MUMBAI: Fullerton, the nonbanking finance company backed by Singapore-based Temasek Holdings, plans to enter the affordable housing market in India and has applied for a licence from the National Housing Board. "We will start the housing finance business with an initial capital of Rs100 crore," said Shantanu Mitra, MD and CEO at Fullerton India. "We will be focusing on affordable housing and MSME."
Non-banking finance companies (NBFCs) in the housing finance business face competition from banks, which are able to lend at lower rates. Mitra said the company does not plan to apply for a banking licence as the rules are domestic. "The rules on foreign shareholding are not appropriate for us to apply for a banking licence," he said.
The Reserve Bank of India has round, it gave out licences to IDFC and Bandhan Financial Services. IDFC had to gradually bring down its FII limit to 50% to comply with the RBI's norms. On Thursday, Fullerton reported a 60% year-on-year jump in net profit to Rs301 crore in the year to March 2015 on higher interest income. The company is mainly into lending against property, giving loans to small companies, personal loans and rural loans. It had a total loan portfolio of around Rs 9,000 crore.
The asset quality of the company improved as it has moved from unsecured lending to a balance portfolio with 45% into secured lending. Net nonperforming assets increased slightly to 1.41% from 1.34%.
The company has 437 branches and plans to open 40 more across the country this financial year as it increases focus on rural markets. Fullerton India has capital adequacy norms of 19%. The company is well capitalised and does need to raise any capital, said Mitra.