Tata Capital to raise Rs 20,000 crore as fresh debt, expand retail book

TataNeu helps company to onboard new customer

Tata Capital Financial Services — a subsidiary of Tata Capital — is planning to raise an additional debt of up to Rs 20,000 crore in the current financial year to bolster its retail book. The company is fast digitising its network and using the recently launched e-commerce initiative of the Tata group — TataNeu — to onboard new customers by giving new loans on the application.

The company’s debt as on March 31 this year was about Rs 48,300 crore and the company will raise additional debt by way of non-convertible debentures on a private placement basis, according to TCFL's communication to its shareholders. Tata Sons, the ultimate holding company of Tata Capital, is expected to give its approval to the fund raise and raising the borrowing limits to up to Rs 70,000 crore on Monday.

TCL is a subsidiary of Tata Sons Limited, which holds 94.55 per cent in TCL and in the last five years, TCL has received capital infusion from Tata Sons worth Rs 3,500 crore. Of this, Rs 1,000 crore was infused in the 2020 fiscal year and Rs 2,500 crore was received from Tata Sons in FY19. Tata Sons has not invested in TCL’s equity in the 2022 fiscal year.

Despite the pandemic, the company said its book size increased from Rs 45,101 crore in the financial year ending March 2021 to Rs 56,169 crore in the 2022 fiscal year as customers were acquired via digital applications such as TataNeu. The financial services arm of the Tata Group reported a 21 per cent profit after tax to Rs 817 crore.

The company’s higher profits are attributed mainly to retail finance loans, including auto loans, business loans, personal loans as it disbursed Rs 21,245 crore as compared to Rs 10,288 crore in the previous fiscal year. The company informed its shareholders that synergies with the Tata Group eco system as well as with fintech players played an important role in onboarding new customers during the last two Covid-hit years. “A key partnership that was worked on was with Tata Digital and products such as equal monthly instalment (EMI) cards and personal loans launched on the ‘TataNeu’ platform,” the company said.

Besides, the company also used its network to cross-sell products of other Tata group entities such as insurance and mutual funds. The insurance ventures of Tata group are owned directly by Tata Sons — the holding company of the group. The company said on the commercial lending side, its partnerships with various Tata group companies for working capital loans played an important role for disbursement growth. Partnerships with other fintech players for both business generation as well as process and data augmentation led to growth, the company said.

On customer service, the company said it used the digital platforms to self-service and migrate a large proportion of customer servicing and debt servicing. As part of this, new channels of payment, including Unified Payment Interface-based payments, Bharat Bill Payment Service (BBPS) was launched. 

The collection from digital channels saw an increase by using an end-to-end automated communication framework and use of robotics processes.