Kahini Chakraborty – Mumbai
Believing in a knowledge banking led approach which aims to provide customised and structured solutions to clients in identified growth sectors of the Indian economy, Yes Bank is looking at working with TAAI, TAFI, OTOAI, ETAA and other travel associations. Speaking to Express TravelWorld, Sanjay Agrawal, senior president – business banking, Yes Bank, said, “We have a travel and tourism vertical in knowledge banking to ensure focused servicing of travel agents and tour operators. Our knowledge bankers are industry experts and offer invaluable and in-depth insights into the travel business, thus helping to develop innovative ideas and nurture them to fruition.” He added, “With innovative institutional environment and conducive policy management, tourism can become the backbone of our economy. We recognise this opportunity and would like to enter at an early stage of this phenomenon.”
Majority of the customers in the travel industry fall under the SME segment. Banks have had to change the way they do business and manage risk by understanding the market and differentiating it from the retail and commercial segments. “The importance of the tourism and hospitality sector is heightened by the fact that they can have a multiplier effect on the overall economy and help other related sectors thrive as well,” opined Agrawal. Yes Bank has created customised lending products like Yes Sambhav, Yes Samriddhi and Yes Suyog in view of these challenges to suit the requirements of the travel business. The bank also offers advanced fund based and non-fund based solutions for larger players.
On the working of the travel segment, he opined, “Being a promoter or family driven in most of the cases, travel agencies rely heavily on private funds, family and friends to raise the capital. They also look at private money lenders and the unorganised financial sector to meet their credit requirements. In these cases, the terms of financing lack clarity and the interest rates may also be high. The limited pool of funding available through these schemes often tends to force potentially viable organisations out of business. Given the nature and maturity of these business models, typically banks and financial institutions associate them with higher operational risk and therefore, credit appraisals may involve high transaction costs. This compounds the difficulty on part of these organisations to access sufficient credit at reasonable rates. Travel companies are constrained by their limited expertise in financial planning and managing receivables. Our endeavour is to address these issues through a knowledge based approach.”