The housing finance arm of L&T Finance Holding is busy building a strong home loan base as the parent company awaits a banking licence from the Reserve Bank of India (RBI) by early next year.
L&T Housing Finance has already grown its book size multiple times within a year of inception.
“The book size would have been around 170 crore at the time of takeover. It had grown to 785 crore by the end of second quarter of the current financial year,” said Vasudevan Ramaswami (pictured), chief executive of L&T Housing Finance.
In October 2012, L&T Finance Holdings, the non-banking finance company (NBFC) arm of the engineering giant L&T, acquired 100% shareholding in Indo Pacific Housing Finance. The company was later rechristened as L&T Housing Finance in December.
Ramaswami said the company has major expansion plans on mind. “In terms of book size, we aim to grow to 20,000-25,000 crore over the next 6-7 years,” he said adding that the company’s primary focus would be residential project financing.
The housing finance company has non-performing assets ratio below the industry average of 0.8% and the average home loan ticket size at 35-45 lakh. With its Retail Prime Lending Rate (RPLR) at 17.75%, the company offers home loans at 10.75-11.75% depending upon the size and tenure.
Ramaswami said the company is not considering any change in the reference rate at the moment. The company had repriced its loan book upwards by 25 basis points in September.
The company is present in 37 locations across the country though new business generation is taking place through 16 of them, all tier-I cities. The number would grow by 4-5 locations by the end of current financial year, said Ramaswami. Going forward, the L&T Housing Finance plans to leverage the presence of its parent company in Tier II cities as well.
The housing finance company could witness a merger in case its parent L&T Finance Holdings bags a banking licence. “If the RBI wants lending business to be moved into the bank, that’s probably the way it will go,” said Ramaswami.
In the final norms released in February, the RBI had made it clear that the activities that the new bank is eligible to undertake departmentally will be carried under the bank itself while other ineligible activities are divested into other entities. According to most banking analysts, L&T Finance Holding is one of the front runners for the licence.
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