Life @ SoM

Diksha Session

Date: 31^st January, 2014

Speaker: Mr. V. George Anthony

Designation: Managing Director and Country Head, UAE Exchange, India

Topic: Foreign Exchange and Financial Services

Foreign exchange services require a very great amount of operational efficiency and diligence in their activities. It is backed by robust system which does not require any human intervention for operational activities. UAE exchange started its business with its focus on Foreign exchange services. Mr. V. George Anthony started the session with explaining about evolution of the company and business. UAE exchange promoted by Dr. B R Shetty started in 1999. It has scaled up its branch network to 333 by year 2013. These branches are located in 27 regions and 11 zones. The organization has set up its 12% branches in unbanked regions. Currently they are working on starting new service to transfer money via SMS. The main idea behind this is to be part of financial inclusion initiative. It has steadily increased its employee base from 3219 in 2011-12 to 3220 in 2013-14. Mr.  V. George Anthony played key role in getting first FFMC licence in India for UAE Exchange.

UAE Exchange was established in India for focusing on the remittance business. But the revenues from its remittance business have come down from 98% to 10%. The company has diversified its product portfolio by including related products where it can leverage on its existing customer base. To mitigate risk of company in long run in financial business you have to diversify your product range. It introduced loans which they can cross-sell to the existing customers of remittance and travellers cheque.  

The range of loans provided is as below

1. Gold loans
2. Vehicle loans
3. MSME loans
4. Home loans
5. Personal loans

Company has achieved zero default rates in personal loans.

Company believes in diversifying in related areas only and they cater to working class people who need loans. Another addition in the product portfolio is mobile money transfer. This gives zero risk to the business. All mobile transaction happens only when you prepay the amount. It provides high security and easy transfer of money to remote areas where people do not have access to banking services. Currently organization is working on educating the mobile recharge distributors for money transfer.

The organization has two pillars of strength. Its internal control and audit compliance and Risk management.

Internal control and audit compliance is structured as

1. Concurrent audit
2. Internal inspection
3. System based monitoring
4. Compliance
5. Grading of branches
6. DVR monitoring

Major investment and labour goes in audit. We have seen recently that many banks were fined for not having proper control on KYC norms. UAE exchange had all the processes in place to carry out its operations smoothly and they have set an example for that.

Following are the type of risk all the financial institutes have to consider.

1. Currency risk
2. Credit risk
3. Fraud risk

This risk has to be taken care of because many a times branches under pressure of targets set by higher authorities ignore some of the underlying risks. In financial sectors 20% growth is substantial. If some company is growing at very large compared to this then you have to find out from where this growth is coming? and How it is coming?

UAE does not allow its dealers to explore the speculation arena in foreign exchange. Their focus has been on providing transaction services only. All dealers have a cap of $200,000 for carrying out operations. Foreign exchange market is very volatile and sensitive and as the speculation arena is not the core business company does not allow this. Organization does not take any risk and all the buying and selling are squared all the time.