"This is in line with our long-term expansion strategy. We see immense scope in the home loan market, especially in the low income segment. The idea is to be a facilitator to every Indian dream of owning a house," Elaborating on the subject, Muthoot Pappachan Group Executive Director Thomas Muthoot told reporters.
The new venture, Muthoot Housing Finance will be a subsidiary of the flagship company Muthoot Fincorp.
The group plans to invest around Rs 100 crore over the next two years in this venture, which would primarily target the low to middle income housing finance segment and aim to disburse small-ticket loans.
"We want to tap the opportunity in the middle and low income segment, which is yet to be explored fully. We are looking at customers in the segment with a monthly income of Rs 10,000-30,000 and an average loan size of Rs 3-10 lakh," Muthoot Housing Finance CEO Maneesh Srivastava said.
The company is targeting Rs 125 crore loan size by December 2012, he said adding that the interest rates will be competitive at about 14-15%.
The funding will be done through various sources, including banks, he added.
In the initial phase, the group plans to roll-out 25 branch offices in large urban centres like Chennai, Bengaluru, Ahmedabad and with its headquarters in Mumbai.
"Initially, we are starting from the west and the south. However, we will have pan-India presence in another 18 months," he said.