 "money, funds")
SMFG India Credit Ltd, a unit of Sumitomo Mitsui Financial group, plans to double its assets under management (AUM) to over Rs 70,000 crore in three years. The finance company, earlier known as Fullerton India Credit, will enhance synergy with Japanese original equipment manufacturers (OEMs) for scaling up lending to MSMEs and enter co-lending arrangements with banks.
Shantanu Mitra, its chief executive and managing director, said the company's AUM grew by over 40 per cent year-on-year to Rs 36,613 crore during the financial year ended March 2023 (FY23). The share of housing loans was about Rs 6,000 crore. The company is eyeing a compound annual growth rate (CAGR) of about 35 per cent over the next three years.
The growth in FY23 was broad based with personal loans (including digital lending) constituting 44 per cent of the AUM, followed by loans against property (LAP, at 30 per cent), and housing (11 per cent). The rest of the book had a mix of secured and unsecured product categories, according to rating agency CRISIL.
As a step to grow it's business, which has a “touch and feel” character, SMFG India Credit will open 100-150 branches, including for its housing finance arm, mostly in Tier-II-plus towns each year. As a corollary, the finance company would increase direct sourcing of customers to 60 per cent from the current 40 per cent, Mitra said.
SMFG is looking at fresh capital infusion from its parent over three years. Besides equity infusion, retained earnings would support capital adequacy. Its capital adequacy ratio stood at 18.8 per cent at the end of March 2023.
SMFG acquired an over 74 per cent stake in the finance company in July 2021 for $2 billion and is expected to buy out the balance stake this year, Mitra said. The company is looking at return on equity between 15 and 18 per cent, and return on assets (RoA) of 2.5-3.0 per cent.
Mitra said at present, there are no plans to list the non-banking financial company (NBFC) on the bourses to raise equity. The issue may come up for consideration when the finance firm moves into the list of upper layer of entities regulated by the Reserve Bank of India.
