Godrej Capital, the lending arm of the Godrej Industries group, is planning to enter the affordable housing loan segment even as the total assets under its management are seen growing 59-68 per cent to ₹17,000-18000 crore in the current fiscal.

“This year, we will be incubating the affordable housing business,” Managing Director Manish Shah told businessline. Currently, it lends home loans with an average ticket size of ₹68 lakh. In the affordable segment, it would likely be looking at loans in the range of ₹10-30 lakh, but the company is still deciding on that.

The non-banking lender ended FY24 with assets of ₹10,700 crore, with around 45 per cent of it accounting for home loans and 55 per cent lending to small and medium enterprises. In the current year, the split is likely to be 40 per cent for home loans and 60 per cent for small businesses, Shah said.

The lender has a long-term aim of reaching ₹50,000 crore by the end of FY28.

Housing segment

Getting into the affordable segment is part of the company’s strategy to further homeownership. “Everybody in the country cannot buy a 50-lakh-and-above home,” pointed out Shah.

The government thrust on affordable housing, refinance availability from the National Housing Bank and opportunities in the segment were some factors instrumental in pushing the company into the affordable category. When the Modi administration took charge for the third term, almost the first announcement made was on providing assistance to build three crore more homes under the Pradhan Mantri Awas Yojana.

Shah added that in the mid-income category, where it is at currently, there are already plenty of options for homebuyers. On the company’s entry into affordable home loans, he said, “This is our incubation year.”

In the current year, the company expects its home loan portfolio to be at around ₹6,000-7,000 crore. Its home loans are priced at 8.55 per cent onward.

SME loans

The SME loan book is seen rising to ₹11,000 crore this year, as it sees more small businesses integrated into the formal economy.

Last year, it incubated the unsecured business loans segment, which has assets of ₹1,450 crore now. Loans in this segment are priced from 14 to 19 per cent. It is also planning to grow its MSME secured loan business to ₹1,000 crore this year.

“When we look at small businesses, the opportunity we see is large and the progress we are seeing now is in a one-size-fits-all type approach to small business financing,” Shah said. It has also made a start with dairy farmer financing, leveraging on the ecosystem within the group, Creamline Dairy Products, which buys milk from farmers.

The advent of the Goods and Services Tax and being part of the supply chain had brought more companies into the formal economy, ensuring that they had books of accounts that can be assessed for their creditworthiness. Digitisation of land records has also made it easier to get documents that can authenticate ownership of collaterals.

Most of Godrej Capital’s loans are to companies with a turnover in the range of ₹5-50 crore. Shah said that over time it might lend to companies with revenue lower than ₹5 crore.