### **Overview** Fedbank Financial Services Limited (**Fedfina**) is a **Mumbai-based, retail-focused Non-Banking Financial Company (NBFC)**, incorporated in 1995 and licensed by the Reserve Bank of India (RBI) as an NBFC in 2010. A **majority-owned subsidiary of Federal Bank Limited**, Fedfina operates as a **Systemically Important NBFC (NBFC-ND-SI)**, specializing in **secured lending products**—primarily **Loan Against Property (LAP)** and **Gold Loans**—targeting **self-employed individuals, MSMEs, and underserved customers** across India. The company went public in 2023 with a successful **IPO of ₹1,090 crore**, listed on BSE (544027) and NSE (FEDFINA). Fedfina’s mission is to drive **financial inclusion** by offering inclusive, tailored credit solutions to customers who lack access to formal banking due to informal income structures or limited documentation. --- ### **Strategic Focus & Business Model** Fedfina follows a **"Twin-Engine" (now evolved into "Fedfina 2.0") strategy**, leveraging two core product lines: 1. **Gold Loans** – High-yield, short-tenor products providing liquidity during downturns. 2. **Loan Against Property (LAP)** – Long-term, stable asset-backed lending serving MSMEs. This dual-engine model enables **cyclical resilience**: Gold Loans act as a counter-cyclical buffer, while LAP supports growth during economic expansions. The business is shifting toward a **fully secured portfolio**, with unsecured business loans **discontinued for new disbursals**. #### **Phygital Operating Model** Fedfina combines a **physical branch network** with **digital innovation**: - **694–699 branches** across **18 Indian states and UTs** (as of H1FY26/Mar 2025), concentrated in **Southern and Western India**, with increasing presence in the North. - Digital platforms: Web, mobile app (**"Fedfina Loans" – over 1.2 million downloads**), customer portal, WhatsApp, social media, and AI-powered tools. - **9 digital login options** for seamless customer access. - Over **75% of registrations and 65% of payments** are conducted digitally. --- ### **Financial & Operational Performance** #### **Asset Growth** - **AUM Growth**: Grew from **₹5 billion in FY15** to **₹161 billion in H1FY26**, representing a **15-year CAGR of ~25%+**. - **Branch Expansion**: Increased from **112 in FY15** to **699 in H1FY26**. - **Employee Strength**: Grew from **511 in FY15** to **4,894 in H1FY26**, reflecting operational scaling. #### **Product Portfolio (H1FY26)** | Product Segment | AUM (₹ Crore) | % of Total AUM | Avg. Ticket Size | LTV | Origination Yield | |------------------|---------------|----------------|------------------|-----|-------------------| | **Mortgage Loans** | ₹8,062 | **54.5%** | ₹30.1 lakh | 51.7% | 13.3% | | - Small-Ticket LAP & HL | ₹3,706 | 23.0% | ₹13.7 lakh | 51.9% | 15.5% | | - Medium-Ticket LAP | ₹5,090 | 31.5% | ₹61.3 lakh | 51.7% | 12.3% | | **Gold Loans** | ~₹67,000 | **41.7%** | ₹2.0 lakh | 71.0% | 19.1% | | **Business Loans** | ₹3,800 | **2.3%** | – | – | Discontinued (off-book/divested) | - **Gold Loan AUM per branch** rose from ₹9.1 crore to ₹12.1 crore YoY. - **Doorstep Gold Loans** contribute **15% of Gold AUM**, with disbursements completed in under 30 minutes at customer premises. - **Direct Sales Gold Loan (DSGL)**: Now accounts for **~15% of Gold AUM**, with **13,000+ new customers via field force** in FY25. --- ### **Target Market & Lending Approach** Fedfina serves **underserved MSMEs and self-employed individuals**, particularly in **Tier II and Tier III towns**, who face exclusion from traditional banks due to: - Limited formal documentation - Cash-based operations - Non-traditional income patterns #### **Key Segments:** - **Small-Ticket LAP/HL**: Targeting borrowers with moderate incomes; loans up to ₹3 crore. - **Medium-Ticket LAP**: For MSMEs with ₹1–10 crore turnover, used for expansion, working capital, and CAPEX. - **Gold Loans**: For salaried individuals, housewives, traders, and micro-unit owners seeking urgent liquidity. The company capitalizes on India’s **~25,000 tonnes of household gold reserves**, offering **digitized, doorstep, and collateralized lending**. --- ### **Risk Management & Credit Quality** - **75% of AUM** comes from borrowers with **CIBIL score >700**, indicating **high credit quality**. - **Secured Lending Ratio**: ~90% of the portfolio is now fully secured. - **Mortgage Collateral**: 82.1% secured by **self-occupied residential/commercial properties**. - **Unsecured Business Loans**: ~95% of this segment have **CIBIL ≤700**, reflecting intentional risk segmentation. - **Underwriting Framework**: - **Income-Based** for LAP and Business Loans (GST reviews, field verification). - **Collateral-Based** for Gold Loans (in-house valuation based on caratage and weight). - **Digital Risk Tools**: Salesforce (mortgage), Prosper (gold), BRE (Business Rules Engine), AI/ML for collections. --- ### **Technology & Digital Transformation** Fedfina is a **digital-first NBFC**, with technology embedded across the value chain: #### **Platforms & Systems** - **Digital Loan Origination System (LOS)**: Fully migrated to **Salesforce**, enabling end-to-end paperless processing. - **Fedfina Mobile App** (>1.2 million downloads): Supports loan applications, EMI calculations, payments, branch locator. - **Self-Service Portal**: 24/7 access to account management, re-pledging, payments. - **AI & Automation**: - Cloud telephony + AI/ML for customer service. - Hindi-language chatbot on website and WhatsApp. - **FedCollect App**: Real-time collections dashboards for field teams. - **Fedbank Lite**: Internal app for employee productivity (e-NACH, lead gen, telecalling). #### **Fintech Integration** - Uses **IndiaStack, Aadhaar eKYC, UPI, and multiple fund transfer APIs**. - **Paperless & cashless** for loans >₹20,000. - **Digi Locker** and **branch-on-wheels** expand rural reach. --- ### **Funding & Capital Position** - **AA+ (Stable)** credit rating from **CARE, CRISIL, and India Ratings**, reflecting strong governance and financial discipline. - **Capital Adequacy (CRAR)**: **21.9%**, well above RBI’s 15% minimum. - **Diversified Funding Model**: - Co-lending (RBI’s CLM) with banks in **priority sectors**. - Debt assignment (DA), securitization, and direct borrowings. - Co-lending allows **80% risk transfer (20% retained)**, boosting **ROE and ROA** without capital strain. - Gold loan co-lending yields returns of **~20% on 20% capital**. --- ### **Strategic Initiatives (Fedfina 2.0)** As of H1FY26, the company is executing **Fedfina 2.0**, focusing on: 1. **Disciplined Growth**: Prioritizing **capital-efficient, high-return secured products**. 2. **Rebuilding ST LAP**: Re-engineering underwriting and collections in small-ticket mortgage segment. 3. **Scaling Medium-Ticket LAP**: With strong risk controls and capital efficiency. 4. **Expanding Gold Loans**: Through new branches, **colocation strategy**, and **doorstep services**. 5. **Digitalization**: Full transition to **digital origination, AI-backed underwriting**, and automated collections. 6. **Cost Optimization**: Rationalizing branch footprint, improving **tooth-to-tail ratio** (hiring frontline sales, not back-office staff). 7. **ESG Integration**: Paperless operations, energy-efficient branches. --- ### **Leadership & Governance** - **Promoter**: **Federal Bank Ltd**, providing strong **brand credibility, governance, and access to capital**. - **MD & CEO (Federal Bank)**: **Mr. KVS Manian** (ex-Kotak Mahindra Bank), appointed Sep 2024, brings transformation experience. - **Leadership Depth**: Over **200 years of cumulative management experience**. - **Board Strength**: Includes experienced professionals like **Mr. Parvez Mulla** (ex-HDFC, L&T Finance). ---