The Hindu Business Line : Mahindra Fin sets up rural housing finance unit

A housing loan will have a ticket size of Rs 5 lakh with a tenor of 3-5 years and cost slightly over 10 per cent, the rate charged by co-operative banks.

Mumbai , Jan. 11

Mahindra Finance, a leader in four-wheeler and tractor finance for the semi-urban and rural sectors, has set up a 100 per cent owned subsidiary for rural housing finance, styled, Mahindra Rural Housing Finance Ltd.

The new subsidiary is waiting for a licence from the National Housing Bank to commence operations, said Mr Ramesh Iyer, Managing Director, Mahindra Finance.

New subsidiary

The new subsidiary will cater to the rising demand for home loans from semi-urban and rural areas by tapping initially rural markets in Maharashtra, Gujarat and one of the southern states. Based on the response generated, the company will upscale operations using the existing chain of 394 branches of Mahindra Finance.

Housing loan

Typically, a housing loan will have a ticket size of Rs 5 lakh with a tenor of 3-5 years and cost slightly over 10 per cent, the rate charged by co-operative banks. Company officials refused to go beyond saying that the interest costs will be on par with co-operative banks. There is a possibility of the company going for a floating rate option.

2-wheeler venture

Meanwhile, Mahindra Finance has ventured into two-wheeler financing on a limited scale. It has carried out pilot projects on financing 2,000 two-wheelers through dealers in Gujarat, Maharashtra and Uttar Pradesh. The dealers could be exclusive to the company and also those selling other two-wheeler models.

While domestic activity continues to expand, the company has been eyeing overseas markets too. It has sent officials to potential markets such as the US to study the tractor segment.

As on date, Mahindra & Mahindra has been selling 10,000 units on an annual basis. Also, the company recently announced its strategy to venture into the US utility vehicle market by appointing Global Vehicles USA Inc as its distributor.

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