Godrej set to enter non-bank lending

The 124-year-old Godrej group is set to enter the lending business with its unit Godrej Finance Ltd, a person aware of the matter said. The $4.1 billion conglomerate is expected to make an official announcement in this respect on Monday, the person said on condition of anonymity.

Godrej Finance held a nonbanking financial company (NBFC) licence since 1998, when it was known as Ensemble Holdings and Finance; however, it has never been active in the lending space.

The lender, which will have an authorized share capital of ₹1,000 crore, will start off with non-mortgage loans to small enterprises and loans against property, the person said. It may enter consumer lending later, a space now dominated by Bajaj Finance.

According to Arvind Singhal, chairman of Technopak Advisors, the financing business will grow for all entities as the economy expands. “Godrej is present in housing finance. It is also present in consumer products, appliances and furniture business. Given the financing opportunities, the group has the capabilities to build a good book. Godrej brand stands for trust and respect, which will also help them expand into the financial services business,” Singhal said.

In October 2020, the group launched Godrej Housing Finance, which offers mortgage loans of ₹40 lakh to ₹1 crore, but only for customers of Godrej Properties. Its capital adequacy ratio stood at 21.8% as of March 2021, and had a loan book of ₹1,001 crore as of December 2021. An email sent to a spokesperson for Godrej Housing Finance remained unanswered.

In July 2021, following the RBI nod, group holding company Godrej Industries transferred its stakes in its units Godrej Housing Finance and Godrej Finance to Godrej Capital (another subsidiary earlier called Pyxis Holdings), making it the group’s financial holding company.

As per data from the ministry of corporate affairs, Godrej Finance has been engaged in investment and other NBFC activities. Investment activities include dealing in listed and unlisted securities and holding 0.6% of Godrej Properties, it said.