New business model canvas

Navaratna Public Sector Undertaking (PSU) NLC India Ltd. (NLCIL) is exploring the feasibility of creating a business model for producing green hydrogen. This is in line with the Union government’s goal of creating a hydrogen economy in the country to support green energy security, NLCIL Chairman-cum-Managing Director Rakesh Kumar, said here on Monday.

Mr. Kumar, who hoisted the Tricolour at the Bharathi Stadium to mark the Independence Day, said the NLCIL had registered impressive records in physical and financial fronts for the year 2021-22 and for the first quarter of 2022-23. The consolidated net profit of the company for the first quarter of 2022-23 was ₹568.83 crore, an increase of 59.07% over the previous year. During the first quarter, NLCIL power stations produced 6,963.03 Million Units, which is the highest ever since inception.

During 2021-22, NLCIL had contributed ₹2,200 crore to Central and State exchequers, he said, adding that Tamil Nadu was the major beneficiary of the PSU’s power plants with a maximum share of 55% of its total power generation. The total power generation of NLCIL had now reached 6,061.06 MW and mining capacity enhanced to 52.60 million tonnes per annum, he said.

Mr. Kumar said NLCIL’s business matrix had been integrated with an optimal mix of thermal and renewable energy generation by diversifying into new initiatives. This included commercial mining, installation of electric vehicle charging stations, blending of lignite with coal and underground coal gasification.

NLCIL functional directors Shaji John, K. Mohan Reddy, Suresh Chandra Suman, Chief Vigilance Officer L..Chandrasekhar, NLCIL’s senior officials, executives, employees, and representatives of unions and associations attended the celebrations. To mark the occasion, the senior most employee of NLCIL T. Raja, technician grade-I, mines-II and his wife were honoured by Mr. Kumar.

Thomson Nguyen is the founder and CEO of Nearside , a neobank serving small businesses of all sizes.

What do Bank of America, JPMorgan Chase and Wells Fargo all have in common? They are all traditional financial institutions built to service large, well-known businesses. Big banks choose to direct their major products toward big companies because they have the potential for more significant returns. And their best consumer products are, similarly, aimed at the big spenders—people with plenty of capital.

The question many are asking: Who will serve the little guy?

Small businesses are the backbone of the modern economy and make up more than half of the businesses circulating the market in the U.S. Since the outbreak of Covid-19, we have seen a flood of new business applications in 2021 and 2022, bringing a wave of first-time entrepreneurs and fresh thinking into the commercial sector. Yet, I believe these new businesses remain largely underserved by more established financial institutions.

What exactly is a small business?

Part of the problem is that our understanding—and most banks’ understanding—of small businesses is pretty narrow. When people hear “small business,” they typically think of mom-and-pop shops, family-owned restaurants or privately owned car mechanic garages. While these businesses are valid and still in need of better banking options, they don’t fully represent the reality of our workforce. The formal definition of a small business is a company with fewer than 500 employees, according to the U.S. Small Business Administration . However, companies with fewer than 20 employees have different needs than organizations with hundreds.

Etsy shops, influencers with brand partnerships, freelancers, gigsters and so many more all fall under the small and micro-business category. Their untraditional take on business ownership presents new needs that have yet to be addressed by big banks.

Changing The Future Of Banking

An article at BankDirector.com describes the financial offerings for smaller businesses as ” limited at best and inadequate at worst.” In the past, most were forced to visit physical branches. On top of that, I’ve found that most legacy banks won’t offer new entrepreneurs access to credit. This practice forces them to use personal cards to manage business cash flow or take out loans just to lay their business’ foundation. It is a vicious cycle that only ever affects entrepreneurs of small and micro-businesses. The more hoops a business owner has to jump through, the more likely they will get caught in one of them.

Fortunately, many entrepreneurs are creating new companies and tools to create better banking solutions for small and micro-businesses. After all, no one understands the challenges of entrepreneurs better than other entrepreneurs.

Today, digital integrations and technologies are changing how people handle their money. The convergence of these two phenomena is bringing about a transformation in banking that I think will set a precedent for how small business banking should be. Thanks to the rise of mobile and online financial resources, setting up and running a business is less of a hassle. Now, most banking tasks can be done with a few taps on a smartphone between meetings, from the comfort of your bed or on the go.

But the future of business banking isn’t just digital—it’s about the additional services alternative banking can provide for entrepreneurs’ unique needs. Shifting away from legacy financial institutions and focusing on alternative, tech-focused options in the mainstream market creates a new sector and enables more entrepreneurs to build and scale their businesses.

Before You Open Your Account

It’s important to remember that not every banking solution has the same services, fees or even account types. Knowing what banking details matter most and analyzing your situation will significantly benefit you as a small business owner, so you don’t put money where it isn’t beneficial. For example, if you only need a business checking and savings account to separate your finances while you build your company, a neobank could be a good option. The same goes if you want a place solely to deposit and withdraw funds.

Because neobanks are targeted for the specific communities traditional banks leave out, they have certain tech features that other institutions don’t such as earlier access to direct deposits and small business loans to help you reach your goals faster. They can be a solid option for low to no-cost banking, but may not be the best choice if you are looking for an institution that provides a broad array of account and service types or includes physical branches and higher maximum deposits. It all depends on what you need for your business.

Helping the little guy may seem like a charitable gesture—but the truth is that working with small businesses is an incredibly viable and lucrative business move as well. The number of entrepreneurs entering the economy is not slowing down, so it’s time for the banking industry to catch up. Large legacy banks’ lack of interest in accommodating small businesses hinders their chance to tap into a booming new industry. Entrepreneurs need to be met with more comprehensive platforms and transparent financial resources.

It turns out that looking out for the little guy isn’t just the right thing to do; it’s also the right business move.

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The Reserve Bank of India (RBI) on August 10 released a list of norms to regulate digital lending to protect borrowers and crack down on the growing number of frauds and unlawful activities within the sector.

The RBI in January 2021 set up a working group to study issues regarding digital lending and suggest regulations. In November 2021, the group proposed stricter norms for digital lenders, some of which have been accepted and others are under examination.

Also read: RBI’s digital lending rules cover the same ground, long way to go

Why now?

The norms were overdue and anticipated by stakeholders and industry experts. Instant loan providers mushroomed, especially after the COVID-19 pandemic, and lure gullible consumers looking for easy loans only to harass those later using recovery agents. Moneycontrol had reported on a few such cases on May 23. These digital lending apps were charging usurious interest rates to borrowers and breaching their data privacy.

The RBI’s first set of norms, announced on August 10, aim to regularise digital lending for regulated entities and crack down unlawful activities.

“We are hopeful that these guidelines will streamline the lending scenario in the country,” said Anuj Kacker, co-founder of personal loan and neobanking platform Freo and vice-president of the Digital Lenders Association of India (DLAI). “The regulator is trying to create a conducive environment for genuine players to operate and for customers to be protected at all times.”

What has changed?

The RBI has said that all loan disbursals and repayments through the digital lending apps should be executed only between the bank accounts of borrower and the regulated entity without any pass- through or pool account of the lending service provider (LSP) or any third party. Apart from that all fee or costs to LSP to be paid by regulated entity and not borrower.

Secondly, the RBI has mandated an upfront disclosure of all-inclusive cost via annual percentage rate to the borrower. This is to make the borrower aware of the kind of interest they will pay on digital lending platforms. There is also a cooling off period when a  loan can be paid off to be part of loan contract. Additionally, to protect data privacy, the RBI has stated that the data collected by DLAs should be need based, should have clear audit trails and should be only done with prior explicit consent of the borrower.

“With the new guidelines borrowers are given the option to accept or deny consent for use of specific data, including the option to revoke previously granted consent as well, besides the option to delete the data collected from them by the DLAs/ LSPs in the past,” said Joginder Rana, vice chairman and managing director at CASHe. “This will empower customers to take charge of their data rights and is a positive step for them.”

Will all digital lenders come under RBI’s purview?

Not yet. While announcing the norms, the central bank classified digital lenders are classified into three categories. The first are those entities regulated by the RBI and permitted to carry out lending business. Second are those entities authorized to carry out lending as per other statutory or regulatory provisions but not regulated by RBI. The third category includes those entities lending outside the purview of any statutory or regulatory provisions.

The RBI’s regulatory framework is focused on the digital lending ecosystem of regulated entities and the LSPs engaged by them to extend various permissible credit facilitation services. The lenders in the other categories can consider formulating appropriate rules and regulations on digital lending based on the recommendations of the working group.

What do the regulations mean for fintechs?

There will be some changes for fintechs, especially since the first loss default guarantee (FLDG) recommendation for digital lending are still under examination. FLDG is a lending model between digital lending fintechs and their partner banks and NBFCs. Under these agreements, the fintech promises to compensate the partners up to a pre-decided percentage in case customers fail to repay the loans. This is in exchange for the partners lending through the fintech from their own books

“The biggest impact is going to be on the fund flow where now the fintech or the LSPs will get paid only through the lender,” said Kunal Jhunjhunwala, founder and managing director of airpay. “The fintech will not play any role in the fund flow, it will simply play a role in the on-boarding of customers and customer servicing.”

Jhunjhunwala elaborated the actual capital flow between the borrower and the lender and vice versa will be handled amongst them. The lender will pay the fintech as numbers come in. This is a very large and significant change and fintech business models will get impacted significantly, added Jhunjhunwala.

Also read: RBI says first loss default guarantee recommendations for digital lending are under examination

How effective are new rules to bring in discipline in digital lending?

According to industry experts, these norms are the first step to regulate digital lending. But a lot more needs to be done, since a large part of the problem lies with the unregulated ones.

“This was clearly much ado about nothing, and this could have just been an operating circular without the need of a working committee,” said an industry source, who did not wish to be defined. “The broader issue is about unregulated lenders and that needs a much better coordination with multiple stakeholders, including the government. The RBI has clearly dodged that.”

“The old school policy making won’t be enough to regulate the entire digital lending ecosystem,” the person added.​

Commercial vehicle manufacturer Ashok Leyland Ltd. (ALL) will be introducing complete variants of LNG and CNG trucks in haulage, tipper and tractor segments over the next six months.

“As a part of our green-mobility agenda, we aim to bring alternative fuel based vehicles which can provide same efficiency and range as our ICE models,” said N. Saravanan, chief technology officer, in a statement.

On Wednesday, ALL claimed that it was the first company to receive LNG Fuelled Truck Central Motor Vehicle Rules (CMVR) certificate for AVTR UF3522 and its variants from the Automotive Research Association of India (ARAI).

“AVTR UF3522 is an effort to bring clean and safe vehicles to all our stakeholders. Our LNG vehicle is based on our proven modular truck platform – AVTR along with H6 engine to provide better range and operability across all functions and industries,” he said.

While announcing that it was completely developed in and for India, ALL said it was intensifying efforts in the alternative fuel segment. The AVTR UF3522 is the next step to expand the offerings.

LNG is being considered as the future of the natural gas economy offering lower on-road total carbon emissions as compared with its counterparts like CNG, it said.