Tata Capital expects healthy retail loan growth in FY25: Senior executive

Slower growth expected in FY25 but it would still be 'significantly higher' than the industry, says company

This report has been updated

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Tata Capital expects its retail loan portfolio to grow 25-30 per cent in the financial year 2024-25 (FY25) – slightly slower than the previous year due to a high base effect and a slowdown in personal loans due to regulatory action, said a senior executive of the company.

The retail loan book accounts for 63 per cent of the non-banking financial company’s (NBFC) overall book, which stood at Rs 1,57,760 crore as of March 31, 2024. The book grew 38 per cent to Rs 1,00,051 crore in FY24, from Rs 72,758 crore in FY23.

“The base for the retail segment this year is high. Our retail book has almost doubled in the last two years,” said Vivek Chopra, chief operating officer – retail of Tata Capital, in an interaction with Business Standard.

 

“Also, the growth in the unsecured personal loan (PL) segment has come down, which is a trend across the industry. Due to these two factors, it (growth in the retail segment) may not be as much as last year. So, we feel it (growth) would be slightly lower at 25-30 per cent, however, it would still be significantly higher than the industry growth rate and retail would continue to remain a key growth engine for Tata Capital,” Chopra said.

Growth in personal loans moderated after the Reserve Bank of India (RBI) increased the risk weightage on lending to unsecured loan portfolios. In FY25, business, micro and two-wheeler loans are expected to drive the growth of the company's retail book.

Chopra said he expected business and microfinance loans, part of unsecured lending, to grow 40-45 per cent in FY25. The two-wheeler segment is expected to grow 45 per cent. Personal loans are expected to grow at 25-30 per cent compared to 35 per cent in FY24.

New branches and a focus on “unpenetrated geographies” are expected to help the company’s two-wheeler loans. Tata Capital plans to expand to 1,000 branches in FY25 from 723 branches in FY24.

“In the two-wheeler segment, we have been growing significantly. Our strategy has been largely driven by getting into Tier-II, Tier-III, and IV markets. A lot of growth is coming from these markets. Since the base in these markets is small, we see decent growth coming in. The growth in the segment is largely driven by getting into new geographies where we were not present earlier,” said Chopra.

Tata Capital plans to enter a new segment every year, and entered education loans in January 2024 due to demand from customers. The product has three segments: Study abroad, study in India, and vocational education.

Tata Capital Financial Services and Tata Cleantech Capital recently merged with Tata Capital. According to the RBI rules, Tata Capital is an upper-layer NBFC and it is required to list shares by September 2025. Tata Sons owns nearly 95 per cent stake in the company.