RBI circular does not affect Fedbank Fin’s unsecured portfolio: MD

economictimes.indiatimes.com:

Anil Kothuri, MD & CEO, Fedbank Financial Services, says RBI’s intent is to clamp down on unsecured lending which is used to fuel consumption and that is what they seek to moderate and put guardrails around. “The loans that we do are loans for working capital for self-employed customers. To the best of my understanding, that is outside the ambit of the circular that the RBI has recently issued. Almost all the loans that we do in Fedfina qualify for priority sector lending by banks.”


In terms of your loan book, I believe, 86% of the portfolio is backed by the assets for the company. Where do you see this target going up? Do you expect this to be at these levels in terms of the secured loan book or could this vary and maybe see a bit of a reduction?
We are in business to empower emerging India with easy access to loans. We serve the working capital requirements of the small self-employed customer. We do that against the pledge of gold, mortgage of property and we do unsecured loans too. Our unsecured book is about 14% of the overall portfolio. But it has the lowest behavioural tenor. Unsecured loans get repaid within 30 months as opposed to secured mortgage loans which get repaid in about eight years. Which is why with each passing month, the proportion of secured loans in the portfolio keeps increasing. So, this 14% that you see will keep coming down with the passage of time and we will move to a greater proportion of secured assets in our book.

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