L&T Finance's rural business finance book reaches Rs 25,000 crore

Non-bank lender aims to scale up loan against properties

L&T Finance's rural business finance (RBF) book has hit the Rs 25,000 crore mark in the first quarter of the current financial year after posting compound annual growth rate (CAGR) of 26 per cent between FY21 and FY24.

As a step to grow the RBF further, the non-bank lender plans to scale up the micro-loan against property (LAP) business, and enhance presence in markets like western Uttar Pradesh, Maharashtra, and Telangana, according to its FY24 annual report.

At present, its RBF book predominantly consists of group loans and micro finance. It forms 31 per cent of the company's retail portfolio of Rs 80,037 crore. The non-bank lender was able to disburse Rs 21,495 crore, while building a book of Rs 24,716 crore, showing 32 per cent year-on-year (Y-o-Y) growth in FY24. It added 1.54 million customers during the last financial year.

 

The year gone by was characterised by the sustenance of growth for the joint liability group (JLG) industry, which is the microfinance sector, on the back of stable rural demand, and improved portfolio performance. The industry crossed the assets under management milestone of Rs 4 trillion during the year with a growth of about 30 per cent while adding about 10 million customers to the lending universe, according to an annual report.

Sonia Krishnankutty, chief executive, rural business finance, L&T Finance, said in a statement that over the past two years, “the primary focus of our team of over 10,000 field staff is on right customer selection, maintaining customer connect, and ensuring credit discipline, which is pivotal in sustaining the business model."

The business growth was supported by robust risk framework, and continual portfolio monitoring to the pincode levels, ensuring superior portfolio quality with collection efficiency levels of 99.7 per cent-plus, the annual report stated.

The increasing smartphone penetration, and the government’s push for digitisation helped enhance its digital collection contribution from 3 per cent in April 2023 to over 21 per cent in March 2024, building efficiencies and reducing risks in the process, the company said.