Gold loan lender Muthoot Pappachan Group's housing finance subsidiary is targeting to grow its book by nearly three times to Rs 300 crore by March, 2014, a top company official has said.
"We started home loan business in July 2011 and had a book of Rs 105 crore as of March 2013. This would grow to Rs 200 crore by September and Rs 300 crore by March 2014," Muthoot Housing Finance chief executive Maneesh Srivastava told PTI.
He said the group, which has been facing troubles ever since the regulatory moves on flagship gold loans business, branched out into housing loans to increase its product bouquet, spread its risks and leverage on the existing network even though a loan is processed independently.
Mr Srivastava said the company lends between Rs 3 and 15 lakh, with an average loan size at Rs 6.3 lakh. It generally targets projects in the vicinity of a big city or a town.
It does not insist on any income documentation and relies on CIBIL data, inputs from the field time and ability to assess the informal sector of the economy, courtesy the experience from the gold loan lending, for doing due diligence on loans, he said.
The company is present in 17 cities across seven states. Unlike the gold loan lending business, a major chunk of business comes from western and northern markets, he said.
The company primarily depends on finance from commercial banks and also on refinance provided by sector regulator National Housing Bank, he said, adding it lends in the region of 13.5 to 16 per cent per annum to borrowers depending on the risk.
He claimed that the company has commitments of Rs 100 crore from its bankers already lined up and hence, it will not be difficult to attain the targeted loan growth.
Mr Srivastava said the company is well capitalised with a contribution of Rs 55 crore from the parent and its capital adequacy will stand at over 30 per cent by March 2014.
Currently, the parent holds 66 per cent in the company, Mr Srivastava said, adding that in the future, it may look to divest to a "strategic investor".