Piramal Finance’s gross non-performing asset (NPA) ratio was flat sequentially while there has been a slight rise in net NPAs both sequentially and year-on-year (Y-o-Y). Which are the areas where delinquencies are still elevated?
There are two areas that we have been talking about, in terms of delinquencies. One is loans against property — particularly small loans against property — and car finance. Although it is not too alarming, these are the areas where we have seen slight deterioration. At the same time, the delinquent pools have come down on a quarter-on-quarter (Q-o-Q) basis in unsecured retail lending. We have seen the most improvement in terms of credit costs and flows into stage 3.
How is the recovery environment shaping up, especially in the microfinance business?
Recoveries have stabilised and, in fact, improved during the quarter. Segments like microfinance have seen a notable improvement in recoveries, making this a strong quarter on that front.
The policy repo rate has been reduced by 125 basis points (bps) in 2025. How has been the rate transmission of bank loans to NBFCs?
While the Reserve Bank of India (RBI) has cut rates by 125 basis points, banks have reduced marginal cost of fund based lending rate (MCLR) by only about 35 bps on a weighted average basis. The transmission so far has been relatively weak. I expect to see another 25 bps transmission to happen in the next few months.
Has banks started lending to NBFCs after the risk weight norms were rolled back?
Yes, this is not a problem right now. There were some issues for a few months, but that situation has now normalised, and banks are lending to NBFCs again.
Housing loans have shown considerable growth this quarter. What is your target customer profile in housing finance and the average ticket size?
The average ticket size in housing loans is around ~20–22 lakh. Our customers are primarily suburban and semi-urban borrowers. About 60 per cent are self-employed, while the remaining 40 per cent are salaried individuals working in the lower-income segment, such as shop employees or factory floor workers.
Retail now accounts for over 80 per cent of total assets under management (AUM). Will this mix change further?
Our long-term target was for retail to contribute 80–85 per cent of AUM, which we have largely achieved. Going forward, we do not expect any significant change in this mix.
Piramal Finance has secured a $350 million capital from DFIs such as International Finance Corporation (IFC) and Asian Development Bank (ADB). Has there been an increasing focus on DFIs rather than domestic banks? How do you plan to deploy these funds?
The funding strategy changes from time to time, and at present, DFIs offer a competitive rate even after taking into account all the hedging costs. The landed cost in India is attractive.
While DFIs come with stringent developmental criteria, our business model aligns well with these requirements, making it easier for us to qualify. Additionally, DFIs typically lend for longer tenures than domestic lenders, which is beneficial. Having marquee DFIs on our lender base also adds credibility and helps attract other lenders. Our current deal is in progress and has reached an advanced stage. The capital will primarily be deployed towards lending to women and small business owners.
The company has indicated it will continue to source funding from DFIs. Are there more fund-raising plans in the pipeline?
We expect to raise an additional $100–150 million over the next couple of months. Discussions are ongoing and are at fairly advanced stages.
 "Jairam Sridharan, MD & CEO, Piramal Finance")