RBL Bank to launch commercial vehicle, used car financing soon
What's the story
RBL Bank is gearing up to launch commercial vehicle (CV) and used four-wheeler financing within the next three months. The move is part of a broader strategy to improve its net interest margins (NIM) from retail assets. The bank plans to do this by shifting its portfolio mix toward higher-yielding assets while keeping the retail share in its overall loan mix at around 31%.
Growth plan
Bank aims to boost NIMs after profit plunge
Kumar Ashish, the head of retail assets and collections at RBL Bank, revealed the bank's plans to expand its NIMs to 5.1%. This comes after a sharp decline in overall NIMs from 5.45% to 4.89%. The decline was attributed to challenges in the microfinance institution (MFI) sector and contributed to a massive 76% drop in Q4 net profit at ₹86 crore.
Market expansion
Focus on expanding retail assets in tier-II, III cities
RBL Bank is focusing on expanding its retail assets in tier-II and III cities, where it already has a distribution network of 550 branches and over 1,500 business correspondent touchpoints. The bank plans to tailor its product mix according to customer needs and ensure quicker turnaround times for credit delivery across various categories such as tractor finance, gold loans, home loans, and business loans.
Strategic focus
Strategy for home loans and CV financing
In the home loan segment, RBL Bank plans to focus more on affordable housing. For the soon-to-be-launched CV segment, it will target customers slightly below prime to expand margins. The bank also plans to leverage its existing staffing for retail credit in a bid to keep costs under control while expanding market share.
New ventures
RBL Bank also looking to enter used car business
RBL Bank is also looking to enter the used four-wheeler business. The bank plans to focus on partnerships with car reselling portals so that customers can get a loan quote in one go after selecting their car on the website. This move is part of its broader strategy to expand into new niches and meet unfulfilled customer needs.