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Cholamandalam Investment & Finance pushing forward with mortgage finance unit

India-based vehicle financer Cholamandalam Investment and Finance Co. Ltd. is pushing forward with its plan to set up a mortgage finance unit and expects to receive its license for the business by March 2020, Bloomberg News reported Aug. 19, citing the company's executive director, Arun Alagappan.

The company plans to transfer its 26 billion rupee housing loan portfolio to the new housing subsidiary once it gets its license, the executive added.

Cholamandalam Investment and Finance is looking to establish the housing finance unit despite a cash credit crunch affecting India's shadow lenders. Mortgage finance companies, including Dewan Housing Finance Corp. Ltd. and Indiabulls Housing Finance Ltd., have had their credit ratings downgraded, while the former has been trying to sell off assets to raise funds, the news outlet reported.

A new housing finance unit would enable Cholamandalam Investment and Finance to grow its loan book faster, Alagappan said, adding that the company will target low-cost-home buyers and offer loans of up to 1.5 million Indian rupees.

Interests for low-cost-home financing has picked after the government announced plans to provide interest subsidies for buyers as part of a wider housing program, Bloomberg reported.

As of Aug. 19, US$1 was equivalent to 71.53 Indian rupees