Anand Rathi Global Financial Services is planning to foray into the small and medium enterprise financing space through roll-out of loan against property and unsecured loans.
Currently, the non-banking finance company, which has seven lines of business, including loan against securities, loan against commodities, initial public offer financing, and promoter funding, has drawn up a blue-print for growing its SME financing business to ₹5,000 crore in three years, according to Ashish Kohli, Director & CEO (SME Finance).
“We will initially have presence in 11 locations — Delhi, Chandigarh and Jaipur in the North, Hyderabad, Chennai and Bengaluru in the South, and Mumbai, Pune, Ahmedabad, Surat and Indore in the west.
“With these 11 locations, we will be geographically well-spread. There won’t be any concentration risk. This is essential as we are in the business of loan against property and unsecured loans,” said Kohli, and added that in 18-24 months, the NBFC will expand its presence to 25 locations.
The target customer segment for loan against property (LAP) will primarily be traders, manufacturers, professionals (doctors, chartered accountants, architects), and the service industry.
Creating a nicheKohli said that “the loans (under LAP) will vary from ₹50 lakh to ₹7-8 crore. Since the tenure of these loans will be 10-15 years, the EMI (equated monthly instalment) burden on the customers will be lesser.”
The NBFC is trying to create a niche by not targeting the conventional style of monthly repayments but looking at quarterly (loan) repayment, bullet repayment, and weekly repayment through digital payment gateways. For this it will leverage financial technology to build the system in-house, explained Kohli.
“We are trying to own a customer rather than just lend him money. Once a customer is on board, we will try to build a relationship with him so that he is with us for a long period of time.
“We are trying to customise loans for the customers. We want to give professionals growth capital for purchase of machinery, offices, etc,” he said.
As for unsecured loans, the company is trying to focus on SMEs only by giving them short-tenor ( three to four years) loans of ₹15-35 lakh.
Kohli underscored that unsecured loans are not risky if proper underwriting is done.
“And we are targeting only those set of customers who have proper financial records, books of accounts, rather than catering to anybody and everybody. So, we have a product policy programme, underwriting norms, which will help us to ensure that we build on a right algorithm, which is able to give a right credit score to the customer,” said Kohli.