Shriram Finance to enter home loan business

Shriram City Union Finance – A south India-based financial services provider which is into commercial vehicle financing, life insurance, consumer and small businesses financing, retail broking and chit fund business – is all set to enter the home loan segment.

Shriram is planning to float a housing finance subsidiary with a capital base of Rs 100 crore. The unit will be headed by Sujan Sinha, who was was earlier VP (retail assets) with Axis Bank.

“We are floating a separate entity to ensure that there is no asset liability mismatch as home loans are long-tenure loans. It will also ensure that we get access to refinance and other sops from NHB from time to time. We have a good market share and we can leverage the existing customer base,” said Subhasri Sriram, executive director and CEO of Shriram City Union Finance.

The home loan subsidiary is likely to be operational by March 2011. It will cater to middle-income customers so that the ticket size of loans are around Rs 20 lakh. “There is good growth potential in the semi-urban and smaller centres. We will target these,” Sriram said.

The Chennai-based group is also keen to enter the banking space once the Reserve Bank of India issues the final guidelines on the entry of new players. At present, SCUF offers loans for two wheelers, used autos and CVs, gold and small businesses, apart from personal loans.

The group plans to float a separate entity if it gets a banking licence. It is keen to leverage its 50-lakh strong customer base across companies for a successful business, sources close to the Group say.

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