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Tuesday, April 5, 2011

Muthoot Housing in talks with IFC, eyes small-loan portfolio

Muthoot Housing Finance Company, a part of the Kerala-based Muthoot Pappachan Group, is in talks with International Finance Corporation (IFC) to raise resources. It aims to build a portfolio of small-ticket loans aggregating about Rs 500 crore in the medium term.

Tapping multilateral institutions like IFC is one of the options the finance company had explored. It may also tap banks for funding, said Maneesh Srivastava, chief executive of MHFC.

The company plans to invest around Rs 100 crore over the next two years and would primarily target the low to middle-income housing finance segment. The customers in the segment have a monthly income of Rs 10,000-30,000 and an average loan size would be Rs 3-10 lakh. The company is targeting a Rs 125-crore loan book by December, 2012. It has already secured a licence from the National Housing Bank, a regulator of housing finance companies.

Over the medium term, the housing finance company could have a loan portfolio of Rs 500-600 crore, Srivastava said. The interest rates will be competitive, at about 14-15 per cent and margins are expected to be around 3 per cent.

In the initial phase, the group plans to open 25 branch offices in large urban centres like Chennai, Bengaluru, and Ahmedabad, with its headquarters in Mumbai. To begin with, the company would aim to build on its operations in the West and the South. However, Muthoot would have its presence across the country in 18 months.

Source: Business Standard


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