Deutsche Bank’s former co-chief executive Anshu Jain is partnering with former colleague Bhupinder Singh to launch a non-bank finance company in India, counting on the millions underserved by the banking sector in his home country.
The NBFC will lend to individuals, SMEs and entrepreneurs, and may be modelled on San Francisco-based fintech startup SoFi to which Jain is an adviser, four people familiar with the plan . It may be backed by SoftBank, as in the case of SoFi.
“Technology will be the backbone of this firm, which hopes to tap India’s underserved and under-penetrated lending market by using online analytics through credit scores and data collected from Aadhaar,” said one of the people.
The idea is to build a desi version of SoFi, which started as Social Finance in 2011, offering an online platform to help match the funding needs of students wanting to study at Stanford with wealthy alumni who were ready to help. It has since grown into a full-fledged NBFC, giving cheap student loans, as well as mortgages, personal loans and wealth-management services.
Jain quit Deutsche Bank in June 2015 amid falling profits at the German bank, mainly as a result of high legal costs and fines on misadventures like the alleged rigging of benchmark rates by European lenders.
In February, the German financial regulator closed special audits at Deutsche Bank, effectively freeing Jain of any wrongdoing. The proposed NBFC will be Jain’s first financial services venture in India. Jain directed talk to Singh when contacted via email for comment.
Former Deutsche Bank co-chief Anshu Jain, ex-colleague Bhupinder Singh to launch NBFC in India
Singh declined to comment. Singh, a former co-head of Deutsche Bank’s corporate banking business in Asia Pacific, quit the bank less than a year ago. He is likely to be the founding CEO for the new venture while Jain will be an investor, the people ET spoke to said.
“It will be like SoFi, but an Indian version, as there will be need for brick-andmortar branches — albeit a sparse network, because the endeavour would be to do a majority of the business online,” said the first person.
Another of the four people said the venture has been in the works for six months.
“It is still awaiting final regulatory approvals, but one thing is certain, that it will be backed by foreign private equity or venture money. SoftBank may be one of the backers, especially because Jain is putting his skin in the game,” said this person. SoftBank could not be immediately reached for comment.
The firm’s name is yet to be finalised. It will have different lending verticals, such as small & medium enterprises (SME), loan against property and mortgages.
Head hunters are already recruiting people for the venture. The NBFC will look to tap the vastly underserved lending market in India where, according to a World Bank-Gallup Global Findex Survey released last year, more than 47% of the population still does not have a bank account.
“I am not surprised that Jain has decided to invest his money in the financial services business in India. It’s a business he understands, it’s a market he is familiar with and it really makes sense for him to invest at this point of time,” said Ashwin Parekh, who advises boards and CEOs in the financial services sector.
Source: The Economic Times
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