Money & Banking

Muthoot Fincorp floats housing finance arm

| | Updated on: Mar 29, 2011
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Muthoot Fincorp Ltd (MFL), a Kerala based non-banking finance company, has floated a wholly-owned housing finance subsidiary, Muthoot Housing Finance Ltd (MFHL), which will focus on lending to the low- and middle-income segments.

The diversification into the housing finance segment comes in the wake of stiff competition in the gold loan segment where MFL is one of the leading players.

The housing finance company will give 60 per cent of the value of a house as loan, with the ticket size being pegged in the Rs 3 lakh to Rs 10 lakh range. Average interest charged will be about 14-15 per cent. It will target those customers wanting to buy an affordable house on the fringes of city limits.

“We will cross-sell home loans to the one million-odd customers of Muthoot Fincorp. Majority of Muthoot Fincorp's customers have availed themselves of gold loans and they present an excellent opportunity to cross-sell,” said Mr Thomas George Muthoot, Director, MFL.

MFL's promoters will pump in Rs 100 crore into the Mumbai-headquartered MFHL over the next couple of years. MFHL will have a loan book of about Rs 150 crore by the end of March 2012, he added.

Long-term strategy

“The foray into housing finance space is part of our long-term strategy. We see immense scope in the home loan market, especially in the low-income segment. In the initial phase, we will set up branches on the outskirts of large urban centres such as Mumbai, Chennai, Bengaluru and Ahmedabad,” said Mr Thomas Muthoot, Executive Director, MFL.

MFHL, according to its CEO Mr Maneesh Srivastava, will leverage Muthoot Fincorp's customer base to target those who have a monthly income of Rs 10,000-30,000 and are looking to buy an affordable house.

Published on March 12, 2018

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