and capital) required motivation towards a common goal, trust, integrity, innovation and long-term relationship with the team and customers and the ability to adapt and survive hurdles like Covid-19.
So far, they have raised approx. Rs 108 crs in capital, all of it from the Centrum Group and the business has been profitable from the first year itself. Today they have served over 350,000 Clients, across 9 states, 73 districts and 130 branches with 850 people. They started with one loan product, today they do 6 different loan products, life insurance and health insurance distribution as well.
Having a strong corporate promoter, which brings in the brand value, the lenders and partners certainly has helped to scale up faster and this is what makes Centrum Microcredit stand out from others in the industry.
Prashant thinks this is a great time to be an entrepreneur in India. There is an openness for start-ups and from all quarters like – Young entrepreneurs, experienced professionals who are turning entrepreneurs, fresh students, investors – VC/PE funds, funders and the government. He feels the Government has played its role to boost start-ups in India through governance compliances and creating the environment for businesses to prosper.
According to him, the key underlying theme is digitalization and technology coupled with changing customer behaviour. His advice for young entrepreneurs and start-ups is, “Foremost; you have to be very clear – who are your serving, what is the value for the client, what will you deliver, how will you do it. It could be a new idea / business model but it could also address an existing business differentially or efficiently. There is nothing wrong in starting up to serve customers in an existing business / industry.”
The road ahead for Centrum Microcredit is uncertain and challenging at the same time exciting and rewarding and they are well on their journey to achieve their mission which is to positively impact 3 million households by 2025, across India by providing microcredit and other relevant financial services. “It is both, a matter of pride as well a humbling experience to be recognized for work we have put in over the last 3 years when we were awarded a) Company of the Year (NBFC Sector) b) Best Digital Lending Solutions at the Asian Leadership Awards in June 2021” mentions Prashant.
You can check out Centrum Microcredit at: Centrum Microcredit Limited