Tata International implements learnings from Tata Motors Finance on Operational Processes in Retail Financing

Published on February 22, 2023

Tata International is in the business of distribution of commercial vehicles, agricultural and construction equipment and passenger vehicles in various countries of Africa. Financing plays a key role in enhancing sales in these markets. AFCL is a Tata International brand in Africa for retail financing. The company started operations a few years ago and is currently in the growth phase for number of products and markets.

AFCL wanted to look at the global best practices in retail financing, which would help it to scale faster and reduce risks associated with asset-based finance. It also wanted to understand operational processes like underwriting, KYC and risk management. To support AFCL in its endeavours, Tata Business Excellence Group (TBExG) facilitated the following three best practices sessions with SMEs from Tata Motors Finance:-

1. KYC by Sujir Nayak, Head - Operations; and J Jadhwani, Head - Business Transformation & CISO, on June 1, 2022
2. Session on Credit Risk by Sachin Lahoti, Head - Credit, New Vehicle finance (TMFL) on July 5, 2022
3. Collections by Atul Pratap (TMFL) on July 27, 2022

Across the three topics, AFCL could implement the following learnings:

1. KYC
   1. Verified KYC Process with TMFL
   2. Implemented best practices around file segregation and online file storage to DMS as a best practice
   3. Implemented best practices around KYC verification
   4. Drafted AML-CFT policy based on TMFL’s response

2. Credit and Risk
   1. TMFL guided AFCL on how credit assessment and underwriting are done along with standardised payment and best payment methods
   2. AFCL then developed a new Credit Assessment Tool (CAT) on a best-effort basis to further strengthen and standardise their internal processes. The improved CAT now ensures:
      - Standardisation across AFCL on credit evaluation and credit decisions
      - Improved customer scoring model
      - Build in sensitivity analysis
      - Build in cash flow analysis
      - Improved ratio analysis with graphs
      - Differentiation in credit evaluation between company and individuals

3. Collections
   1. AFCL verified its collection mechanism against what TMFL uses
   2. TMFL guided AFCL on how to use an online auction/sales platform which the company also took as a good practice. It is now working to build an online platform to better support the sale of repo vehicles