Piramal Finance is gearing up for its next phase of expansion with a foray into the gold loan segment by March 2026. Its MD & CEO Jairam Sridharan tells Mahesh Nayak about the company’s transformation into a tech-led, retail-focused NBFC & ambitions to deepen financial inclusion across Bharat. Excerpts:
How has Piramal Finance evolved over the past few years?
It’s been a remarkable journey. Five years ago, we were a 90% wholesale NBFC. Today, we are 83% retail. Our retail-led book has grown 4 times in four years, from Rs 20,000 crore post-DHFL acquisition in 2021 to Rs 90,000 crore now. The era of monoline NBFCs is over. No single product is large enough to sustain a Rs 1 lakh crore book. All large NBFCs today are diversified. We started with that vision and built a multi-product platform from day one. First, we built a diversified NBFC from scratch, offering a range of products including housing loans, loan against property (LAP), used car finance, personal loans, digital lending, and more. Second, we have invested heavily in distribution and technology. That has helped us scale rapidly and efficiently. We are now among the top 15 NBFCs in the country.
What defines the next phase of Piramal Finance’s retail strategy?
The next phase is centred on deepening trust, expanding reach and offering products tailored to Bharat. With 70% of our customers coming from tier-2 and tier-3 cities, we are intentionally focused on underserved, high-growth regions. We currently operate in 428 cities with 517 branches, and plan to add 75 more in the next 3–4 months. This physical footprint, combined with digital onboarding and AI-driven underwriting, gives us a strong edge in semi-urban India.
How is Piramal Finance leveraging AI to drive inclusion and scale in Bharat?
Artificial Intelligence (AI) is deeply embedded across our operations, with over 45 models running live to unlock credit access for millions—especially those underserved by traditional metrics, such as CIBIL scores or salary slips. This tech-led approach has helped us reduce our operating cost-to-AUM from 6.5% to 3.9% in just two years, with a target of 3.25–3.75% by FY27. Lower costs mean we can lend more widely and affordably. Over 70% of our customers are from tier-2 and tier-3 cities, many of whom are first-time borrowers. We combine human judgment with data intelligence to deliver fast, fair, and responsible credit, making financial inclusion in Bharat a lived reality.
What’s the current size of your investment book?
Our total balance sheet is around Rs 95,000 crore, of which about Rs 5,000 crore is in investments. These include stakes in Shriram Group’s insurance (Life and general) arms, a JV in Pramerica Life with Prudential, and a sub-10% stake in fintech lender FIBE. Over time, we plan to divest. Our core focus is lending. We want to allocate more capital to our core business and reduce exposure to non-lending activities.
Are you considering to add a new product?
Gold loans we are preparing to launch this financial year, something we don’t currently offer. It’s a strategic addition that aligns with our Bharat-focused retail strategy. While we will build it gradually, our long-term goal is to create a sizable gold loan franchise. Beyond that, our core retail basket—encompassing housing loans, LAP, MSME credit, and personal finance — is robust, but we are evaluating new opportunities that deepen inclusion and serve emerging needs across tier-2 and 3 India.
What’s your growth guidance for FY26?
We have guided for 25% growth this year and were already at 22% y-o-y by September, with a stronger-than-expected first half fuelling optimism. For FY27, we will reassess in January but expect to remain comfortably above 20%. Growth has been led by LAP (up over 50% to Rs 20,000 crore), housing (Rs 30,000 crore) and salaried personal loans. Unsecured lending, now accounting for 17% of the book, is growing more slowly but is expected to accelerate toward our 25% long-term target. With 80% of growth expected from retail segments, including home loans, MSME credit, personal finance, and gold loans, our focus remains on tier-2 and 3 markets, where 70% of our customers reside. We expect to cross Rs 1lakh crore in AUM by FY26 and reach Rs 1.5 lakh crore by FY28, powered by a tech-first, retail-led strategy for Bharat.
How do you view inorganic growth opportunities?
Absolutely, inorganic growth is very much on our radar. We are actively scouting for NBFC-like businesses in Bharat markets, focusing on microfinance, gold lending, affordable housing and MSME credit. These segments align with our strategic priorities and we are open to acquisition opportunities in this space. That said, we are guided by two key principles: values and valuation. Any potential acquisition must align with our cultural ethos and come at a fair price. We are not interested in overpaying for quality; the fit has to be strategic and financially sound.
What’s the current status of Piramal Finance’s legacy book?
Our legacy book has been significantly downsized—from a peak of Rs 50,000 crore to about Rs 5,500 crore today, representing just 6–7% of our total book. It primarily consisted of large-ticket construction finance and structured transactions. We have already absorbed the P&L impact required to wind it down and expect the remaining portion to be fully phased out over the next five to six quarters.
How is the wholesale business evolving within Piramal Finance’s portfolio?
The wholesale book is expanding rapidly at nearly 40%, split between medium-sized real estate construction finance (two-thirds, with ticket sizes of Rs 150–200 crore) and mid-market corporate lending to BBB+ rated firms (one-third, with revenue sizes of Rs 150–1,000 crore). With an average ticket size of `70 crore and a three-year tenor, the focus remains on low-risk, non-structured transactions. Though still modest, we expect the wholesale book to reach Rs 15,000 crore by year-end, plus Rs 2,000–3,000 crore in legacy assets, maintaining our targeted 80:20 retail-to-wholesale mix.
How do you assess your capital position given your growing book, and what are your current funding costs? Are you raising money, and how is that progressing?
Our capital position is strong, with capital liquidity at 20.5% versus the 15% regulatory requirement. Liquidity is equally robust, with an average LCR above 250% against RBI’s 100% mandate. We are raising funds at an interest rate of 8.75–8.80% from bonds and approximately 9.20% from loans. Over the next six months, we expect a 30–40 basis point drop in loan rates as banks cut MCLRs. As a floating-rate borrower, this should expand our margins, even as banks face compression.
Can you share more about Piramal Finance’s alternatives business and future plans?
Our alternatives business spans both performing credit and distressed asset spaces, managed in partnership with Bain and CDPQ, respectively. The funds have delivered a strong performance, with over $1.5 billion deployed to date. We are currently seeking to raise capital for two new funds—one in a familiar space and another in a new vertical. As demand evolves, we will refine our strategy, but the outlook remains positive and growth oriented.
What are the key risks or concerns you’re watching as you scale?
Risk remains central to lending. While unsecured segments faced tighter conditions last year, growth has stabilised over the past six to nine months, prompting cautious optimism. We monitor macroeconomic shifts—such as interest rates, liquidity, and regulation—while our diversified model mitigates concentration risk. The biggest structural risk head isn’t credit or liquidity, but whether GDP can accelerate toward 8%. Youth employment is critical and addressing it is key to inclusive growth and expanding credit across Bharat.