Blackstone Group Inc.’s Indian mortgage lender plans to exit its small builder financing business at a time when pain from the nation’s credit crunch abounds, with another victim claimed this week.

“We are in the process of phasing out this small builder loan portfolio to keep the company 100% retail focused as per mandate from new owners,” said Deo Shankar Tripathi, 66, chief executive officer of  Aadhar Housing Finance Ltd. , in an interview.

The Reserve Bank of India this week seized major non-bank lender  Dewan Housing Finance Corp. , which held a controlling share in Aadhar until selling it to Blackstone in June. India’s more than 15-month-old credit crisis has dragged economic growth down to its slowest in six years.

Tripathi said he expects some improvement in Indian credit markets next quarter.

While more than 99% of Aadhar’s lending is already to individuals, about 45% of non-performing loans at the end of March were tied to its small non-consumer book, according to an India Ratings’ review last month. Blackstone’s capital injection lowered Aadhar leverage from 9.5 times of net-owned funds to 3.75 times, according to Tripathi.

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