Reliance Home Finance is planning to increase its assets under management (AUM) from Rs. 6,500 crore to up to Rs. 50,000 crore in five years, and is expecting 90 per cent of its business to come from the self-employed class.
“It took us four-five years to set up our processes and till that time, we were going cautiously. Now we are confident about our assessment tools and skills and we’re trying to get into the right spot in the market place,” said K V Srinivasan, chief executive at Reliance Commercial Finance, and director of Reliance Home Finance.
“If you look at the pattern of mortgage financing now, 80 per cent of the loans are given to salaried class. But, about 70 per cent of the real estate market is held by the self-employed class. We want to fill that space and expect 90 per cent of our business to come from the self-employed class,” Srinivasan said, adding the lack of proper financial documents was no hindrance.
“We have our own technique of assessment, and it is not a copy-pasted model, but something we have built up handling our SME clients class in the commercial finance business,” he added.
“Cash flows for these customers are easily traceable, even as the profit is frequently under-reported and income tax returns are depressed. Our capabilities have been developed keeping this in mind,” Srinivasan added.
The strategy will be to focus on the non-metro areas with low ticket offering that falls in the ‘affordable housing’ category. The company also wants to lend in the smart city projects that will be coming up in the near future.
Currently, 40 per cent of the disbursements happen in the Rs. 10-25 lakh bracket, which the group wants to expand. It also wants to give a big push to the Rs. 5-10 lakh category of loans.
The company has for now tied up with specialised groups such as microfinance institutions and non-banking financial companies to source business from these markets.