Piramal aims to be among top-5 NBFCs in retail space after DHFL deal

Piramal Retail Finance on Thursday said it aims to focus on scale, and become one of the top five retail non-bank lenders in five years, after the acquisition of mortgage lender DHFL and entering more products which ups the cross-sell opportunities.

The legal and regulatory process for the acquisition of DHFL, bought through a bidding process, is going faster than expected, but a timeline cannot be given by when it will be over, its chief executive Jairam Sridharan told reporters here.

It can be noted that the NBFCs space is highly competitive, and despite the reverses witnessed over the last three years, keeps witnessing newer entrants like the entry of deep-pocketed Godrejs and Poonawalas recently.

At present, the loan book of Piramal Capital and Housing Finance, which completely owns PRF, is Rs 45,000 crore and only 11 per cent of it is retail, he said, adding that after the DHFL acquisition, the retail portion will rise to 45 per cent by the end of FY22.

Sridharan said the company's ultimate aim is to take the overall retail share to two-thirds of the book in the medium term, for which it will be launching new products, organically expanding its network and also need more people.

We aim to scale, responsibly.the intent will be to underwrite (loans) appropriately, not for growth, he said. A company statement said it is aiming to disburse Rs 3,000 crore of fresh loans in FY22.

The timing of the move is very opportune, Sridharan said, pointing out that entrenched lenders are caught up protecting their portfolios which are under stress due to which lenders tend to go slow on new lending.

"It is the best time to start when things are at the bottom of the cycle. I would rather ride the way up a wave rather than riding the wave down, he said.

PRF presently operates in seven distinct product lines, including the mortgage business, and the newly launched used car loans and consumer finance, he said, adding that tie-ups with fintechs are at the root of entry into many product portfolios.

Going forward, the company aims to enter loans against shares, education loans, unsecured financing for businesses and two wheeler financing, he said, making it clear that it is not interested in consumer durables finance.

In FY21, the employee base of PRF doubled to 1,000 and it is aiming to double it again in FY22 as well, Sridharan said, pointing out that it has adopted a strategy which is a mix of physical plus digital.

Similarly, on the network front, it went from a presence in 12 locations to 40 by end of FY21, and aims to add another 10 in a few months. The merger with DHFL will add another 300 branches.

Sridharan said the budget consumer in towns ranked between 20 to 1000 is PRF's target segment.

On the DHFL deal, he said work to get approvals from insurance regulator Irda and NCLT, and also a no objection certificate from lenders, is still in process.

When asked about the fate of DHFL's wholesale portfolio, which the company had avoided bidding for initially but had to eventually take it, he said all the options are on the table once PRF becomes the owner of the assets.

A slew of litigations faced by DHFL are not a concern for Piramal because under the Insolvency and Bankruptcy Code, the same is the responsibility of the committee of creditors and the RBI-appointed administrator, he said.