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Cholamandalam Investment & Finance Company Ltd (CIFCO) expects its three new business segments targeted at the consumer and SME ecosystem to add about ₹1,000 crore of disbursements each quarter to the total disbursements kitty within six months’ time as the Murugappa Group’s NBFC hopes to scale up faster through support strategic digital partnerships and a pan-India branch network of more than 1,100 offices.
The December 2021 quarter was a strong one for the company, with total disbursements of more than ₹10,000 crore. It expects further momentum in disbursements in the coming months with the launch of the new business divisions.
While the company has chalked out plans to consolidate its position as a leading player in vehicle finance, loans against property, and housing finance, it has launched three new business areas with strong digital focus – consumer & small enterprise loans (CSEL), secured business & personal loans (SBPL) and SME loans (SME).
While it has entered into strategic partnerships with fintech companies - BankBazaar, Kreditbee and Paytail – to scale up the new businesses, the company is in discussion with about 10 more companies.
It expects to do total disbursements of about ₹600-700 crore in the three new business areas from this quarter and reach a level of ₹1,000 crore disbursements per quarter in the next six months. “The opportunities are humongous and it is going to be fast as compared to the previous businesses,” Ravindra K Kundu, Executive Director, Cholamandalam Investment & Finance Company Ltd, said during the company’s Q3 earnings call.
Consumer loans will focus on professionals and the salaried classes. Professional loans will be extended to doctors, engineers and chartered accountants and will account for 70-80 per cent of this category, while the rest will be accounted for by salary loans.
Company’s target
In the SME ecosystem focus, the idea is to start from the bottom of the pyramid (BoP) and move up to the middle of the pyramid and slightly upper segment, but not the large ones. The company will target BoP sections such as small grocery shops, general kirana stores, smaller stationery shops, medical shops and electrical appliances services, among others, in tier-2 or 3 locations.
The company will offer secured business loans based on informal collateral. The loan ticket size will be in the range of ₹1-5 lakh for a tenure of 2-4 years.
Under the secured business line, it will be a plain term loan where EMI will be collected every month. And in the case of business loans, it will offer simple flexi, hybrid flexi and dropline flexi loans in order to cover all the needs of borrowers. It will offer term loans and working capital finance, equipment finance and supply chain finance under the SME loan portfolio.
Kundu said Cholamandalam had already invested in building the fundamentals for the SME ecosystem that will help the company access about 3.3 lakh MSMEs immediately to meet their loan needs.s
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