Piramal Housing to extend loans to low-income groups across the country

Piramal Housing Finance that's shedding its overweight on builder loans is taking baby steps to become a financial conglomerate, a versatile retail lending platform that would lend to build small sized homes to buy a motorcycle leveraging on its recent tie ups with tech startups.
Its newly built technology platform could be plugged into any digital platform and do data analytics in house to gain an edge over the peers most of which are still with legacy systems, said Piramal retail finance CEO Jairam Sridharan.

“We should have another 10-20 partnership with fintechs next one year through the merged entity (DHFL and Piramal Housing),” Jairam Sridharan, Chief Executive Officer, Piramal Retail Finance told ET.

At least five-six partnerships that Piramal is in talks with for new businesses like education financing and merchant financing for small businesses, he said.

Piramal has launched used car financing in partnership with Cars24, it has also tied up with Zest for unsecured digital lending, it is also offering small business loans, loans against property besides home loans as part of its retail push.

"We are reaching out to Bharat customers as you have to access their repayment capability through informal ways,” he said.

“Bharat is a collection of niches.”

Piramal Housing, which is set to own Dewan Housing Finance (DHFL) is keen to extend loans to low-income groups across the country. Those are typically families with both husband and wife working organised and unorganised sectors.

Instead of rigid formal documentations, the home financier goes through informal ledgers maintained with them.

You have to question the conventional wisdom as you assess repayment capability,” Sridharan said.

For example, a customer working as BEST bus driver from Thane availed a loan of about Rs 27 lakh jointly with his wife, who sells vada pao, a popular street food and takes tuition. The customers could not obtain any bank loan as they sought to buy an 1BHK home at outskirts.

Similarly, a customer from Indore could avail a mortgage loan of about Rs 10-12 lakh against an ancestral land.

The group is aiming to raise the share of retail loans. It is working on an internal strategy to curve out the developers’ loan portfolio separate from the whole book, ET reported on March 30.

“We will change the composition of loan book, three-fourth of it will likely be retail loans in the next two years,” said Sridharan.

Out of the Rs 45,000 crore lending book, retail loans constitute Rs 5000 crore or about 11% of our book. With DHFL the retail portion of the book will increase substantially by the end of the year and expected to be 40% of our book.

“In the medium term we expect two-thirds of our book to be retail, a big part of it will be mortgages but with the new products we are launching we expect to have a good cross sell opportunity,” said the CEO.

"We have doubled out total employees to 1000 in the last fiscal and will double again in the next one year,” he said.

Total locations have increased from 14 to 40 in the last one year. It is expected to be in 1000 town in five years. The home financier is targeting the small and mid towns in India.

"The litigations and the cases around DHFL is for the CoC to deal with according to the IBC. Whatever cases that have been reported have come to light post the audit by Grant Thornton so there is nothing new and we have always been aware of these case," Sridharan said.