When it comes to business lending, banks, and Non-Banking Financial Companies (NBFCs) mostly concentrate on and cater to large and medium-large businesses. Further, they only function and operate in the organized sector, limiting their exposure to the unorganized sector to little or none.
Mr Ashok Mittal–a seasoned professional having a rich experience of more than 30 years in the Capital and Commodities Market, Banking, Financial Services and Foreign Exchange–observed this hesitancy on the part of these institutions when it came to lending money to the neediest MSMEs in organized and especially in the unorganized sector. His exposure to the NBFC businesses led him to realize that most NBFCs focused on larger clients with big ticket sizes; smaller merchants were often left by the wayside.
He says, “As opposed to popular perception, giving loans only to large companies can be detrimental for a lender’s loan book as it concentrates the risk. I wanted to change these principles in my new venture and cater to the underserved segment, which digital lenders were largely ignoring.”
He adds, “None of the businesses were focusing on small merchants. I had been thinking of starting up for close to three years. So, when I left my corporate job as CEO of an NBFC in January 2017, I jumped on to the entrepreneurial boat immediately.”
Around February 2017, Ashok took over the defunct NBFC–Prest Loans; a trade name of ‘Lord Krishna Financial Services Ltd’ a Non-Banking Finance Company registered with RBI–and becoming the Founder and CEO, transformed it into a new FinTech company with the mission of providing fast, flexible, and transparent Loan products to the Business and SME sector in India.
Reviving the NBFC Model
Originated somewhere in 1713, in old French from Late Latin praestus ready to hand. The word ‘Prest’ means ‘to stands for’ or ‘Ready’ or ‘Prepared’. It also means ‘advance of money or loan.’ The word was highly used during the years 1713-1810 but got lost gradually. “We are reviving the word the way we aim is to revive the businesses and we stand for businesses,” states Ashok.
Today, under the astute guidance of Ashok, the company is led by a strong and experienced team. Prest Loans is a new-age FinTech NBFC, providing all kinds of loans to support and encourage businesses; these loans may be in form of working capital finance to small businesses, MSME units, E-commerce vendors, Invoice financing, Inventory funding and etc. Recently, Prest Loans has stepped into the Electric Vehicle loan segment as well.
The Vision of the company is to assist its stakeholders in growth through customized financing solutions and support the ‘financial inclusion initiative’ for the Micro, Small and Medium Enterprises (MSME) sector in India.
Ashok mentions, “Our mission is to provide solutions of global standards in the Micro, Small and Medium Enterprises (MSME) sector. We would facilitate and encourage entrepreneurs across the country to grow their businesses with a sustainable approach.”
Prest Loans, offers small businesses loans that include unsecured business loans and short- and long-term secured business loans. He chose this path as he didn’t want to wait for a license from the Reserve Bank of India. “There are two ways to start an NBFC – either apply for a new license or acquire a defunct one. We chose the latter since we wanted to get started right away and didn’t want to wait for 3-5 months to get our licenses,” he says.
Prest Loans’ average customers are merchants running businesses in the dense commercial hubs of Delhi-NCR. Further stretching its arms in the commercial clusters of Rajasthan, Gujarat, and Madhya Pradesh.
A Visionary Leader Par Exemplar
Ashok has been a part of a Harvard Business School executive program called ‘Managing and Transforming Professional Service Firms.’ He is a gold medalist commerce graduate from M.D.S. University, Rajasthan and has done Masters in Banking Management (MBM) and CAIIB.
He was heading the commodities and currencies business at Emkay Commotrade Ltd as CEO and Karvy Comtrade Ltd as Country Head. He was the director of Karvy Forex and Currencies Pvt Ltd and Emkay Fincap Pvt Ltd. He has also had the experience of working with the Union Bank of India and UCO Bank.
Ashok has been a regular in business media channels for more than a decade now, providing strategic inputs while also having a strong presence and networking with print and electronic business media.
He has conducted more than 200 public seminars on various financial services segments and has been an eminent speaker in many National Seminars of various organizations like PHD Chamber of commerce, FICCI, Assocham, Exchanges and ICFAI to name a few. He has been on the Jury for the Best Market Analyst Awards conducted by Zee Business for three consecutive years in 2012, 2013 and 2014.
Ashok has been awarded by eminent personalities like Mr Pranab Mukherjee, Mr Narendra Modi, and Mr Amit Shah. He is passionate about setting up and expanding businesses from scratch.
Strengthening through Struggles
Referring to the challenges he faced, Ashok expresses, “Strength and growth come only through continuous effort and struggle.”
Prest Loans had to struggle at several points in its journey. Firstly, when it started the process of getting RBI approval in November 2016, exactly at the time of Demonetization, when RBI was busy in that. Hence, the RBI approval process got delayed. The firm could not infuse capital during that time. It resolved it by raising debt from various sources so that the business continues.
Thereafter, in September 2018 IL&FS fiasco happened due to which NBFCs started facing Asset and Liability Mismatch (ALM) which further created a liquidity crunch in the market. Although Prest Loans did not get directly impacted by this; it surely impacted the capital raise plan as most investors went into wait and watch mode.
Prest Loans could handle this situation and sail through by maintaining a quality portfolio and not having any Asset Liability Mismatch by changing the product mix, infusing more capital, and getting support from its lenders and initial seed investors.
Enabling Businesses to Go Digital
Also, being a digital player, it expects the maximum process to be done through technology, but the initial challenge was that its clients were not so much tech-savvy hence it needed to support them and assist them in completing the process. The team had to put extra effort to make the process easy for them by providing training and assistance to provide quick and easy services from application to disbursement of the loan.
Prest Loans team has been very innovative, they keep going to customers to understand the customer’s needs and create new products from time to time based on customer requirements.
Prest Loans caters to the first ‘M’ in the MSME segment i.e., the Microbusiness segment and offers loans to the MSME Sector i.e., shopkeepers, retailers, and wholesalers who have no banking habits and do not maintain proper financial documents due to the nature of their business.
Tailor-Made Credit Offerings
For example, a small retailer, a juice shop, a food or snack store, a tea stall, a grocery shop etc., have a lot of customer footfall and do cash transactions. For these profiles, it has its expert credit team who understands alternate data and assesses the MSME on a cash flow basis to help in finding the right product, and right amount at an affordable price as per their profile.
It has devised a unique and proprietary credit assessment system which considers the financial and non-financial data into account like personal details, social details, banking behaviour etc., and arrives at a score, called ‘Prest Score.’ It offers the amount of loan, tenure of loan and Commercials (Rate of interest) based on this ‘Prest Score.’
Ashok informs, “Our algorithm-based credit score ‘Prest Score’ is a proprietary software tool. We have built tech strength to offer various kinds of products with a lot of flexibility in tenure, repayment method, interest rate applicability, etc.” The idea is to create an impact with the help of tech.
The Ace of People-Business-Tech Management
As the Ace of Prest Loans, Ashok met more than one lakh business people across the country. This experience helps him to understand the need for any kind of business.
The experience has also taught Ashok how to keep their team motivated and accelerate performance. If they take care of their team and customers, the business will automatically grow and excel. “Business is all about managing the people and their expectations,” says Ashok.
Being a good leader isn’t easy. While a leader’s actions may be scrutinized when things are going bad, it is their leadership qualities that shine through the worst of times. Ashok has a strong belief that ‘The real product of a Founder is his Team.’
A Compassionate Leader Redefining Leadership
The best leaders exhibit certain qualities that make them hugely successful. Clarity, Decisiveness, Courage, passion, and Humility are five attributes of some of today’s truly great leaders.
Ashok says, “Our employees are family members and we do not believe in the typically employer-employee relationship. Like any family, we genuinely care about them and back them up in all situations. Professional experience and deep industry knowledge make our team unique. Our ultimate goal to work as a team and provide the best services is an add-on; ‘Happy Employees = Happy Customer = Successful Company.”
Prest Loans is unique and different in many ways from other lenders in the same space. Some of its distinct traits are:
Technology: Prestloans’ Tech enables more transparency and fast processing at all levels. Each client has a unique user ID and password which enables them to check the loan status, ledger, and every information online anytime during the process and even after the disbursement throughout the loan life cycle.
Anywhere, Anytime Access through a mobile Application (APP): Prest Loans can do most things on the go with help of various tools available to source the customers and do various verifications on the applicant.
Winning on TAT
Ashok believes, “Our success stands at an easy process with minimum documents and the fastest approvals. Our quick processing and flexible repayment options make us unique in this segment.”
Also, the pricing is very competitive, and the rate of interest is based on the customer profile. Prestloans not only consider the financial parameters but also has very high weightage on non-financial parameters like personal and social information of the applicant. Its strength is analyzing the ‘ability and intention to pay’ by the borrowers despite of not having proper documents and financial history.
Another unique philosophy it has is to not focus on the metro or bigger cities; “we are expanding in Tier – III and Tier – IV cities and towns where most lenders are not able to reach. Our team knows the local culture, people, and practices better than anyone else.
We WIN on the Turn Around Time (TAT) by providing faster decisions and servicing to the customers,” says Ashok.
Ashok’s Passionately Valued Counsel
As an experienced professional, Ashok’s advice to the budding aspirants willing to enter the business world is that a business runs on the passion of the founder entrepreneur.
He adds, “I do what I love doing. Being passionate about creating an impact in society through technology, gives me extra energy and positive vibes. I enjoy meeting and talking to my team members and customers on regular basis to learn about ground realities often.
My advice to budding entrepreneurs would be to be in the field, visit and meet the maximum number of customers on regular basis, take feedback and learn from it. Run for creating ‘Value’ and not for creating ‘Valuation’; valuation is a by-product of the product value. Follow the concept of Just Do It.”
Reshaping New Age Finance
The concepts of finance have always remained consistent with the times. The methods of executing financial services have undergone many changes though. Traditional finance relied on building a strong one-stop shop with the entire gamut of services that an individual would need. The new-age financiers are growing rapidly with the growth in technology and the growing need for more customer-focused and dynamic service.
Ashok says, “As a new age financial company, we at Prest Loans decided to put together a list of how traditional finances compare against new age finance.”
Ashok also highlights that an old player is not necessarily traditional, and a new firm doesn’t automatically become ‘new age finance.’ It is a question of mindset and methodology and changing of deeply set ways that decades of financial markets have taught us.
The best thing that a larger player can do is partnering with a smaller firm like a FinTech company that can provide a particular product or service which can give an edge to the bigger player. With a thoughtful approach to finance, using technology and keeping user experience at the centre, a traditional financial company can mould itself to be a formidable, new-age player.
Powering Business’s Present and Future
The lending sector in India will see impressive growth in the times to come and FinTech will play a big part in that growth. New age NBFCs like Prest Loans are already using FinTech to execute better credit scoring, and faster approval processes to build a more memorable customer experience. Their efforts in adopting FinTech will be key in propelling the lending sector in India to heights, never seen before.
The problem of credit health- The credit rating agencies in India (CIBIL, CRIF, Equifax, Experian, Highmark – NBFC companies like Prestloans; are generally a member of all these companies) have been operating under the mechanism that worked for them in western markets.
They seek out information on salary, and assets and try pulling more details through one’s PAN card number. While that might work for urban, salaried professionals, that approach doesn’t yield the right credit rating for someone from a different background, people with no credit history and properly accounted income setup.
Prest Loans is one such digital lending NBFC that is dedicated to making a change in this landscape. Ashok insists, “Get in touch with us today and know more about how we can work together to secure easy and assured finance for you and help you ‘Power your Business.’
Three ‘V’s of Fintech
How the FinTech industry is going to work with the help of Artificial Intelligence and Machine Learning, and especially in India, when you try to go to tier three tier four cities, there are ‘Three Vs of Fintech’ which are going to help. This is also the of the upcoming book of Mr Ashok Mittal.
The first “V” is Voice: So, you need to move away from writing text, for example, writing email content etc. You need to communicate it to the people through voice. There are a lot many companies coming up with voice chat or voice bots where we continue communicating with not just informative material but a two-way communication in terms of questions and answers. Voice Chat voice is going to play a significant role in your segment of the technically powered system.
The second ‘V’ is Videos: So, again, moving away from the text you need to communicate your message through videos. For example, creating videos of smaller duration. You may communicate through videos with your stakeholders.
The third and most important ‘V’ is the language of the customer so “Vernacular’: While the most common mode of communication now is English, some people will try to speak with the client because the customer is not able to express himself the way you want him/her to, so there would be a huge disconnect. So, expressing your natural speech and your own language is very important.