Scrappage policy to give a boost to used CV financing plans: Indostar Capital

Surabhi | Updated on September 06, 2021

R Sridhar, Executive VC and CEO, IndoStar Capital

Believes sector has the potential to grow 10 times in the next five years

Indostar Capital Finance is betting big on used vehicle financing along with affordable housing and small and medium enterprise (SME) financing, as it looks to turn into a completely retail focussed non-banking financial company (NBFC).

“In the commercial vehicle (CV) business, we will focus on used vehicle financing. There is a lot of demand for old vehicles in the five to 10 year category and there are very few companies in this segment. Further, we also expect a lot of demand following the scrappage policy,” said R Sridhar, Executive Vice-Chairman and CEO, IndoStar Capital Finance.

Also see: Delhi govt bans plying of 10-year old diesel and 15-year old petrol vehicles in city

From about ₹3,000 crore disbursements in the segment, the company believes that the used CV business has the potential to grow 10 times in the next five years.

In an interaction with BusinessLine, Sridhar said the NBFC has also seen collection efficiencies move back to pre-second wave trends.

Branch expansion

Sridhar said the company is working on a branch expansion plan that aims to increase the current 250 branches to 1,000 over the next five years and be present in geographies across the country.

It will be on a hub and spoke model where it will move to 200 hubs in the next 5 years.

“The geographical expansion will consist of all the four zones of the country. We have also started building a presence in the north-east,” he further said.

Exit corporate lending sector

Indostar Capital Finance is also on track to exit the corporate lending business by March 2023 and will focus exclusively on retail lending.

“We have full conviction to be a 100 per cent retail lending organisation,” Sridhar said.

The company has a 77 per cent retail portfolio and 23 per cent corporate. It expects to bring the corporate book to 10 per cent by March 2022, and then bring it to zero in the year after that.

Published on September 06, 2021

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