Bajaj Fin plans to double loans against securities portfolio

The company has a book size of Rs 700 cr at present

Bajaj Finserv Lending is targeting to double its loans against securities (LAS) portfolio to Rs 1,400 crore this fiscal, a senior company official has said.

The Pune-headquartered company, which has been offering LAS for last three years, has a book size of Rs 700 crore at present.

"We are confident of doubling the book size as there is a demand for such products, especially given the current economic scenario," head for LAS, Sameer Satyam told PTI over phone.

In LAS, the company lends against select listed shares, mutual fund investment and insurance policies taken from its sister arm Bajaj Allianz Life Insurance, Satyam said.

In difficult economic times, securities is the best asset a person has and the opportunities available makes one leverage against the securities, he said. It targets a niche segment of customers like promoters of companies or those in the senior management, he said, adding, on an average the loan to value ratio would be at 50 per cent, though it may go up to 70 per cent depending on the security offered.

The loans, which are generally for a year with a ticket size of upto Rs 10 crore, carry interest rate of upto 14 per cent, which is at a premium as compared to other collateral-based activities.

"Here, the risk is high and hence our margins are also wider. We work on with a margin of three to four per cent," Satyam said.

The loans are availed for varied purposes, including purchase of property/farm house, executing a merger, subscribing to a rights issue etc, said Satyam, adding, the company has no delinquencies from the portfolio.

The company has also recently launched a web-based portal, which will give an in-principle approval for a loan within five minutes to a prospective client for a fee of Rs 1,999, he said.

Through the portal, it intends to garner a business of up to Rs 70 crore in the next six months, Satyam added.