Reliance Home Finance, the mortgage subsidiary of Reliance Capital, plans to increase its Assets Under Management (AUM) from Rs 6,500 crore to Rs 50,000 crore in five years, most of which will come from disbursing loans to self-employed customers.

The company also plans to issue masala bonds, or rupee-denominated bonds, in the international market in the next financial year to raise capital. It, however, does not require immediate funds given its capital adequacy of 19 per cent, against the regulatory requirement of 12 per cent.

“It took us four-five years to set up our processes and till that time, we were going cautiously. Now we are confident about our assessment tools and skills and we’re trying to get into the right spot in the market place,” said K. V. Srinivasan, Chief Executive at Reliance Commercial Finance, and director of Reliance Home Finance, in an interview.

“We are looking at a very strong take-off,” he said.

Self-employed customers, mostly entrepreneurs of small and medium enterprises (SME), do not readily get loans from banks because most of them do not follow a proper tax record and tend to understate their income. Reliance Home Finance wants to fill this vacuum. The group’s immediate target is to boost its AUM to Rs 10,000 crore by the end of this financial year and Rs 50,000 crore by 2020.

“If you look at the pattern of mortgage financing now, 80 per cent of the loans are given to salaried class. But, about 70 per cent of the real estate market is held by the self-employed class. We want to fill that space and expect 90 per cent of our business to come from the self-employed class,” Srinivasan said, adding the lack of proper financial documents was no hindrance.

Source : Business Standard