Low net interest margin, but reasonable returns on MSME portfolio: Cholamandalam Investment's Arul Selvan

Cholamandalam Investment and Finance is set to diversify and expand its portfolio, targeting the MSME and unsecured segments, particularly mortgages aimed at the lower end of the socioeconomic pyramid, said Arul Selvan, CFO and President at the company. He acknowledged that the return on net interest margin (NIM) level is relatively lower, but they are still reaping reasonable returns on the MSME portfolio.

"Delinquencies in the new business segments have seen a slight uptick but remain below the industry average, offering a sense of stability and a foundation for growth. Consumer and small enterprise loans are integral parts of the new business segment. We plan to expand new business segment cautiously, with a comfort level of around 2-2.5% regarding the Gross Non-Performing Asset (GNPA) ratio. This ambitious growth plan aims to increase new business's contribution to 20% of the overall Assets Under Management (AUM)," he told CNBC-TV18.

Cholamandalam Investment also anticipates improvements in the cost of funds and yields, and they have hinted at potential re-pricing in the vehicle financing book, reflecting their adaptability to changing market conditions.