Fullerton India to expand secured rural lending, enter new States

Fullerton India Credit Company is looking to tap the rural markets in Jharkhand, Assam, Punjab and Kerala over the next one-two years.

The NBFC, a wholly-owned subsidiary of Singapore-based Fullerton Financial Holdings, part of Temasek Holdings, operates its rural business under the ‘Gramshakti’ brand. It recently entered the eastern States of Bihar, Odisha and West Bengal.

The company has close to 355 rural branches across 14 States, said Vishal Wadhwa, Head - Rural Business, Fullerton India. The rural business currently accounts for nearly 35 per cent of its total assets under management (AUM), which stood at ₹17,217 crore as on June 30, 2018.

Eastern foray

“We expect our rural portfolio to grow to nearly 37-38 per cent (of AUM) by the end of this fiscal backed by our foray into the eastern region,” Wadhwa told BusinessLine.

The company offers group, personal, two-wheeler and mortgage loans as well as loans for consumer durables in rural areas. Group loans, modelled on microfinance lending, account for nearly 50 per cent of its total lending in rural areas. Of the remaining 50 per cent, nearly 25 per cent comes from mortgages and 20 per cent from individual personal loans, said Wadhwa.

Fullerton’s rural loan book is highly skewed towards unsecured lending, which accounts for nearly 72 per cent of its advances. However, the share of secured lending is expected to increase to nearly 40 per cent over the next two-to-three years.

According to Wadhwa, the company was only into group lending in rural areas even around three years back, like any other microfinance institution. However, it undertook a product and geographical diversification over the last 18 months to de-risk its portfolio. This also helped improve its share of secured lending.

“Moving forward we wish to shore up the share of secured lending to close to 40 per cent of our advances in rural areas,” he said.

Despite a higher skew towards unsecured lending, its non-performing assets (NPA) as a share of total rural advances stands at just 0.5 per cent while its NPA in urban areas is around 2.5 per cent. The share of unsecured lending in urban areas is close to 42 per cent. The company aims to bring it down to 40 per cent by the end of this fiscal, Wadhwa said.