Dear Shareholders,
I am pleased to present to you the 38th annual report of the company
for the year 2023-24.
The last year saw your company, Capital Trust Ltd., stepping into the
shoes of extraordinary success. All this took place through able and different approaches,
setting us apart in fintech and in-house financing, with a reach extending to the rural
populace of our cities, including Tier 3, 4, and 5 cities. Big data, machine learning, and
AI technologies now enable us to significantly assess risk and help us in processing
loans, hence offering tailored financial services to our customers.
New products are positive relationships with customers and significant
growth of the loaning, which goes alongside the expansion of locations. But at the same
time, we understand that in rural areas, personal relationships and being on the ground
matter. It is due to this fact that our highly developed technological infrastructure has
been invested with—2,000 employees in our committed team—such that the customer
gets the support and assistance he needs, especially at the time of need when National
Automated Clearing House (NACH) transactions could not be carried out correctly. Thus, we
embrace technology and human touch to offer a wholesome customer-centric experience.
Our vision is to connect and make the rural population stand front in
financial services in a manner that is augmented and powered in the underprivileged
nations. Our unique approach brings convenience, access, and reliability to our customers
based in rural areas, therefore providing the possibility for thousands of them to have a
level playing field to thrive and grow financially. To this end, we work to offer
wide-ranging financial inclusion solutions to respond to the needs of Rural India while
sustainably doing this through economic empowerment.
This December, Capital Trust received the Great Place to Work
Certification for the first time in history, which means the exposal of a work environment
in which sits a dedicated workforce. On December 20, 2023, RBI gave consent to Capital
Trust to use Aadhaar-based authentication in authentication of their customers. By getting
this permission, its KYC, signing, and NACH authentication process has smoothened out and
made hassle-free and less time-consuming.
We hope that in the future, as we keep on being enthusiastic about
empowering the rural folk with excellent provision of innovative financial solutions, we
shall keep on creating immense value for our stakeholders.
Economy as General:
The past year has witnessed significant growth and transformation,
driven by technological advancements and regulatory reforms. We have witnessed the rise of
innovative fintech solutions that are revolutionizing the way financial services are
delivered. As an industry, we stand at the forefront of this transformative journey,
leveraging technology to bridge the gap and provide financial inclusion
to the underserved segments of our society.
According to the World Bank's latest India Development Update, India's
growth remains resilient, despite certain indications of a slowdown. The World Bank
India's biannual flagship publication reveals that the overall growth remains strong, with
an estimated growth rate of 6.9 percent for the entire year. Real GDP has shown a
year-on-year growth of 7.7 percent during the initial three quarters of fiscal year
2022/23. However, there have been some signs of moderation in the second half of FY 22/23.
The Indian economy is expected to grow 7.5% this year, revised upwards
from the erstwhile 6.3% projected earlier by the World Bank. The multilateral lender has
stated that India will be the primary driver of the regional growth of the sub-economy,
with output expected to rise at 7.5% in FY23-24 and moderate to 6.6% in the medium term.
Such solid growth has been driving brisk growth in services and industry. The World Bank
noted the 8.4% year-on-year growth rate of economic activity in the fourth quarter of
2023, driven by rapid hikes in investment and government consumption. More recently, the
data from the survey for economic activity were said to have confirmed that the excellent
performance continued over the near term.
However, there will be some headwinds to growth in FY23-24. Despite
this, there will be a few headwinds to growth in India in FY23-24: An increase in
borrowing costs, tighter financial conditions, and high inflation are going to weigh down
economic expansion. Real GDP growth would moderate to 6.3% in FY23-24 compared to 6.9%
estimated for FY22-23.
Capital Trust and Digitisation
The finance available to the rural borrower in India has been of the
traditional, cash-based lending models. Many in the rural areas have opened bank accounts
in the form of Jan Dhan accounts, but they still do not have the "Banking Habit"
and prefer dealing more with cash. So how does one lend and collect money digitally from
customers who are used to cash in terms of earnings and expenditure?'
Welcome to the Capital Digital Initiative by Capital Trust Limited. The
Capital Digital Initiative will change how lending is done in the rural sector, driven by
the best in technology, smartphones, and digital payments backbone to be the platform on
which retail loans will be originated in rural India. All individual business loans will
be disbursed and collected online, making it very convenient and hassle-free for the
borrower. In case the mode of payment by the borrower is not online, then an automated
cash pick-up facility will be available. Now, the rural client can be treated on par with
the urban client for the first time, with the same ease and choices made available for
repayment. He can pay through NACH, Wallets, UPI, NEFT, IMPS, or, as a last choice,
through cash. The individual app also allows customers to view their loan details and
transaction history and to make online repayments.
This is further reinforced by intensive communication strategies that
inform and remind clients about the benefits of e-payment. Borrowers under the traditional
modes of cash collection have to lose business time to attend to the branches or lose
business time that could be otherwise used during centre meeting days. CTL leverages the
benefit of e-payments on customers and even gives some incentives for electronic payments.
Consequently, a great majority of rural borrowers have resorted to digital payments;
nearly 80% of their EMIs for the new Capital Business Loans are currently being paid
through digital modes, compared to 0—10% with other lenders. Capital Trust is at the
forefront in making this 100%.
This innovative movement provides not only ease of access to customers
in rural divides but also assures financial inclusion and digital literacy, hence ensuring
rural India is at par with its urban divides in terms of financial services and
opportunities
Formalization of Informal MSMEs
May 2023 was when the dramatic act was done, through the formalization
of its target segment. It was this that resonates totally with our own constancy in
focusing on credit delivery to small businesses, including kirana stores, mobile repairing
shops, and haircutting salons. In this gesture, the Reserve Bank of India (RBI) does
acknowledge the country's Informal Micro Enterprises (IME) sector. Such recognition alone
adds to the credence of our product offerings and secures our services on the same
platform as those of the formal MSME sector. This declaration by the RBI strengthens our
commitment to arming opportunities for the backbone of the rural economy with tailor-made
financial solutions, along with new doors to growth and collaboration in the financial
sector.
We have been able to catalyse over 120,000 Unique Registration Numbers
through our Udyam Assist Platform, which indicates how far we have gone in trying to make
sure that we categorize all our customers as beneficiaries of the MSME Priority Sector
Loans. This
has gone a long way toward ensuring that all our millions of customers
are supported and recognized in ways that enable them to thrive and be key players in the
rural economy. Empirical formalization of their status, thus, empowers them to have
broader scales of access to finance services through which financial deepening takes place
and helps to foster high levels of economic development and growth within the rural areas.
Successful Bullet Repayments
I am pleased to announce the successful repayment of a significant ?77
crore bullet repayment. This achievement includes ?45 crore sub-debt repayment to IDFC
First Bank and ?32 crore NCD+TL repayment to SBI, substantially enhancing our financial
standing. Following this repayment, the company has secured additional funds from both
banks and NBFCs. We now have a diverse group of lenders who have provided the company with
term loans.
Lending as -a- service
we've made over the past two years in transitioning towards off-balance
sheet partnerships, aligning with our strategic objective of offering Lending-As-A-Service
(LAAS). In particular, our focus on co-lending and Business Correspondent (BC)
disbursements has been instrumental in this journey. The shift towards off-balance sheet
partnerships for LAAS has unlocked several benefits for our organization. It has enabled
us to optimize our capital structure, mitigate risk, and enhance our competitive edge in
the dynamic lending landscape. Looking ahead, we remain committed to fostering strategic
alliances, exploring innovative lending models, and harnessing technology to further
strengthen our position as a leading player in the financial services sector.
Great Place to Work Certification
In December, 2023, Capital Trust achieved a significant milestone by
being awarded the Great Place to Work Certification for the first time in its history.
This prestigious recognition underscores the exceptional work environment fostered within
the company, characterized by a committed and engaged workforce. As a result, Capital
Trust has experienced higher employee retention rates, reflecting the organization's
dedication to cultivating a workplace culture that values and supports its employees.
RBI Approval For Authentication Under Aadhaar Act
On December 20, 2023, Capital Trust received approval from the Reserve
Bank of India (RBI) to implement Aadhaar-based authentication for their customer
verification processes. This consent marked a pivotal moment for the company, streamlining
crucial operations such as KYC (Know Your Customer), signing procedures, and NACH
(National Automated Clearing House) authentication. By leveraging Aadhaar-based
authentication, Capital Trust has significantly enhanced efficiency and reduced the time
and effort required for these vital processes. Moreover, this integration has bolstered
security measures, ensuring a more robust framework for verifying customer identities.
With the adoption of Aadhaar-based authentication, Capital Trust stands poised to deliver
an even smoother and more seamless experience for its customers while adhering to
regulatory standards and enhancing trust and confidence in its services.
Conclusion
In conclusion, I would like to express my deepest gratitude to all our
shareholders for their unwavering support and trust. Your continued belief in our vision
and commitment has been instrumental in our success. As we look towards the future, we
remain dedicated to serving the undeserved, embracing technological advancements, and
creating value for all our stakeholders.
I would also like to extend our deepest gratitude to all employees for
their invaluable contributions to the company. Last but not least, special Thanks to our
Funders, Shareholders and customers for their continued support and loyalty to our
Company.
With Warm Regards,
Yogen Khosla
Chairman and Managing Director