A streamlined government financial institution that is digitally aware

By going through a digital transformation, TNPFC succeeded in attracting depositors

By going through a digital transformation, TNPFC succeeded in attracting depositors

Public institutions are often perceived as inefficient and dealing with them is seen as a time-consuming process. However, the more than three-decade-old state-owned Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd., (TNPFC) broke the mold by staying lean and undertaking a digital transformation. It has also become one of the trusted institutions, which offers a higher interest rate than banks for deposits.

TNPFC began operations in 1991 and is registered as a non-bank financial company. It raises funds through various attractive deposit schemes and provides financial assistance for power and infrastructure projects of the Tamil Nadu Generation and Distribution Corporation Ltd (Tangierco).

Fixed deposits are mobilized from the public, institutions, government departments and state government programs, such as cash incentive program, family support programs, minister’s daughter protection program in chief, the Oru Kala Pooja program and the COVID-19 program.

The average interest rate offered by the company is 150 basis points higher than the rates offered by public sector banks. At present, TNPFC has 2,35,791 depositors with cumulative deposits of ₹34,248 crore (excluding government scheme deposits). Over the past two years, what has helped the company is its digital transformation.

Chandra Kant Kamble, the former managing director of TNPFC, who led the digital transformation, pointed out that there were legacy system issues such as data integrity, redundancy, partial data and multiplicity of data .

“In 2018, the company was operating with less than 50 employees and did not have a digital channel, such as a web portal or mobile app, to collect payments for creating new fixed deposits. Moreover, it has not been able to renew or close existing fixed deposits online,” he pointed out.

At the time, public depositors had to go to the company’s only branch in Chennai to receive the proceeds from closing term deposits through a check instrument, Mr Kamble said.

However, due to digital transformation, TNPFC was able to mobilize online retail deposits of over ₹1,080 crore from April 2020 to May 2021, he pointed out. It was also able to attract applicants from other states. The transformation has also ensured timely disbursement of trust funds for beneficiaries approved by Tamil Nadu’s Departments of Social Welfare and School Education. The digital push has helped TNPFC move from the generic demographic of retired service staff to a more digital banking experience for all types of depositors.

Before the digital transformation, opening an account took four to eight days, but after digitization it took four to six minutes. The same was true for transactions such as account closure, renewal, and appointment changes.

Filers such as Janaki Raman, a naval architect, are full of praise for TNPFC’s digital commitment. “I have been a customer for 15 years. Earlier I was visiting the branch and it took an hour because of the queue. Now, with online facilities, every service is just a click away and it is very easy to use,” he said, adding that online services were better than even some private sector banks.

“I have been a digital customer for six months. The online transaction is very simple and user-friendly. It was safe and I did not expect such an experience from a government organization,” said Ramya Vasudevan, Founder and CEO of Vivikta Naturals.

Mr. Kamble pointed out that the real challenge of digitization was that they did not have a dedicated IT team, unlike private banks.

Meanwhile, some have expressed concerns about the security of deposits with TNPFC as it lends to Tangedco, which is in poor financial condition. Officials assured that Tangedco had never defaulted on payment to TNPFC and that given the support of the state government, the risk would be limited.

TNPFC has also started treasury operations and has sufficient liquidity. A further migration of risks has been foreseen through the diversification of operations, they added.

A senior TNPFC official pointed out that the company is considering other avenues such as bill discounting for people waiting for payments from public sector companies, financing other government-related infrastructure projects, which are managed under a public-private partnership or where the government is the major buyer and consortium loan in Tamil Nadu.

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