By Hariprasad Radhakrishnan
At a time when the auto sales continue to be in the slow lane, tractor financing major Mahindra Finance is giving small-ticket loans to its existing customers with a good track record. Having disbursed about 60,000 small-ticket loans of about Rs 500 crore over the past year, it plans to build a book of Rs 20,000-25,000 crore over the next three years.
The company has been providing small ticket loans, including personal, consumer durable and two-wheeler loans, to existing customers who have paid their installments regularly for a period of 12 months. Having ticket sizes of Rs 40,000-50,000, the loans are as good as “secured”, says Ramesh Iyer, vice-chairman and MD, Mahindra Finance. “Say, a loan of Rs 3 lakh has been given on a vehicle, and the customer has repaid one year. In one year, he would have repaid Rs 1 lakh. If you give him Rs 40,000 more as a personal loan or a small ticket loan, it is as good as two or three more instalments being funded. The underlying asset acts as a collateral for both loans,” he said. These loans do not just help in profit-making, but in cost rationalisation. “The same customer would have to be approached for existing loan recovery, and you would also make collections on the small ticket loan. Whatever this personal loan will make, will help bring down my overheads,” Iyer said.
He added that the company wants to extend one such loan to a non-Mahindra Finance customer in each of the four lakh villages where the NBFC has its reach.
During the nine months ended December 2019, the total value of assets financed witnessed a decline of 4% year-on-year (y-o-y) to Rs 33,126 crore. As of December 31, 2019, the standalone assets under management stood at Rs 75,884 crore, up 16% y-o-y. Among the various asset classes, the pre-owned vehicles segment is witnessing traction, while the CV segment continues to be under pressure, Iyer had said on the Q3FY20 analysts call. The company had posted a 14% y-o-y rise in its net profit at Rs 365 crore during the quarter.