Mahindra Finance plans to separate fintech biz, mulls banking licence

Mahindra & Mahindra Financial Services plans to carve out a special business unit (SBU) for its fin-tech vertical which will be run like a “separate independent company,” said MD Ramesh Iyer.

The company will allot Rs 250-Rs 300 crore in capital to this entity and measure the return on capital. To be called Digital Finco, this SBU will focus on small ticket loans particularly in the two wheeler space. Currently, Mahindra Finance does not have a presence in two wheeler financing. Digital Finco will also enter personal and consumer durables financing segments both in urban and rural markets.

“Digital Finco will use Mahindra Finance knowledge of these markets and convert it into a digital solution,” said Iyer. “We are looking at a loan book of around Rs 5,000-Rs 7,000 crore in the first year and want to scale it up to Rs 25,000 crore by 2023,” he added. Mahindra Finance is also readying its rural housing finance subsidiary — Mahindra Rural Housing Finance — for an IPO in 2-3 years. “Currently the book size of this entity is around Rs 8,000 crore and we will build it to Rs 50,000 crore before the listing,” he said.


The company is also exploring possibilities regarding a banking licence. “We are looking at that option closely because it is interesting and we are considering governance and other parameters about the bank vs NBFC debate. It will be considered once these parameters are looked into,” he added.