A team of microfinance professionals at L&T Retail Finance Group, which is in turn a part of L&T Finance, is assessing villages in other northern states, where the company plans to foray shortly.
Buoyed by the success rate of its microfinance business in the rural areas of Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra, L&T Finance, the financial services arm of Larsen & Toubro, is set to expand to Gujarat and Orissa over the next three months.
A team of microfinance professionals at L&T Retail Finance Group, which is in turn a part of L&T Finance, is assessing villages in other northern states, where the company plans to foray shortly.
“We are extremely happy with the growth of our microfinance business and we will very soon be present in almost every state,” said Dinanath Dubhashi, vice-president, L&T Retail Finance Group.
The company had extended loans worth Rs 400 crore to over 5 lakh customers as on September 30, 2009 at an interest rate of 24%. The company claims to have a recovery rate of over 99% (in line with the global average for the microfinance business).
“Our microfinance business, along with commercial vehicle finance in rural areas, is growing at 40-50% annually as against 20-25% growth of our corporate finance business. Even though our rural finance business accounts for only 7-8%, we expect it to become huge in the coming years,” Dubhashi said.
L&T Finance is also ready to foray into general insurance business and is expecting the approval for its application from the Insurance Regulatory and Development Authority (Irda) by April.
“We are hopeful of getting clearance from the regulator in the coming months and we will start our business shortly after that,” said N Sivaraman, senior vice-president, L&T Finance.
The insurance arm would begin operations with paid-up capital between Rs 110 crore and 120 crore, he said. “We expect our share capital to go up to Rs 500 crore in the next 5 years depending on business growth,” Sivaraman said.
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