In his leadership role at Poonawalla Fincorp, Abhay Bhutada has spearheaded initiatives aimed at reducing operational expenses (OPEX) while concurrently enhancing asset quality. Through strategic measures such as consolidating branches and manpower, adopting a digital-led model, and leveraging data analytics for prudent lending decisions, the company has achieved a significant reduction in OPEX and a consistent improvement in asset quality metrics. Bhutada's emphasis on a risk-adjusted lending approach and a blend of digital and physical strategies has positioned Poonawalla Fincorp for sustainable growth, reaffirming his commitment to operational efficiency and asset quality enhancement.

1. Abhay Bhutada's Strategy for
Reducing OPEX and Enhancing Asset
Quality at Poonawalla Fincorp

2. Introduction
Optimizing operational efficiency and enhancing asset quality are crucial goals for any financial
institution. Abhay Bhutada, MD of Poonawalla Fincorp, has successfully navigated these challenging
terrains. His strategic approach has not only reduced operational expenses but also improved asset
quality, setting a strong foundation for the company’s future growth. Let’s delve into the key measures
that have driven these achievements.

3. Achieving Operational Efficiency
● Reducing operational expenses (OPEX) is a significant milestone for Poonawalla Fincorp.
● The company has seen a consistent reduction in OPEX over the last few quarters, dropping from
5.43% to 3.99% year on year. This impressive reduction can be attributed to several strategic
initiatives:

4. Consolidation of Branches and Manpower
● One of the primary strategies was the consolidation of branches and manpower.
● By optimizing the physical presence and streamlining the workforce, Poonawalla Fincorp has
managed to cut down on unnecessary expenses.
● This not only reduces costs but also improves operational efficiency.

5. Focus on a Digital-Led Model
● A significant shift towards a digital-led model has been instrumental in reducing OPEX.
● The company has adopted a centralized approach where sourcing is primarily digital,
supplemented by a Direct Selling Agent (DSA) model.
● This digital-first strategy minimizes costs associated with physical operations and manual
processes.
● The emphasis on digital collections further contributes to cost efficiency, ensuring that
operations remain lean and effective.

6. Phygital Strategy
● While the focus is on digital, Poonawalla Fincorp has not entirely abandoned the physical
model.
● The blend of digital and physical ensures that the company can cater to diverse customer needs
while maintaining cost efficiency.
● This hybrid approach leverages the best of both worlds, ensuring seamless operations and
customer satisfaction.

7. Enhancing Asset Quality
● Maintaining and improving asset quality is another area where Abhay Bhutada, MD of the
company has made a substantial impact.
● The company has shown consistent improvement in asset quality, which is crucial for long-term
sustainability and growth.

8. Risk-Adjusted Lending Approach
● Poonawalla Fincorp employs a risk-adjusted approach to lending.
● Rather than targeting new-to-credit customers or riskier segments, the company focuses on
borrowers with proven credit histories and stable cash flows.
● This strategy mitigates the risk associated with lending and ensures a high-quality loan portfolio.

9. Leveraging Data and Analytics
● The company leverages a robust database and advanced analytics to make informed lending
decisions.
● By lending to bureau-tested customers, Poonawalla Fincorp minimizes the risk of defaults and
enhances the overall quality of its assets.
● This data-driven approach ensures that the company’s growth does not come at the expense of
asset quality.

10. Consistent Improvement in Asset Quality
Metrics
● The effectiveness of these strategies is evident in the company’s asset quality metrics.
● Gross Non-Performing Assets (GNPA) have reduced from 1.44% to 1.16%, and Net
Non-Performing Assets (NNPA) have decreased from 0.78% to 0.59%.
● These improvements reflect the company’s commitment to maintaining a healthy loan portfolio
and underscore the success of its strategic initiatives.

11. Future Trajectory
● Looking ahead, Poonawalla Fincorp is well-positioned to continue its trajectory of reducing
OPEX and enhancing asset quality.
● Abhay Bhutada’s confidence in the company’s prospects is based on the robust strategies in
place.
● The digital-led model, combined with a prudent lending approach, ensures that the company can
achieve sustainable growth without compromising on asset quality.

12. Conclusion
● Abhay Bhutada’s leadership at Poonawalla Fincorp showcases how strategic initiatives can drive
significant improvements in operational efficiency and asset quality.
● By consolidating resources, embracing digital transformation, and adopting a risk-adjusted
lending approach, the company has set a strong foundation for continued success.
● As Poonawalla Fincorp moves forward, these strategies will undoubtedly play a crucial role in
maintaining its competitive edge and achieving long-term growth.