Automobile financier Cholamandalam to set up mortgage-finance unit to offer home loans of upto Rs.15 lakhs

Automobiles financier Cholamandalam Investment & Finance Co., is planning to set up a mortgage-finance unit and plans to target buyers of low-cost homes and offer loans of as much as Rs.15 lakhs. The government under Prime Minister Narendra Modi has undertaken to build homes for poor Indian families by 2022. A government plan to provide benefits including interest subsidies has seen a surge in funding for affordable homes and lured buyers and financiers such as Cholamandalam.

Indian government plans to build 10 million houses in urban areas by 2022.

The housing finance license will also let Cholamandalam take advantage of refinancing options from National Housing Bank, which supervises housing finance companies. Under the government’s Pradhan Mantri Awas Yojana for urban areas, the state will subsidise interest on mortgages of as much as Rs.18 lakhs.

Cholamandalam will transfer its Rs.2,600 crore housing loan portfolio to the new housing subsidiary once it gets its license, according to the company’s executive director Arun Alagappan. According to him, even during crisis when the company went to banks for fund raising, it did not face any issues of raising money. He cited that “For more than 20 quarters, Cholamandalam hasn’t had an asset liability mismatch.”