14-04-2014, 03:41 PM
Study of Channel Finance Customers in TCFSL
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The Banking industry in India is becoming highly competitive day by day, so it is necessary to know the level of satisfaction which the customers derive by using the services of the bank or financial institution. By knowing the level of satisfaction we can know the preferences of the customers and can recommend the outcomes to help serve the customers better. To this end, a study of the channel finance customers in TCFSL was done.
The major findings are:
1. A satisfaction rating of 80% from customers: Customers satisfied due to convenience, long association with Tata group and support of RMs.
2. 21% customers unaware of their RMs with 40% of RMs maintaining limited contact
3. Low awareness and usage of the Sage CRM among customers
4. High Satisfaction levels, with many preferring TCFSL over other financers but some issues remain
a. Documentation and Renewals
b. While interest rates does not determine overall customer satisfaction, it has featured very prominently as a critical buyer value for the corporates
c. Other areas of improvement involve TDS refund, Tranche period and notification systems
INTRODUCTION
About TCFSL
Tata Capital Limited is a subsidiary of Tata Sons Limited. The Company is registered with the Reserve Bank of India as a Systemically Important Non Deposit Accepting Core Investment Company and offers through itself and its subsidiaries fund and fee-based financial services to its customers.
TCFSL caters to the diverse needs of retail, corporate and institutional customers. The project focused on the channel financing function in the corporate division. The corporate division also provides term loans, working capital demand loans, lease rental discounting, bill discounting, structured investments, letter of credit, bank guarantee and equipment finance.
With 98 operating companies, across seven major business sectors, the Tata Group renders us a unique advantage of being able to benefit from the knowledge and the network. In spite of the economic turbulence of 2008-09, the company closed fiscal 2011 with an asset book of Rs164 billion and Rs1.03 billion profits before tax.
The principal strengths of TCFSL lie in the strong Tata brand with its inherent stamp of credibility and transparency, and the advantage of having holistic, seamless support for all financial services requirements under one reliable roof. Another advantage for TCFSL is the Tata ecosystem. All business partners, customers and vendors of Tata companies provide a big universe of opportunities, especially in the corporate customer segment, an advantage that no other NBFC has. The Tata companies account for less than 20 per cent of TCFSL’s business and the Tata ecosystem another 30 to 40 per cent. Another advantage is that, as an NBFC, TCFSL can provide acquisition financing and promoter funding, which banks cannot offer. There are no restrictions on the number of branches that NBFCs can set up, and NBFCs, being customer-focused, have a faster turnaround in servicing customers than banks. Another advantage in TCFSL’s business model unlike most NBFCs which focus on retail or B2C business: TCFSL have an equal emphasis on corporate clients. This gives TCFSL an added advantage in terms of the pace of growth as the B2C business has a longer gestation.
Process Followed - Scope & Methodology
The Banking space in India is becoming highly competitive day by day so it is necessary to know the level of satisfaction which the customers derive by using the services of TCFSL.
By knowing the level of satisfaction we can know the preferences of the customers and can recommend the outcomes to help serve the customers better.
Hence, a customer study covering 150 customers of TCFSL availing channel finance was hence proposed. The survey covered around 150 existing customers of Tata Steel, MJunction, Titan, Levi’s, Tata Global Beverages and various other non-Tata vendors availing the facility of Channel Finance.
Understanding Channel Finance
Forward and backward linkages in a business organization play a significant role in the success or failure of the business entity. For a manufacturing or trading firm, while the suppliers of raw material are important as they provide input for production, equally important is the role of its distributors which sell products manufactured by the firm through retailers to the ultimate consumer. Channel financing relates to ensuring that integrated financial and commercial solution is available to the entire chain of supply and distribution, that could ensure the health of the firm, financed by the bank.
Channel financing is different from the conventional lending since, in conventional lending, the financing banks are generally not concerned as to how the suppliers of the firm and dealers of the products of firm, are financing their activity. The weak financials of the supplier (leading to delay in supply and non-availability of market credit) or the dealers of the products (delay in receipt in payment leading to higher book debts) could adversely impact the sales as well as profits of the financed firm. In the channel financing the financing bank may have to find ways and means as to how the suppliers and buyers (dealers of the product) can be financed through various instruments/facilities. Hence, the channel financing adds value to the transaction for all the parties concerned, be it the manufacturer/trader, the supplier of the inputs or the dealer/buyer or the financing bank.