RBL Bank eyes wider margin from retail, CV finance rollout in 3 months

Business Standard

29-06-2025

RBL Bank is aiming to widen its net interest margins (NIM) from retail assets by shifting the portfolio mix towards higher-yielding assets, a senior official has said.
As part of the same strategy, the private sector lender will launch a commercial vehicle (CV) financing and used 4-wheeler finance in the next three months.
The increase in NIMs, which is being targeted at a time when the entire industry is facing challenges on this front, will be achieved while maintaining the retail share in the overall loan mix at around 31 per cent level, Kumar Ashish, its head of retail assets and collections, told PTI.
Ashish, however, did not share the current NIMs of the retail business nor did he share an aspirational number. It had reported a sharp decline in the overall NIMs to 4.89 per cent as against 5.45 per cent, and the narrowing was one of the reasons along with setbacks in the MFI business for the 76 per cent drop in the Q4 net profit at Rs 86 crore.
He said at the bank level, it is aiming for expanding NIMs to 5.1 per cent.
In retail assets, the bank's focus relies on going deeper into tier-II and III cities, where the bank already has a distribution network courtesy its 550 branches and over 1,500 business correspondent touchpoints.
After understanding the customer needs and tailoring the product mix, it will focus on quicker turnaround times for delivering credit in categories such as tractor finance, gold loans, homes loans, business loans and the upcoming businesses, he said.
Admitting that RBL Bank is a "challenger bank" in many of the retail businesses and will be up against aggressive competition, Ashish said it will have to find new niche of customers whose needs are unfulfilled, use a lot digital inputs for loan underwriting, depend on quicker turnaround times and have a control over the costs to deliver on higher NIMs.
Citing the case of home loans, he said the bank will focus more on the affordable housing segment while even in the soon-to-be-launched CV segment, it will go after demand from customers a notch under prime to expand margins.
On the costs front, it is making best use of the existing staffing for doing more, pointing out that the talent across branches which was primarily focused on liabilities will now be doing retail credit as well.
"We would have to gain market share in order to grow," Ashish, who joined the bank from Aditya Birla Capital recently, made it clear.
The CV financing will be done to smaller players in smaller cities and the bank's tractor financing team will be used for distribution, he said.
It is also looking to get into the used four-wheeler business, where it will be focusing on tie-ups with car reselling portals such that a customer is able to get a quote on the loan as well in a single journey after selecting his car on the website, Ashish said.
Meanwhile, on the MFI business, Ashish said the collections have further improved since the late-April commentary and are getting better.
The lowest point in collections was in December last, when the troubles for the industry started, he said, adding that since then the collections are steadily climbing up.
Maintaining the earlier commentary, Ashish said the bank is "optimistic" about the MFI business and added that the second half of FY26 will be a better story.
Tamil Nadu and Karnataka, the two markets where the bank faced issues because of political moves to introduce ordinances, continue to be challenging and the bank is reducing exposure there, he said. It has a low or negligible exposure in Bihar, which is headed to polls soon.
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