'Mahindra Finance aims to nearly double non-vehicle loan book in FY25'

India's non-bank lender Mahindra & Mahindra Financial Services will adopt a de-risking strategy and aims to nearly double its non-vehicle loans portfolio in the next financial year, its vice chairman and managing director said on Wednesday.

"Our aim is 20% of the balance sheet should comprise of non-vehicle business," Ramesh Iyer told Reuters, adding its focus will be on financing small and medium enterprises (SME) that include business loans, machinery, and loans against property.
 

Currently, non-vehicle finance comprises 5%-6% of the company's loan book. The target will be met in phases and may not exceed 10% in 2024-25, Iyer said.
 

Mahindra Finance is one of India's largest deposit-taking non-banking financial companies, offering vehicle loans, SME finance, personal loans, and housing finance, among others.
 

Within vehicle loans, Iyer expects pre-owned vehicle segments to drive growth on the back of high demand and attractive yields.

The company plans to grow its assets under management by 25% on-year to 1.25 trillion rupees in the next financial year, Iyer said.
 

The non-bank lender expects net interest margins to be at around 7% by March-end from 6.8% in the fiscal third quarter, and then inch up to 7.2% by the end of the next financial year, assuming the Reserve Bank of India starts cutting its key lending rate.

Mahindra Finance will also look to tap the overseas market for funding for the first time in the next financial year starting in April, through either loans or bonds, Iyer said.
 

"It will depend on what is the landed cost of money. We will look at the liquidity situation in India, the all-inclusive cost of fund and the period for which such funds are available." The company is also looking to add two more banks as partners for co-lending and will open 125 new branches in the next financial year.