Sample this, according to available statistics, Non Performing Assets (NPA)s for all banks rose to 3.6 per cent in September 2012 and is expected to reach 4.4 per cent in March 2014. Given this large number, it is not surprising that global rating agency Moody downgraded Indian banking system’s outlook from stable to negative. One look at any bank’s balance sheet and it is not too difficult to understand the heartburn NPAs are causing the institution.
While regulatory corrections and policy changes take shape, Ahmedabad-based NPAsource.com is trying in its own small way to fix this gigantic problem faced by all banks – public, private and foreign. NPAsource.com, an online portal dedicated to the resolution of NPA properties of banks. Many PSU banks like SBI, IDBI, Bank of India, Indian Overseas Bank & Nabard have already started putting their NPA properties auction notices on this portal. NPAsource.com provides a global network for banks as well as potential and genuine investors interested in purchasing NPAs connect with each other. It also restricts the syndicate of local auctioneers who generally buy NPA properties at a lower price than their actual market realization values. The portal lists more than 21,000 NPA properties worth over Rs 20,000 crores. NPAsource.com’s team has followed up on about 8,500 NPA properties (industrial, commercial and residential) valued at about Rs. 5,363 crore, of which 2,823 properties valued at Rs. 1,419 crore have already been resolved.
NPAsource.com is the brain child of founder and MD, Devendra Jain, a chartered accountant by training, Devendra has over a decade’s experience with corporate, before he turned entrepreneur. He started NPAsource in August 2011, but commercial operations for the startup only began in May 2012. The initial months were taken up in establishing contacts with banks and convincing them to use the portal to resolve their NPA problems. Today many banks are happy working with NPAsource and the growing list of properties on the portal is an evidence of this fact.
“Banks generally don’t want to share more information about properties and investors who want to make investments need more information to decide on the deal. We wanted to create a platform where everyone can come together and solve their problems,” explains Devendra. After getting details from the bank, NPAsource also analyses and cross checks all the property information before putting it up on the portal. Buyers looking to purchase an NPA property can be of all the information available on the site. NPAsource lists information about residential, commercial and industrial properties. However the portal does not list NPAs like personal loan or vehicle loan, the properties listed on NPAsource are only those based on security. “We don’t do personal loan type of NPA because they huge in volume, but small in value. Also to search for defaulter, locate them, it becomes more like a recovery agent and we are not in that area. We want to provide ideas, solutions to banks and investors,” says Devendra.
Besides their registered office at Ahmedabad, they have an office in Mumbai and Jaipur and have 5-6 franchises located in North India and Maharashtra. Including all their own staff and the franchisees, NPAsource already employs 60-70 people across the country.
NPAsource has different revenue models. They charge a small fee to the banks that put up their auction notice on their site. The portal conducts indepth analyses of properties listed on the site and for investors who want to look at those detailed reports, they have to purchase it from NPAsource. Then they have a number of consultants, CAs and company secretaries registered on their website, who pay for the advertisements they post here. NPAsource helps this group of professionals connect to investors who come to their website looking for assistance. And the most effective revenue model for the website is when there is a property resolution. When a property issue is resolved and they are able to conclude a deal between the bank and the investor, then they earn consultancy charges for their services.
NPAsource is getting very good response from banks and investors alike and the time they invested in building relations with banks is finally bearing fruit. “The NPA market size is somewhere in the region of Rs 2 lakh crore, even if we cover 5-10% of the market it’s a big scope for us,” says Devendra. To make investors aware about NPAsource they have a marketing and PR team, who regularly seek customers. They also conduct seminars, conferences, investor meets on a regular basis to tell people about what they are doing.
While there is a lot of scope within India itself, Devendra is not waiting for saturation here before he looks outside. NPAsource set up its first offshore office in Dubai six months back and today have established a good network with banks in UAE, both local as well as international. Devendra chose Dubai as his first destination, because he knows its importance as an international hub. “We are getting good response from Dubai, but it’s a mixed market and even bankers there are facing many problems. The reason we chose Dubai is because it is an international hub, where all big international banks are present. Dubai itself is a very small market for us, but through there we can easily access banks from other countries, that’s the vision,” says Devendra.