Tamil Nadu

A lean, digitally savvy government financial institution

Government-owned institutions are often perceived as inefficient and transacting with them is considered a time-consuming process. However, the over three-decade-old State-owned Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd., (TNPFC) has broken the mould by remaining lean and undertaking a digital transformation. It has also emerged as one of the trusted institutions, which delivers a higher than bank interest rate for deposits.

The TNPFC commenced operations in 1991 and is registered as a non-banking finance company. It mobilises funds through various attractive deposit schemes and provides financial assistance to power and infrastructure projects of the Tamil Nadu Generation and Distribution Corporation Ltd (Tangedco).

The fixed deposits are mobilised from the public, institutions, government departments and State government schemes, such as cash incentive scheme, bread-winning schemes, the Chief Minister’s Girl Child Protection Scheme, Oru Kala Pooja Scheme and the COVID-19 Scheme.

The average interest rate offered by the company is 150 basis points more than the rates provided by public sector banks. At present, TNPFC has 2,35,791 depositors with cumulative deposits of ₹34,248 crore (excluding government scheme deposits). In the last two years, what has helped the company is its digital transformation.

Chandra Kant Kamble, the former Managing Director of TNPFC, who spearheaded the digital transformation, pointed out that there were legacy system issues like data integrity, redundancy, partial data and data multiplicity.

“In 2018, the company operated with less than 50 staff members and did not have a digital channel, such as a web portal or mobile application, to collect payments for the creation of new fixed deposits. Further, it was unable to renew or close existing fixed deposits online,” he pointed out.

Back then, public depositors needed to visit the sole corporate branch in Chennai to receive the proceeds from the closure of fixed deposits through a cheque instrument, Mr. Kamble said.

However, due to the digital transformation, TNPFC was able to mobilise online retail deposits of over ₹1,080 crore from April 2020 till May 2021, he pointed out. It was also able to attract depositors from other States. The transformation also ensured timely disbursement of deposit funds for beneficiaries approved by the Tamil Nadu Social Welfare and School Education Departments. The digital push helped TNPFC to shift from the generic demographic of retired service personnel to a more digital banking experience for all types of depositors.

Prior to the digital transformation, account opening took four-eight days, but post-digitisation, it took four-six minutes. The same was the case for transactions like account closure, renewal and nomination changes.

Depositors such as Janaki Raman, a naval architect, are full of praise for the digital engagement by TNPFC. “I have been a customer for 15 years. Earlier, I was visiting the branch and it took one hour because of the queue. Now thanks to online facilities, every service is just a click away, and it is very easy to operate,” he said, adding that the online services were better than even some of the private sector banks.

“I have been a digital customer for the last six months. Transacting online is very easy and user friendly. It has been safe, and I never expected such an experience from a government organisation,” said Ramya Vasudevan, founder and CEO of Vivikta Naturals.

Mr. Kamble pointed out that the real challenge to the digitisation was they did not have a dedicated information technology team, unlike private banks.

Meanwhile, some have raised concerns about the safety of deposits with TNPFC as it lends to Tangedco, which is in a bad financial position. Officials assured that Tangedco had never defaulted on payments to TNPFC and since there was State government backing, the risk would be limited.

TNPFC has also started treasury operations and has enough liquidity. Further risk migration has been planned through diversification of operations, they added.

A senior official of TNPFC pointed out that the company was looking into other avenues like bill discounting for people who are expecting payments from the public sector enterprises, funding other government-related infrastructure projects, which are run under public private partnership or where government is the main purchaser, and consortium lending in Tamil Nadu.


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Printable version | Jun 10, 2022 1:23:41 am | https://www.thehindu.com/news/national/tamil-nadu/a-lean-digitally-savvy-government-financial-institution/article65511481.ece