Cholamandalam Investment and Finance Company is focusing on the mortgage businesses to drive asset growth and diversification, even as it reworks the product strategies for newer segments such as consumer and small enterprise loans (CSEL) and SME loans over pricing and profitability issues.
Disbursements in CSEL and SME loans fell 40% and 19% year-on-year to ₹2,142 crore and ₹1,581 crore, respectively, in the second quarter. Overall disbursements, though, were marginally higher at ₹24,442 crore compared to ₹24,314 crore in the year-ago period.
Arul Selvan, president and CFO of Cholamandalam Investment and Finance Company, attributed the slowdown in consumer and SME lending to a voluntary pullback in these areas due to profitability concerns. “We have consciously cut down disbursement to supply chain finance and other products in the SME segment because they are not profitable and have low ROTA,” he said.
He added that the lender has come out of fintech partnerships in the CSEL segment. “We are now working on building a slightly longer-tenure book of three to five years.”
Chola Finance’s core vehicle finance disbursements grew 10% to ₹13,539 crore in the latest quarter. “Vehicle finance will remain our mainstay but the mortgage business will be the next big growth driver,” Selvan said.
The Murugappa Group NBFC is engaged in vehicle financing for commercial vehicles, passenger vehicles, two-wheelers, tractors, and construction equipment in both new and used segments. As of Q2FY26, vehicle finance accounted for 54% of its total assets under management (AUM) of ₹1.99 lakh crore. The company aims to reduce the share of vehicle finance to 50% over the next two years by diversifying into other asset classes, including CSEL, SME loans, and mortgage & home loan businesses.
According to Selvan, the mortgage segment — including LAP and home loans — will form the next largest share after vehicle finance. The share of these businesses in total AUM has already risen to 33% from 30% in the same quarter last year.
Selvan said the company’s mortgage business, which includes LAP and home loans, has matured over time and is now ready for scale. “We started the mortgage businesses more than 10–12 years back. We have sort of understood and went around learning this business and now we are scaling it up and they will become now the next larger book.”
The SME and secured business & personal loan (SBPL) segments, launched a few years ago, are still evolving and will take one or two cycles to stabilise and grow, Selvan said. “That is the correction we are making.”
As part of its diversification strategy, Chola has entered the gold loan business, with plans to build a ₹1,500-crore book over the next two-three years. The gold loan portfolio has already grown to ₹456 crore from ₹97 crore in the first quarter. Selvan said the company will continue to expand this business despite higher operational costs. It added 112 gold loan branches in Q2 and plans to expand further in the coming quarters.
