Lanka ORIX Finance completes 10 years of excellence

Lanka ORIX Finance PLC is a premier licensed finance company in Sri Lanka with its own unique identity. As one of the flagship entities of the LOLC Group, it has remained dedicated to bridging the gap between aspiration and achievement based on the unshakable foundation of uncompromising quality, complete customer satisfaction and unparalleled financial expertise.

Today, the legacy of Lanka ORIX Finance PLC resonates the prowess of a dynamic entity – a stalwart in Sri Lanka’s rapidly evolving finance industry. Inspired by a vision to make a difference in the lives of the people of Sri Lanka, it aims to be innovative in developing new products and services as well as creating new markets, particularly in untapped regions of the country.

Following are excerpts of an interview with Lanka ORIX Finance Managing Director/Chief Executive Officer Brindley de Zylva

By Ashwin Hemmathagama

Q: How would you assess LOLC’s performance over the past 10 years?

De Zylva: Lanka ORIX Finance is a subsidiary of the Lanka ORIX Leasing Company, which holds 90% of the stake, with the balance held by the general public. This company was incorporated in 2001 and commenced commercial operations on 5 June 2003. We will be completing 10 years in business in June.

Until 2009, the business environment was rife with uncertainties due to terrorist activities stifling performance – the finance business was not exempt from this. However, prudent risk mitigation methods enabled us grow steadily during this period. During the period, we established ourselves as provider of inclusive financial services and expanded our reach to the lower end of the SME sector.

The defeat of terrorism in 2009 gave us new opportunities and opened markets in the Northern and Eastern Provinces. Today, we have eight branches in the North and another seven branches in the Eastern Province, in addition to two savings centers and 11 cash collection points to serve the growing customer base in these regions. Incidentally, 20% of our outlets are now located in the Northern and Eastern Provinces.

Q: Can you quantify your success during this period?

De Zylva: The success of our company can be measured by the trust the public has placed in us. We hold over 10% of deposits in the finance sector. Our deposit base, which exceeds Rs. 31 billion, is one of the largest in this sector – in less than 10 years of operations.

Q: What is your most preferred sector?

De Zylva:  Our business caters to all segments of society. We have some high net worth customers, especially amongst the SFIDA and NRFC account holders. However, our business model on lending products is best suited to the SME sector with a vast range of asset backed auto finance products to cater to all their needs. By concentrating on loans for income generating activities, we are constantly looking at improving the income and livelihood of this segment. With specially developed micro savings products, we strive to inculcate the habit of saving.

Q: If so, why not start a separate company exclusively for micro financing?

De Zylva:  In fact, LOLC Microcredit Ltd., a company within the LOLC Group, specialises in micro credit. We encourage and instil the culture of saving, both within the micro credit customer base and their children for whom we have developed an attractive children’s savings scheme – ‘ORIX Champ’.

Q: What are your main products?

De Zylva: On the lending side, loans and finance leases are the main products with the underlying security being a motor vehicle. These products in general could be termed as ‘auto finance’. On the deposit side, it is the senior citizens deposit scheme that is the most popular, with over 36% of our deposit holders constituting those over 55 years of age.

Our fastest growing product is inward worker remittances. In 2008, we got the approval for limited foreign currency business. We developed inward worker remittance channels aimed at luring those in the informal sector and the formal sector. We have partnered with exchange houses in Europe and the Middle East to offer safe and economical channels for remittances.

Credit schemes have been developed to provide the beneficiaries of remittances with the much required seed capital to commence cottage industries that will give them a steady source of income when they return home at the end of their tenure.

As an encouragement, we provide a free life insurance cover for migrant workers who utilise the remittance channels developed by us, which also includes compensation for loss of employment and reimbursement of airfare to attend the funeral of a close family member.

Q: What is your status on Islamic finance?

De Zylva: Our aim is to offer an inclusive financial service for those excluded from the formal sector due to their religious beliefs. We have gone to great lengths to ensure that we have the most trusted Shariah scholars on an advisory panel to assist us in perfecting our Islamic finance scheme. We have four branches, three of which are in the Eastern province, specialising in Islamic finance whilst the entire branch network is geared to offer this scheme. Islamic finance accounts for 10% of our business.

Q: If the contribution is 10% from Islamic finance, why not open an Islamic bank separately?

De Zylva: Well, we are a finance company with our own market in the financial services sector which is independent of banks whose focus is much wider. There will always be room for finance companies in any economy provided their focus is to shift customers from the informal to the formal sector.

Q: What are your plans for the next decade?

De Zylva:  Our first decade has been amazing. Our deposit base has grown from zero to over Rs. 31 billion, shareholder funds from Rs. 200 million to over Rs. 5 billion, our asset base exceeds Rs. 47 billion and we are the only finance company in the country to be granted permission to engage in foreign currency business, join the SWIFT network and be listed in the Bankers Almanac.

Our plans for the next decade revolve around the use of mobile technology without which the financial sector will be left behind. The foreign currency deposit market will also feature prominently in planning ahead.

Q: How would you assess competition within the industry?

De Zylva: There is lot of room for growth within the country. We see lot of opportunities and it is a matter of how you make use of them. We welcome competition – it will assist in expanding markets.